Writ petitions dismissed as BIFR reference abated under SARFAESI Act. Pursue remedy under Section 17.

The court dismissed both writ petitions, ruling that the reference before the BIFR abated when secured creditors acted under Section 13(4) of the SARFAESI Act, 2002. The petitioners were directed to pursue their statutory remedy under Section 17 of the SARFAESI Act, 2002, regarding any actions by the Bank.

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Issues Involved:
1. Availability of alternative remedy under Section 17 of the SARFAESI Act, 2002.
2. Abatement of reference under the third proviso to Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985.
3. Interpretation of the phrase "reference is pending" in the third proviso to Section 15 of the Act, 1985.
4. Continuation of reference proceedings under Sections 16, 17, 18, and 19 of the Act, 1985.
5. Applicability of Section 22 of the Act, 1985 to the proceedings under the SARFAESI Act, 2002.

Detailed Analysis:

1. Availability of Alternative Remedy under Section 17 of the SARFAESI Act, 2002:
The court considered whether the writ petitions should be dismissed due to the availability of an alternative remedy under Section 17 of the SARFAESI Act, 2002, after the Bank invoked Section 13(4). The court cited the Supreme Court's decision in United Bank of India Vs. Satyawati Tandon, which emphasized that the High Court should not entertain a writ petition if an effective remedy is available, particularly in matters involving recovery of public dues. However, the court noted that one exception to this rule is when the jurisdiction of the authority is challenged. Since the petitioners questioned the Bank's jurisdiction under Section 13(4) of the SARFAESI Act, 2002, the court decided to examine the merits of the case rather than dismissing the petitions outright.

2. Abatement of Reference under the Third Proviso to Section 15 of the Act, 1985:
The court examined whether the reference registered before the BIFR abated under the third proviso to Section 15 of the Act, 1985, upon the Bank taking measures under Section 13(4) of the SARFAESI Act, 2002. The court concluded that the reference abates automatically when secured creditors representing not less than three-fourths in value of the amount outstanding take measures under Section 13(4). No formal order or adjudication by the BIFR is required for abatement.

3. Interpretation of the Phrase "Reference is Pending" in the Third Proviso to Section 15 of the Act, 1985:
The court interpreted the phrase "reference is pending" to mean that the reference continues to be pending at any stage, including under Sections 16, 17, 18, and 19 of the Act, 1985. The court rejected the argument that the reference ends upon registration or declaration of sickness by the BIFR. The court emphasized that the reference remains pending until all proceedings under the Act, 1985, are completed.

4. Continuation of Reference Proceedings under Sections 16, 17, 18, and 19 of the Act, 1985:
The court held that even if the reference is proceeding under Sections 16, 17, 18, and 19 of the Act, 1985, the secured creditors are fully empowered to take measures under Section 13(4) of the SARFAESI Act, 2002. The court noted that the third proviso to Section 15 of the Act, 1985, applies irrespective of the stage of the reference proceedings.

5. Applicability of Section 22 of the Act, 1985 to the Proceedings under the SARFAESI Act, 2002:
The court determined that the petitioners are not entitled to protection under Section 22 of the Act, 1985, once the reference abates due to the secured creditors' actions under Section 13(4) of the SARFAESI Act, 2002. The court concluded that the proceedings initiated by the Bank under Section 13(4) of the SARFAESI Act, 2002, are not without jurisdiction.

Conclusion:
The court dismissed both writ petitions, holding that the reference before the BIFR abated upon the secured creditors taking measures under Section 13(4) of the SARFAESI Act, 2002. The petitioners were advised to avail their statutory remedy under Section 17 of the SARFAESI Act, 2002, against any measures taken by the Bank.

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