Securitisation measures and sick company appeals: creditor consent under the recovery framework triggers the statutory remedy under Section 17.

A pending appeal before the Appellate Authority for Industrial and Financial Reconstruction is treated as a continuation of the original proceeding, so the second proviso to Section 15(1) of the Sick Industrial Companies Act can operate even at the appellate stage when securitisation measures are taken. The Court also held that consent of secured creditors representing not less than three-fourths in value to proceed under the securitisation framework constitutes a measure for recovery of secured debt under Section 13(4) of the 2002 Act. In that situation, the borrower must pursue the statutory remedy under Section 17 rather than seek writ interference.

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Issues: (i) Whether the second proviso to Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, which provides for abatement of pending references on measures being taken under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, also applies when an appeal is pending before the Appellate Authority for Industrial and Financial Reconstruction. (ii) Whether the consent of secured creditors representing not less than three-fourths in value amounts to a measure taken to recover secured debt under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, thereby leaving the petitioner to pursue the statutory remedy under Section 17 of that Act.

Issue (i): Whether the second proviso to Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, which provides for abatement of pending references on measures being taken under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, also applies when an appeal is pending before the Appellate Authority for Industrial and Financial Reconstruction.

Analysis: The proviso was construed purposively in the light of the object of the securitisation legislation. An appeal was treated as a continuation of the original proceedings, so the pendency before the Appellate Authority did not prevent the proviso from operating by necessary implication. A narrow reading confined only to the Board for Industrial and Financial Reconstruction was rejected.

Conclusion: The proviso applies even where the matter is pending in appeal before the Appellate Authority for Industrial and Financial Reconstruction.

Issue (ii): Whether the consent of secured creditors representing not less than three-fourths in value amounts to a measure taken to recover secured debt under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, thereby leaving the petitioner to pursue the statutory remedy under Section 17 of that Act.

Analysis: The Court held that once secured creditors representing the requisite value decide to proceed under the securitisation framework and give consent for that purpose, the decision itself constitutes a measure for recovery of secured debt under Section 13(4). In that situation, the borrower's remedy lies in the appellate mechanism provided by the statute.

Conclusion: Such consent amounts to a measure under Section 13(4), and the petitioner must work out its remedy under Section 17.

Final Conclusion: The writ petitions failed because the securitisation measures were held to be operative notwithstanding the pendency before the appellate forum under the sick companies regime, and the petitioner was left to the alternate statutory remedy under the securitisation .

Ratio Decidendi: A pending appeal under the sick industrial companies regime is treated as a continuation of the original proceeding, and creditor consent to proceed under the securitisation statute constitutes a recovery measure under Section 13(4), excluding writ interference where an effective statutory remedy exists.

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