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AI Drafter ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 are barred by section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 during pendency of proceedings before the BIFR, and whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has overriding effect in case of conflict.
Analysis: The statutory scheme of the Sick Industrial Companies (Special Provisions) Act, 1985 was noticed as a protective regime that stayed coercive recovery measures during pendency of proceedings. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was examined as a later enactment intended to enable speedy recovery by secured creditors, containing a non obstante clause in section 35 and a specific amendment in section 41 affecting the Sick Industrial Companies (Special Provisions) Act, 1985. Applying legislative history and the mischief rule, the Court held that the two enactments are inconsistent to the extent that one creates a stay on recovery and the other authorises summary enforcement of security interests. The Court held that the later special statute was intended to prevail and that the pendency of a reference before the BIFR would not by itself bar action under the securitisation law. The contrary view taken without reference to section 35 was treated as per incuriam.
Conclusion: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the latter Act overrides the former in case of conflict.
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