PUNJAB NATIONAL BANK Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) The appellant had, after Respondent 4's management was taken over by U. P. State Textile Corporation Limited (Respondent 3) under the industries (Development and Regulation) Act, advanced some money to the said Respondent 4. In respect of the advance so made. Respondents 1, 2 and 3 executed deeds of guarantee undertaking to pay the amount due to the Bank as guarantors in the event of the principal borrower being unable to pay the same.

(2.) Subsequently, Respondent 3 which had taken over the management of respondent 4 became sick and proceedings were initiated under the Sick textile Undertakings (Nationalisation) Act, 1974 (for short "the Act"). The appellant filed suit for recovery against the guarantors and the principal debtor of the amount claimed by it.

(3.) The following preliminary issue was, on the pleadings of the parties, framed: