RAJESH SETH @ SHETH Vs. VIDEOCON INDUSTRIES LTD

JUDGEMENT

(1.) This common order will dispose of both the Notice of Motions.

(2.) The facts relevant for answering the issues raised in the present Motions which are not in dispute are as follows:

(3.) The principal stand of the Judgment Debtors is that the debt qua Judgment Debtors is not a good debt. This plea is taken in the background that the Judgment Debtors were only guarantors for the loan taken by the Company of which the Judgment Debtors were incidently directors. Besides, the decree passed against the Company as well as the Judgment debtors was subject matter of the scheme propounded by the company under section 391 and 392 of the Companies Act, 1956, which has been duly approved by the Company Judge. On account of the said scheme, the Petitioning creditors are entitled to recover amount referred to in the decree in accord with the provision made in the scheme in relation to the suit claim. For that reason, the Petitioning Creditors cannot proceed in relation to the said consent Decree either against the company or for that matter, Judgment Debtors who were only guarantors. In any case, the Petitioning Creditors having altered the obligation of the company, who was the principal debtor, which act was done without notice and consent of the guarantors(Judgment debtors), the liability of the Judgment debtors arising out of the said consent decree would cease to operate. To buttress this submission, reliance is placed on Section 139 of the Indian Contract Act, 1872 which stipulates that surety stands discharged due to the act of commission or omission of the creditor which is inconsistent with the rights of the surety. It is the case of the Judgement Debtors that in view of the arrangement provided in the scheme propounded by the Company; and which scheme is binding on the the principal debtor(the Company) as well as the Petitioning Creditors, the same is detrimental to the interest of the Judgment debtors.