Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short “the SICA). - Application for protection of sec.22 (1) of SICA by Guarantors - whether maintainable - Settled law - if the action filed by the Bank comes with in the ambit of term suit, he can obtain protection - if the action of Bank is in the nature of proceedings , he can not avail the protection - in this case , he filed application in proceedings , High court rightly dismissed the application =2015 S.C.(2013) MSKLAWREPORTS


 whether  the
appellants who are Directors and  Guarantors  of  a  sick  company  and  are
entitled to get the protection of  Section  22(1)  of  the  Sick  Industrial
Companies (Special Provisions) Act, 1985 (for short “the SICA). =

Appellants, who are the guarantors, can obtain  the  protection  of  Section 22(1) of SICA only if the action filed by the bank comes  within  the  ambit of the term ‘suit’.  If the action filed  by  the  respondent  bank  in  the nature of ‘proceedings’ and not a ‘suit’,  protection  under  Section  22(1) would not be available, especially, when the appellants are guarantors. =

  This Court, in KSL and Industries Limited (supra) took the  view  that
even though both the conflicting statutes SICA and Recovery of Debts Due  to
Banks and Financial Institutions Act, 1993 (for short the “RDDB”) contain  a
non-obstante clause, in case of conflict the RDDB  Act,  1993  will  prevail
over SICA, so far as public revenue recoveries are  concerned.  
 This  Court
also emphasized that the liability of surety or  guarantor  is  co-extensive
with that of the  principal  debtor  in  Kailash  Nath  Agarwal  and  others
(supra).   
In  Nahar  Industrial  Enterprises  Limited  (supra)  this  Court
reiterated the term ‘suit’ have to  be  confined  in  the  context  of  sub-
section (1) of Section 22 of SICA to those  actions  which  are  dealt  with
under the Code and not in the comprehensive over-arching proceedings  so  as
to apply to any original proceedings before  any  legal  forum.    The  term
‘suit’ would apply only to proceedings in civil court  and  not  actions  or
recovery proceedings filed by banks  and  financial  institutions  before  a
tribunal such as DRT.

 In our view, all the legal  points  raised  by  the  appellants  stand
covered by the Judgments  referred  to  hereinbefore  and  hence  a  further
examination of the same  is  unnecessary.    The  appeal,  therefore,  lacks
merits and the same is dismissed, however, there will  be  no  order  as  to
costs.

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