SARFAESI interim status quo does not negate Section 13(4) action; BIFR abatement follows once creditor consent threshold is met.

Section 13(4) SARFAESI measures were treated as legally effective despite an interim status quo order from the DRT, because such an order does not erase the underlying statutory action unless it is set aside in proper proceedings. On that basis, the BIFR reference was regarded as abated. The third proviso to Section 15(1) of SICA was read to require consent of secured creditors representing at least three-fourths of the outstanding secured debt, and that consent could be validly expressed before the BIFR without any special form. As the secured creditors had given the requisite consent, the statutory condition for abatement was satisfied.

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Issues: (i) Whether the reference before the BIFR had abated upon service and invocation of measures under Section 13(4) of the SARFAESI Act, despite an interim status quo order passed by the DRT. (ii) Whether consent of secured creditors representing not less than three-fourths of the outstanding secured debt, expressed before the BIFR, was sufficient to trigger abatement under the third proviso to Section 15(1) of SICA.

Issue (i): Whether the reference before the BIFR had abated upon service and invocation of measures under Section 13(4) of the SARFAESI Act, despite an interim status quo order passed by the DRT.

Analysis: The statutory scheme was read to mean that once measures under Section 13(4) are initiated, the legal effect of that action is not erased merely because an interim order directs status quo in relation to the secured property. An interim order is only a temporary arrangement and does not determine the legality of the underlying statutory action unless the action itself is set aside in appropriate proceedings. The Court held that the DRT's stay or status quo order did not nullify the notice and measures already taken under Section 13(4).

Conclusion: The reference before the BIFR stood abated notwithstanding the DRT's interim order.

Issue (ii): Whether consent of secured creditors representing not less than three-fourths of the outstanding secured debt, expressed before the BIFR, was sufficient to trigger abatement under the third proviso to Section 15(1) of SICA.

Analysis: The third proviso to Section 15(1) of SICA was construed as making abatement conditional on the consent of secured creditors entitled to recover at least three-fourths of the outstanding secured debt. The Court held that the relevant enquiry is confined to whether that statutory threshold of consent is satisfied, and that such consent need not be recorded in any special form if it is clearly expressed before the competent authority. On the facts, the secured creditors had unanimously supported abatement.

Conclusion: The statutory condition for abatement was satisfied and the proceedings before the BIFR had abated.

Final Conclusion: The impugned order was set aside, the BIFR proceedings were held to have abated on service of the Section 13(4) notice, and the writ petition was allowed.

Ratio Decidendi: Interim orders do not efface the legal effect of a valid statutory action, and abatement under the third proviso to Section 15(1) of SICA follows once secured creditors holding the requisite threshold of debt consent to the step.

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