M/S MADRAS PETROCHEM LTD. & ANR versus BIFR& ORS.

Citation: [2016] 11 S.C.R. 419 · Decided: 29-01-2016 · Supreme Court of India · Bench: KURIAN JOSEPH · Disposal: Dismissed

Cited by 8 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

.[2016] 11S.C.R.419 
MIS MADRAS PETROCHEM LTD. & ANR 
v. 
BIFR& ORS. 
(Civil Appeal Nos. 614-615 of2016) 
JANUARY 29, 2016 
(KURIAN JOSEPH AND R.F. NARIMAN, JJ.] 
Securitisation and Reconstruction of Financial Assets and 
Enforcement of Security Interest Act, 2002 (SARFAESI Act) - ss. 13, 
35, 37 and 41 - Sick Industrial Companies (Special Provisions) 
·Act, 1985 (SICA) - ss. 15; 22 and 32 - Whether the SARFAESI Act 
prevails over the SICA Act - Held: SARFAESI Act prevails over the 
SICA to the extent of inconsistency therewith - Where a secured 
creditor of a sick industrial company seeks to recover its. debt in the 
manner provided by s.13 (2) of the SARFAESI Act, such secured 
creditor may realise such secured debt uls. 13(4) of the SARFAESI 
Act, notwithstanding the provisions of s.22 of SICA - In a situation 
where there are more than one secured creditor of a sick industrial 
company or it has been jointly financed by secured creditors, and 
at least 60% of such secured creditors in value of the amount 
outstanding as on a record date do not agree upon exercise of the 
right to realise their secitrity under the SARFAESI Act, s.22 of SICA 
will continue to have fall play -Where, uls.13 (9) of the SARFAESI 
Act, in the case of a sick industrial company having more than one 
secured creditor or being jointly financed by secured creditors 
representing 60%. or more in value of the amount outstanding as on 
a record date wish to exercise their rights to enforce their security 
under the SARFAESI Act, s.22 of SICA, being inconsistent with the 
exercise of such rights, will have no play - Where secured creditors 
representing not less than 75% in value of the amount outstanding 
against financial assistance decide to enforce their security under 
the SARFAESI Act, any reference pending under the SICA cannot 
be further proceeded with and proceedings under the SICA will 
abate - However, s.22 of the SICA will continue to apply in the case 
of unsecured creditors seeking to recover their debts from a sick 
industrial company - This is for the reason that the SICA o;verrides 
the provisions of the DRT Act - Recovery of Debts Due to Banks 
and Financial Institutions Act, 1993 (DRT Act) - ss. 17, 18 and 34. 
' 
419 
A 
• 
B 
c 
D 
E 
F 
G 
H 
420 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
(2016] 11 S.C.R. 
Sick Industrial Compa1111:' (Special .Provisions) Act, 1985 
(SICA) - s.15(1), proviso 3 - Expression "where a reference is 
pending" in s.15 (1) proviso 3 - Interpretation of - Whether the 
said expression would include all proceedings before the BIFR or 
only proceedings at the initial reference stage - Held: s.15(1) proviso 
3 covers all references pending before the BJFR, no matter whether 
such reference is at the inquiry stage, scheme stage, or winding up 
stage. 
Dismissing the appeals, the Court 
HELD: 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 
1.1 The Sick Industrial Companies (Special Provisions) Act, 
1985 prevails in all situations where there are earlier enactments 
with non obstante clauses similar to the Sick Industrial Companies 
(Special Provisions) Act, 1985. Where there are later enactments 
with similar 11011 obstante clauses, the Sick Industrial Companies 
(Special Provisions) Act, 1985 bas been held to prevail only in a 
situation where the reach of the 11011 obstante clause in the later 
Act is limited - such as in the case of the Arbitration and 
Conciliation Act, 1996 - or in the case of the later Act expressly 
yielding to the Sick Industrial. Companies (Special Provisions) 
Act, 1985, as in the case of the Recovery Of Debts Due To Banks 
And Financial Institutions Act, 1993. [Para 33) [462-A-C) 
l.2 Section 37 of the Securitisation and Reconstruction of 
Firiancia.l Assets and Enforcement of Security Interest Act, 2002 
does not include the Sick Industrial Companies (Special 
Provisions) Act, 1985 unlike Section 34(2) of the Recovery of 
Debts Due To Banks and Financial Institutions Act, 1993. Section 
37 of the Securities and Reconstruction of Financial Assets and 
Enforcement of Security Interest Act, 2002 states that the said 
Act shall be in addition to and not in derogation of four Acts, 
namelyt the Companies Act, the Securities Contracts (Regulation) 
Act, 1956, the Securities and Exchange Board of India Act, 1992 
and the Recovery Of D

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