Action under sarfaesi act even after giving consent for bifr

The provisions of section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 has been amended by section 41 of the SARFAESI Act, 2002 wherein a schedule to the Act is provided containing the amended provisions, the relevant portion of which reads as follows

“Provided also that on or after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where a reference is pending before the Board for Industrial and Financial Reconstruction, such reference shall abate if the secured creditors, representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors, have taken any measures to recover their secured debt under subsection (4) of section 13 of that Act”.

Dear Mr.Narendra ,

My question is - can a financial institution turn away from the consent given to the high court ?  Wouldn't it be waiver by way of acquiescence.

Dear Experts, Pls give your valuable opinions.

Originally posted by : Jitesh
	Dear Experts, Pls give your valuable opinions.

Dear Sir,

It has been held in certain cases that even where provision is mandatory, a person in whose favour it operates, can waive the benefits of the provision. However lot will depend on what exact is the provision, what sort of consent given, period elapsed after giving the so called consent,  argument advanced etc. and it is difficult to give "yes / no" answer in such a situation.

A reference made to BIFR does not loose its status as "reference" within the meaning of "reference" in the 2nd proviso to Sec.15(1) Sick Industrial Companies (Special Provisions) Act. When the package is under consideration before BIFR, the proceedings do not abate (Noble Aqua Pvt. Ltd. & Ors. Vs. State Bank Of India & Ors. : 2008(2) D.R.T.C.341 (Orissa). This view of Orissa High Court is distinguished by Madras High Court  in Salem Textiles Vs. Indian Bank distinguished  with the judgment of  Orissa High Court  judgment holding cited supra. A “reference” at any stage can be abated if secured creditors with 60% strength of advance disbursed  take possession under Sec.13(4) irrespective of the fact that, after making reference to BIFR u/s.15 (blossoming stage), an inquiry will commence u/s 16 and an order will be passed by BIFR u/s.17  after completion of enquiry and thereafter  schemes will be prepared as per sanctions from BIFR u/s.19 (fruition stage) for rehabilitation of the sick unit giving financial assistance  or  may order for winding up of sick industrial company(rotting stage). The second proviso to Se.15(1) wich is reproduced hereunder:

In section 15 in sub-section (1) after the proviso insert the following:--

"PROVIDED FURTHER that no reference shall be made to the Board for Industrial and Financial Reconstruction after thecommencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 where financial assets have been acquired by any securitisation company or reconstruction company under sub-section (1) of section 5 of that Act: PROVI DED ALSO that on or after the commence ment of the Securitisation and Reconstructionof Financial Assets and Enforcement of Security Interest Act 2002 where a reference is pending before the Board for Industrial and Financial Reconstruction such reference shall abate if the secured creditors representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors have taken any measures to recover their secured debt under sub-section (4) of section 13 of that Act.

Giving consent in High Court proceedings for remanding reference back to BIFR, does not deprive the lender's right to invoke the second proviso to Sec.15(1) of SIC (SP) Act  for abatement of the reference by taking possession.