SARFAESI override and premature writ challenge: BIFR pendency did not bar recovery, and section 13(2) notice challenge was premature.

The SARFAESI Act's overriding effect prevails over the Sick Industrial Companies (Special Provisions) Act, 1985, so pendency before BIFR and section 22 protection do not bar recovery once secured creditors take measures under section 13(4). The borrower's challenge to a section 13(2) demand notice is also premature where objections under section 13(3A) have been replied to and no section 13(4) measure has yet been taken, because the statutory remedy under section 17 arises only after such measures. The recovery proceedings may therefore continue, with the borrower left to pursue the post-measure remedy.

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Issues: (i) whether the pendency of proceedings before the BIFR and section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (ii) whether the writ petition challenging the demand notice under section 13(2) was maintainable when the objections under section 13(3A) had been disposed of and no measure under section 13(4) had yet been taken.

Issue (i): whether the pendency of proceedings before the BIFR and section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Analysis: The amended proviso to section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985, read with the overriding provision in section 35 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, was treated as decisive. Once secured creditors representing the requisite value had initiated measures for recovery under section 13(4), the pending reference before the BIFR was liable to abate. The general protection under section 22 could not prevent recourse to the later enactment.

Conclusion: The objection based on section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 failed, and the SARFAESI action was held not to be barred.

Issue (ii): whether the writ petition challenging the demand notice under section 13(2) was maintainable when the objections under section 13(3A) had been disposed of and no measure under section 13(4) had yet been taken.

Analysis: The objections to the demand notice had been replied to, which was treated as substantial compliance with section 13(3A). The Court held that no enforceable cause had yet arisen because no measure under section 13(4) had been taken, and the borrower had an efficacious statutory remedy under section 17 after such measures. The challenge was therefore premature.

Conclusion: The writ petition was not maintainable at that stage and was rejected as premature.

Final Conclusion: The statutory recovery proceedings were permitted to continue, and the borrower was left to avail the remedy available after measures under the securitisation are taken.

Ratio Decidendi: Where the SARFAESI Act applies, its overriding effect prevails over inconsistent provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, and a writ challenging only a section 13(2) notice is premature if the borrower's objections have been considered and no section 13(4) measure has yet been taken.

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