SARFAESI and SICA interplay: three-fourths secured creditor action can abate a pending BIFR reference despite section 22.

Where secured creditors representing not less than three-fourths in value invoke action under section 13(4) of the SARFAESI Act, the pending BIFR reference abates under the third proviso to section 15(1) of SICA. Section 22 of SICA is not treated as an absolute bar to that action because the later special recovery regime, read with section 35 of the SARFAESI Act, prevails when the statutory threshold is met. Pendency of a reference continues through inquiry, scheme formulation, sanction and implementation until termination, but a sanctioned scheme does not prevent the third proviso from operating.

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Issues: Whether the action initiated by the sole secured creditor under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 abated the pending reference before the Board for Industrial and Financial Reconstruction by virtue of the third proviso to section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, and whether section 22 of that Act barred such action.

Analysis: The third proviso to section 15(1) was treated as a specific exception carved out contemporaneously with the enforcement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The governing scheme was read as follows: where secured creditors representing not less than three-fourths in value take measures under section 13(4), the reference pending before the Board abates by operation of law. Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 was not read as an absolute bar in such cases, because the later and special recovery regime under the 2002 Act, read with section 35 of that Act, operates to permit such action where the statutory threshold is satisfied. The Court also held that pendency of a reference continues through the stages of inquiry, formulation, sanction and implementation of a revival scheme until finally terminated, and that the mere fact of a sanctioned scheme does not prevent the third proviso from operating. As the petitioner did not assert that the respondent bank was below the requisite three-fourths threshold, there was no factual basis to resist the respondent bank's action or to continue interim protection.

Conclusion: The respondent bank's action under section 13(4) was protected by the third proviso to section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, and section 22 did not bar it; the petitioner failed to establish any ground for interim relief.

Ratio Decidendi: Where secured creditors representing not less than three-fourths in value invoke section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the pending BIFR reference abates under the third proviso to section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, and section 22 of that Act does not prevent such action.

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