Deemed consent under rehabilitation scheme law binds a financial institution when no objection is raised in time.

A draft rehabilitation scheme under section 19(2) of the Sick Industrial Companies (Special Provisions) Act, 1985 binds the concerned financial institution by deemed consent if no objection is raised within the statutory period. Where the circulated scheme contemplates financial assistance or sacrifice from a public financial institution, silence within the prescribed time attracts the statutory legal fiction of consent. A later denial of approval cannot override the consequence of non-response. The practical effect is that the institution remains bound by the sanctioned one-time settlement, including compliance steps such as issuing a no dues certificate.

---

---

Issues: Whether the petitioner was bound by the draft rehabilitation scheme by deemed consent under section 19(2) of the Sick Industrial Companies (Special Provisions) Act, 1985 and was consequently liable to issue a no dues certificate.

Analysis: The draft scheme was circulated to the petitioner for consent in relation to the proposed one-time settlement. The petitioner did not record any objection within the statutory period, nor did it dissent to the proposal when it was placed for consideration. Section 19(2) creates a legal fiction that consent is deemed to have been given if no consent is received within the prescribed time. Since the petitioner was a public financial institution and the scheme contemplated financial assistance or sacrifice from it, the statutory mechanism was attracted. On the facts found, the petitioner's subsequent stand that there had been no approval for settlement could not displace the consequence of its earlier non-response to the circulated scheme.

Conclusion: The petitioner was deemed to have consented to the one-time settlement under section 19(2), and the direction to issue the no dues certificate was valid.

Ratio Decidendi: Where a draft rehabilitation scheme requiring financial sacrifice is circulated under section 19(2) of the Sick Industrial Companies (Special Provisions) Act, 1985, failure to object within the statutory period results in deemed consent, binding the concerned financial institution to the sanctioned scheme.

---