Overriding effect of securitisation law: BIFR reference abates when secured creditors take enforcement action under the statutory threshold.

The later special statute for securitisation was treated as overriding the earlier sick-industrial-companies law to the extent of inconsistency, because it gives secured creditors a direct enforcement right and contains an overriding clause. The stay in writ proceedings did not revive a reference already concluded before the Board and Appellate Authority, and recovery under Section 13 of the securitisation law was not obstructed. The expression "where a reference is pending" in the third proviso to Section 15(1) was read broadly to cover the entire BIFR process, including inquiry, scheme consideration, sanction, implementation, and final conclusion. Once secured creditors representing not less than three-fourth in value acted under Section 13(4), the sick-industrial reference abated.

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Issues: (i) Whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 prevails over the Sick Industrial Companies (Special Provisions) Act, 1985, and whether the stay order in the writ proceedings revived the reference so as to bar recovery measures; (ii) Whether the expression "where a reference is pending" in the third proviso to Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 covers only the initial reference stage or all stages of BIFR proceedings.

Issue (i): Whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 prevails over the Sick Industrial Companies (Special Provisions) Act, 1985, and whether the stay order in the writ proceedings revived the reference so as to bar recovery measures.

Analysis: The legislative scheme of the 2002 Act shows a clear intent to permit secured creditors to enforce security interests without court intervention. Section 35 gives the Act overriding effect, while Section 37 does not include the Sick Industrial Companies (Special Provisions) Act, 1985 among the laws saved from that overriding effect. Section 41 and the Schedule also amended Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 to provide for abatement where secured creditors representing not less than three-fourth in value have taken measures under Section 13(4) of the 2002 Act. The stay order could not revive proceedings finally concluded by the Board and the Appellate Authority, and in any event the 2002 Act prevails to the extent of inconsistency.

Conclusion: The 2002 Act prevails over the Sick Industrial Companies (Special Provisions) Act, 1985 to the extent of inconsistency, and the stay order did not revive the reference or obstruct recovery under Section 13 of the 2002 Act.

Issue (ii): Whether the expression "where a reference is pending" in the third proviso to Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 covers only the initial reference stage or all stages of BIFR proceedings.

Analysis: The expression "reference" in the proviso is used broadly and cannot be confined to the mere filing or registration stage, because such a narrow reading would defeat the proviso and render it otiose. A reference remains pending through inquiry, preparation and consideration of schemes, sanction and implementation of a scheme, and until the proceedings culminate in successful rehabilitation or a winding-up opinion. The proviso was enacted to balance rehabilitation with recovery, and it is triggered when secured creditors representing not less than three-fourth in value take measures under Section 13(4) of the 2002 Act.

Conclusion: The expression covers all stages of pending BIFR proceedings and not merely the initial filing stage.

Final Conclusion: The proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 had abated upon the secured creditors taking action under the 2002 Act, and the appeals failed.

Ratio Decidendi: Where the later special statute confers a direct right of enforcement on secured creditors and contains an overriding clause, the earlier rehabilitative statute yields to the extent of inconsistency, and a statutory reference before BIFR remains pending throughout the BIFR process until it is finally concluded or abated under the governing proviso.

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