1 First and foremost & Anr. v. BIFR provision & Ors.

2.1 First and foremost, it is important to note that the third proviso to Section 15(1) uses the words "is pending". A reference has been held to be pending the moment it is received by the G Board. If a literal meaning were to be applied to the expression "where a reference is pending", the third proviso to Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 would be rendered otiose and the purpose for which it was inserted would completely fail. On a liternl 1·cading of the H M/S MADRAS PETROCHEM LTD.& ANR. v. BIFR & ORS. 425 provision, such reference shall abate on steps being taken by the secured creditors to recover their secured debts under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the moment a reference is registered. And the moment the reference is registered, an inquiry as contemplated by Section 16 shall be deemed to commence. If that is so, then a reference can never be said to be pending after an inquiry commences. This can never be the case. It is clear, therefore, that the expression "where a reference is pending" would necessarily include the inquiry stage before the Board under Section 16 of the Act. If this be the case, · then the reference can be said to be pending not only when an inquiry is instituted, but also after preparation and sanction of a scheme right till the stage the scheme has worked out successfully or till the BIFR gives its opinion to. wind up the company. [Para 48] [470-E-F; 471-B-F] ·

2.2 The expression "reference" used in Section 15(1) proviso 3 is used in contra distinction to the expression "proceedings" in Section 22. "Proceedings" under Section 22 are actions taken against the sick company, whereas "references" are actions initiated by a sick company - it is perhaps for this reason that the third proviso to Section 15(1) uses the expression "reference" instead of the expression "proceedings". [Para 49] [471-F-G]

2.3 Another important aspect as to the construction of the third proviso to Section 15(1) is· the meaning of the ~expression "such reference shall abate". One of the meanings of the expression "abate" is "to put an end to; to curtail; to ,come to naught". A reference can be said to abate in one or several ways. One obvious way that a reference abates is where the Board, after inquiry, rejects the reference for the reason that the Board is satisfied that the Company is not a sick industrial company as defined under the Act. Another way in which a reference can abate is where a scheme is implemented successfully, and the sick industrial company is taken out of the woods successfully. A third manner in which a reference can abate is when a scheme or scnemes haye failed in respect of the sick industrial company, and in the opinion of the BIFR, the said Company ought. to be · l A B c D E F G H 426 SUPREME COURT REPORTS [2016] l l S.C.R. B A wound up. A fourth instance of abatement is provided by the third proviso to Section 15(1)-0fthe Sick Industrial Companies (Special Provisions) Act, 1985. And that is that a reference which is pending in the sense understood hereinabove shall abate if the secured creditors of not less than 3/4•h in value of the amount outstanding against the financial assistance disbursed to the borrower, have taken measures to recover secured debts under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2fl02. It is clear that the third proviso to Section 15(1) seeks to strike a balance between getting a sick industrial company out of the C woods and secured creditors being able to recover the debt owed to them by such company. The legislature has thought it fit to annul all proceedings before the BIFR only when at least 3/41h of the amount_ outstanding against financial assistance disbursed to the borrower of such secured creditors have taken the measures listed in Section 13(4) of the Securitisation and Reconstruction of Fio, ancial Assets and Enforcement of Security Interest Act, 2002. The balance is therefore struck by the figure of "not less than 3/4th". The legislature llas inserted this provision so that, if 3/4•h or more of the secured creditors get together to take measures under Section 13( 4) of the Securitisation and E Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, they will not be thwarted by the provisions of Section 22 of Sick Industrial Companies (Special Provisions) Act, 1985, and it will not be necessary for them to obtain BIFR permission before taking any such measures. This construction of the third proviso to Section 15(1) is in keeping with the march of events post 2002, when the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 came to be enacted. [Para 50) [471-G-H; 472-A-H] D F Noble Aqua Pvt. Ltd. v. State Bank of India AIR 2008 Orissa 103 - overruled. Mis. Salem Textiles Limited v. The Authorised Officer and Ors. AIR (2013) Madras 229 - approved. Real Value Appliances Ltd. v. Canara Bank & Ors. _(1998) 5 SCC 554: 1998 (3) SCR 170; Pegasus Assets ' G H MIS MADRAS PETROCHEM LTD.& ANR. v. BIFR & ORS. 427