VIJAY SINGH PADODE Vs. SICOM LIMITED

JUDGEMENT

(1.) ADMIT. Respondents waive service. By consent, appeal is taken up for final hearing. The two questions fall for our determination in this appeal from the order dated 6th April 2000 passed by the learned Single Judge of this Court in Summons for Judgment No. 1012 of 1998, in Summary Suit No. 2361 of 1998. Firstly, whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, ("the said S. I. C. A. Act") is applicable to the suit against the guarantor of a loan or advance that has been granted to the concerned industrial company. Secondly, whether the permission granted under section 22 of the said S. I. C. A. Act by the Board of Industrial and Financial Reconstruction ("b. I. F. R. ") by an order dated 29-3-2000 to proceed with the recovery suits filed against the company can be made use by the creditor to proceed with the recovery suit filed against the guarantors of the company. The sequence of events leading to the institutions of the suit, by the respondents S. I. C. O. M. giving rise to this appeal may shortly be stated as follows:

(2.) AT the request of one D. S. J. Communication Ltd. ("the company") the respondents (S. I. C. O. M.) vide its letter dated 21st December, 1995 sanctioned a short term loan of Rs. 100. 00 lacs to the company. The company on 27-12-1995, executed in favour of the respondents a loan Agreement and a Demand Promissory Note to secure said sum of Rs. 100. 00 lacs with interest thereon. The appellants executed guarantee agreement in favour of respondents guaranteeing repayment of the said sum of Rs. 100. 00 lacs together with interest, costs, charges, expenses etc.

(3.) THE company failed to pay respondents dues. The respondents, therefore, by their demand notice dated 9th September, 1997 and thereafter by their Advocates notice dated 21st October, 1997 called upon the company and the guarantors i. e. appellants to pay the respondents dues towards the aforesaid loan. The company vide its letter dated 5th November, 1997 addressed to the respondents advocate informed that the company had voluntarily offered a property worth an equivalent amount of the respondents dues to set off the above loan and that the company would seek further necessary advice of the respondents Managing Director in the matter with the result no action for recovery was initiated against the principal borrower company.