Assigned debt before BIFR reference bars SICA protection and renders later reference non-maintainable under SARFAESI-linked assignment.

A BIFR reference filed after the underlying debt had already been assigned to a reconstruction company was treated as incompetent under the second proviso to section 15(1) of SICA, 1985, and the statutory protection under section 22 was therefore unavailable. On the possession issue, since SARFAESI proceedings, including steps under section 14, were already underway and the secured creditor was pursuing physical possession, the request for a further direction became infructuous. The proceedings were disposed of accordingly, with limited payment directions retained.

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Issues: (i) Whether a reference before the BIFR, filed after assignment of the concerned debt to a securitisation or reconstruction company, attracted the bar under the second proviso to section 15(1) of SICA, 1985 and denied protection under section 22 of SICA, 1985; (ii) Whether the prayer for a direction to take physical possession of the factory premises survived for adjudication.

Issue (i): Whether a reference before the BIFR, filed after assignment of the concerned debt to a securitisation or reconstruction company, attracted the bar under the second proviso to section 15(1) of SICA, 1985 and denied protection under section 22 of SICA, 1985.

Analysis: The debt had already been assigned to a reconstruction company before the BIFR reference was lodged. The second proviso to section 15(1) of SICA, 1985, inserted by section 41 of SARFAESI, prohibits such a reference where financial assets have been acquired by a securitisation or reconstruction company under section 5(1) of SARFAESI. On that footing, the reference was not maintainable in law and could not trigger the statutory protection under section 22 of SICA, 1985.

Conclusion: The objection based on BIFR pendency and section 22 of SICA, 1985 was rejected; the reference was held non est.

Issue (ii): Whether the prayer for a direction to take physical possession of the factory premises survived for adjudication.

Analysis: Possession-related steps had already been initiated under SARFAESI, including proceedings under section 14, and the secured creditor and reconstruction company were pursuing the possession process. In these circumstances, the requested direction no longer required adjudication.

Conclusion: The prayer was held to be infructuous.

Final Conclusion: The objection to continuation of the proceedings failed, limited payment directions were retained, and the report was disposed of with the possession prayer treated as unnecessary for further decision.

Ratio Decidendi: Where a debt has been assigned to a securitisation or reconstruction company before a BIFR reference is made, the second proviso to section 15(1) of SICA, 1985 renders the reference incompetent and section 22 protection is unavailable.

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