APOLLO FINANCE LIMITED Vs. GSL INDIA LIMITED

JUDGEMENT

(1.) This is an application under Section 442 of the Companies Act, on behalf of defendant no.1 for the stay of the suit on the ground that winding up petition being CP No.79/95 was admitted by the Company Judge of the Gujarat High Court on 15/2/2000 and subsequent thereto BIFR exercising the powers under The Sick Industrial Companies (Special Provisions) Act, 1985 (in short 'SICA') has entertained reference No.254/2000 on 7/8/2000.

(2.) For the stay of the suit proceedings, defendant-has taken refuge under the judgment of the Supreme Court in M/S patheja Bros. Forgings & Stamping and Anr. Vs. I.C.I.C.I Ltd. & Ors. JT 2000 (8) SC 252 wherein question for consideration was whether the proceedings can continue against the guarantor in respect of which a reference has been entertained under SICA.

(3.) The Supreme Count while upsetting the decision of the Division Bench of Bombay High Court in Madalso Inter national Ltd. wherein a view was taken that Section 22 cannot be interpreted to hold that a suit against the guarantor also stands suspended. The Division Bench took the following view "The guarantor could be absolute third parties or directors of an industrial company. However, in both cases it would be the guarantors, whether third parties or directors,who would be affected personally; and we see no reason to interpret the Section in such a manner that apart from the properties of the industrial company, the legislature intended to protect the personal interest of, the guarantors as proceedings against guarantor and/their personal property would not affect the revival of the industrial company in any manner whatsoever. In the circumstances, the words "of an guarantee in respect of any loans, or advance granted to the industrial company" in the context will have to read as the guarantee given by the industrial company itself and none else."