Purposive interpretation of SICA proviso requires 75% acquisition of secured assets before the reference is displaced.

The second proviso to Section 15(1) of SICA is to be read purposively and harmoniously with the third proviso and the SARFAESI framework. On that construction, a reference under SICA is not defeated by any trivial acquisition of secured financial assets by an asset reconstruction company or securitisation company. The operative threshold is 75% of the secured assets, and only acquisition at that level attracts the proviso. A literal reading allowing a minimal acquisition to trigger the provision was rejected as inconsistent with the scheme of revival and rehabilitation and as producing an absurd result.

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Issues: Whether the second proviso to Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 applies only when an asset reconstruction company or securitisation company has acquired at least 75% of the secured financial assets of a sick industrial company, or whether any acquisition, however small, is sufficient.

Analysis: The text of the second proviso does not expressly prescribe a minimum percentage of financial assets to be acquired. However, the proviso was read with the third proviso to Section 15(1), which uses a 75% threshold for abatement when secured creditors take measures under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. A literal construction of the second proviso would allow even a minuscule acquisition to defeat a reference under SICA, which would be inconsistent with the scheme of revival and rehabilitation under SICA and would create an absurd and unworkable result. The Court applied purposive interpretation and harmonious construction, holding that the legislative intent required the second proviso to operate only where the asset reconstruction company or securitisation company acquires at least 75% of the secured assets.

Conclusion: The second proviso to Section 15(1) of SICA is attracted only when at least 75% of the secured assets of the sick industrial company have been acquired by an asset reconstruction company or securitisation company.

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