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2011 (12) TMI 421 - HC - Companies LawWrit petition - company invoked the provisions of the Sick Industrial Companies – court passed an order of winding up - Scheme was approved by Court and debts of creditors including that of corporation were settled - corporation also invoked guarantee given by managing director asking for payment of rest of amount Whether the revival scheme submitted by the petitioner under sections 391 and 394 of the Companies Act, 1956 and accepted by court amounts to compounding with the principal debtor leading to the discharge of the surety within the meaning of sections 134 and 135 of the Indian Contract Act, 1872 – Held that:- Once the principal debtor has settled its loan account with the Corporation, the petitioner, who is a guarantor, cannot be made liable to pay any amount over and above the amount paid by the principal debtor - liability of the guarantor is co-extensive with that of the principal debtor and not exceeding the liability of the principal debtor. Once the Corporation has settled its loan account with the principal debtor, the guarantor cannot be saddled with any additional liability – In favor of petitioner
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