VIKRAM SABOO AND ORS. Vs. SICOM LTD.

JUDGEMENT

(1.) THESE Notices of Motion are taken out by two judgment debtors, against whom an insolvency notice has been issued, for setting aside the notice. The motions involve common questions of law and are heard together and disposed of by this common order.

(2.) THE insolvency notice is based on an order dated 1 July 2008 passed on the Judgment Creditor's (SICOM's) application under Section 31 of the State Financial Corporations Act ("SFC Act"), being Misc. Petition No. 2 of 2007. The application prayed for an order for payment of money against the Judgment Debtors, who are directors of Marvel Industries Ltd. ("the Industrial Company"), and guarantors of the latter. SICOM is a State Financial Corporation for certain purposes under the SFC Act and can apply inter alia under Section 31 of the SFC Act for recovery of its dues from guarantors of loans granted by it to industrial concerns. SICOM had admittedly granted a loan to the Industrial Company and the Judgment Debtors were guarantors for this loan. It is also not in dispute that the Industrial Company defaulted in repayment of the loan and SICOM invoked the guarantees given by the Judgment Debtors. The debt not having been discharged despite such invocation, SICOM filed an application under Section 31(1)(aa) of the SFC Act before this Court. A learned Single Judge of this Court allowed that application and passed an order directing the Judgment Debtors to pay Rs. 18.52 crores with interest to SICOM. The Judgment Debtors challenged this order in an appeal, which was dismissed by a Division Bench of this Court. There has been no further challenge to the order and it has become final. Based on this order, the execution whereof has not been stayed, SICOM has taken out the present insolvency notice under Section 9(2) of the Presidency -Towns Insolvency Act, 1909 ("Insolvency Act") against the Judgment Debtors. The Debtors have taken out these two Motions by way of applications under Sub -section (5) of Section 9 of the Insolvency Act for discharge of the insolvency notice on the ground that the order of this Court under Section 31(1) AA of the SFC Act does not amount to a decree or order within the meaning of Section 9(2) of the Insolvency Act and at any rate, is a nullity and not executable against the Judgment Debtors, and no insolvency notice can be based thereon.

(3.) MR . Setalwad, learned Senior Counsel for the Judgment Creditor - SICOM, counters these submissions. He submits that the order of 1 July 2008 is very much an order of a court, even a civil court for that matter, on which an insolvency notice can be founded. He submits that the provisions of the RDDB Act are in addition to, and not in derogation of, the SFC Act as provided in Section 34(2) of the RDDB Act and the order of 1 July 2008 is neither without jurisdiction nor unexecutable.