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Issues: (i) whether a financial corporation governed by the State Financial Corporations Act, 1951 could invoke the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to enforce its secured debt despite the availability of remedies under the State Financial Corporations Act, 1951 and the bar under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985; (ii) whether the doctrine of election barred recourse to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 after prior resort to the State Financial Corporations Act, 1951.
Issue (i): Whether the financial corporation could invoke the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 despite the statutory setting under the State Financial Corporations Act, 1951 and the Sick Industrial Companies (Special Provisions) Act, 1985.
Analysis: The remedies under sections 29 and 31 of the State Financial Corporations Act, 1951 were treated as remedies available to recover dues, but the Court held that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is a separate enactment providing an additional mode of enforcement of security interest. Section 37 of that Act makes its provisions cumulative and not in derogation of other laws, and the amendment introduced by section 41 to section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 was relied upon to hold that the BIFR reference would abate once the required secured creditors took measures under section 13(4). The Court also noted that the secured creditors in the case had taken action under the securitisation statute.
Conclusion: The corporation was entitled to proceed under the securitisation statute, and the bar under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 did not prevent such action.
Issue (ii): Whether the doctrine of election barred recourse to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 after resort to the State Financial Corporations Act, 1951.
Analysis: The Court applied the principle that the doctrine of election operates only where two co-existent and inconsistent remedies for the same relief are available. Relying on the distinction between the remedies under the State Financial Corporations Act, 1951 and the securitisation statute, the Court held that the corporation was not simultaneously pursuing two inconsistent remedies and that the securitisation remedy was an independent and additional remedy. The prior invocation of remedies under the State Financial Corporations Act, 1951 did not extinguish the right to proceed under the securitisation statute.
Conclusion: The doctrine of election did not bar the corporation from proceeding under the securitisation statute.
Final Conclusion: The writ petition failed because the respondent was lawfully entitled to proceed under the securitisation regime and no legal bar was established against the impugned demand and proposed enforcement action.
Ratio Decidendi: Where a later special recovery statute expressly operates in addition to other laws and the remedies are not truly inconsistent, a secured creditor may invoke that statute notwithstanding earlier recourse to another statutory remedy and the doctrine of election will not apply.
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