M/S MADRAS PETROCHEM LTD.AND ANR. v. BIFR AND ORS. INSC 88

In the instant case, admittedly the notice under sub-section of section 13 of the Securitisation Act has been issued on April 7, 2007. But long before that, the company has been declared a sick industrial company by an order of the BIFR dated November 14, 2006. Therefore, the proceeding under the SICA was not at the stage of reference. The proceeding has gone far ahead of that and culminated in an order by which the company was declared sick on November 14, 2006. The said order was passed by the BIFR after hearing the bank and by the said order the bank was appointed an operating agency with a direction to prepare the revival scheme. Therefore, in the facts of this case, the reference cannot abate since the matter under the SICA is not pending in reference before the BIFR. Even though the bank is a party to the said order, it has neither filed any appeal therefrom nor has it asked for consent under section 22 to proceed against the petitioner-company. Therefore, this argument raised by learned counsel for the bank cannot be accepted.’ Relying on the above judgment it has been submitted that by issuance of the notice under section 13 of the Securitisation Act proceedings before the BIFR could not abate when a scheme was formulated. In our view, the judgment has proceeded on the basis of the distinction drawn between the pendency of reference and the existence of the scheme. In our view, the second proviso sic stipulates the pendency of the reference and the reference would include even the preparation of the revival scheme pursuant to the reference, i.e, taking of any action by the BIFR including preparation of a scheme pursuant to the reference. Furthermore, in order to avail of the principles of law laid down in the above judgment it will have to be demonstrated that a scheme had been framed in the present case. No such framing of scheme was brought to our notice by respondent No. 2. However, even if a scheme had been framed in our view that would make no difference to the import of the second proviso sic to section 15 of the SICA. To this extent we are respectfully unable to concur with the view taken by the Orissa High Court. We are also of the view that once the jurisdiction of the BIFR was divested by the mandatory impact of the second proviso sic to section 15, the BIFR could not pass any orders under the SICA notwithstanding the subsequent developments. Orders sought by the petitioner from the BIFR could have been passed either under the SARFAESI Act or by a writ court exercising jurisdiction under article 226 of the Constitution. The phrase “have taken measures” obviously contemplates a measure already adopted and cannot be construed to mean that the jurisdiction of the BIFR would depend upon subsequent alteration in the composition of the consortium of the creditors once such measures are taken. The submission of the petitioner that subsequent events such as the reduction in the percentage of creditors, could enable continuance of the proceedings in the BIER would mean that there would be a constant reshuffling of jurisdictions between the SARFAESI Act and the SICA depending entirely upon the varying percentage of debtors based upon subsequent satisfaction of such debts by the debtor. Such a meaning could never have been intended by the Legislature and the jurisdiction of the BIFR/AAIFR once divested by the operation of the second proviso sic to section 15 could not resuscitate by virtue of subsequent developments. We, therefore, agree with the conclusion of the Bombay High Court 2 Mah. LJ 145), but for the reasons enumerated above. Ms. Maneesha Dhir also pleaded for a harmonious construction so as to harmoniously permit the operation of the two statutes in the present instance the deeming provision to section 15, the second proviso sic was inserted to the SICA itself in 2002 after the SARFAESI Act was enacted. Since the deeming proviso divesting the jurisdiction of the BIFR being incorporated in the SICA itself, the plea of harmonious construction between SICA and SARFAESI Act does not arise.” In this view of the matter, the issue involved in the present writ petition is squarely covered by the judgment of this court in the case of Punjab National Bank and accordingly no further orders are called for in these proceedings. Learned counsel for the petitioner, however, stated that in view of the fact that the property involved is about 55 acres in Manali and is situated in prime location near the Cochin Refineries in Chennai, even the sale of the part of the land would adequately meet the debts of all the creditors. We are of the view that such pleas may be raised by the petitioner before the appropriate forum which has now the jurisdiction in the matter subsequent to the operation of the SARFAESI Act, in view of the effect of the third proviso to section 15 of the SICA which has been construed by us in Punjab National Bank's judgment . Accordingly, in view of the above observations, the writ petition has become infructuous and stands disposed of.