Dismissing an appeal in Madras Petrochem Ltd and Ors v BIFR and Ors, the Supreme Court held that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), prevails over the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), in the case of a secured creditor.
However, section 22 of SICA will continue to apply in a case where unsecured creditors seek to recover their debts from a sick industrial company, as SICA overrides the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Section 22 provides for suspension of legal proceedings, contracts, etc.
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