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2016 (3) TMI 1476 - DELHI HIGH COURTSuit for recovery of money - recovery proceedings under Recovery of Debts Due to Banks and Financial Institutions Act, 1993 are to be treated as a suit or not - if the principal borrower is declared as a sick industrial company, proceedings under Recovery of Debts due to Banks and Financial Institutions Act, 1993 cannot lie or be continued against the guarantors? HELD THAT:- As held in the decision BHAVNAGAR UNIVERSITY VERSUS PALITANA SUGAR MILL PVT. LTD. & ORS. [2002 (12) TMI 563 - SUPREME COURT], a judgment is a precedent for what is decided and not what logically follows from it, therefore a Division Bench of this Court in Inderjeet Arya & Anr. Vs. ICICI Bank Ltd. [2012 (11) TMI 779 - DELHI HIGH COURT] held that the judgment of the Supreme Court in Paramjit Singh Patheja's case [2006 (10) TMI 419 - SUPREME COURT] cannot be interpreted to conclude that each and every kind of action is contemplated to be included in the term 'suit' because the Supreme Court was dealing with a specific issue i.e. whether an award was a decree or an order within the meaning of Section 9(2) of the Insolvency Act. In Inderjeet Arya's case, the Division Bench of this Court also considered the decision of the Supreme Court in Kailash Nath Agarwal & Ors. Vs. Pradeshiya Industrial & Investment Corporation of UP Ltd. & Anr. [2003 (2) TMI 338 - SUPREME COURT] wherein the enforcement of debt against the guarantors was initiated by Pradeshiya Industrial Investment Corporation of UP Limited (in short, PICUP) for loans granted to the principal debtor, one, Shaifali Papers Limited, by triggering the provisions of the UPPM Act. The Division Bench highlighted that the Supreme Court noted two significant aspects pertaining to SICA, 1985. The first being : the interpretation accorded by the Supreme Court to the expression 'proceedings' in the first part of Section 22(1) of SICA. The Division Bench highlighted that it was noticeable that the Supreme Court categorically observed that the observations in Patheja Brothers and Forging and Stamping's case do not suggest that the protection to guarantors of loan taken by a company which later on becomes a sick industrial company is the object of the amendment brought about in sub-Section (1) of Section 22 when the amendment was made in the year 1994. Thus, it was held that having regard to the law laid down in the various judgments, the word 'suit' cannot be understood in its broad and generic sense to include any action before a legal forum involving an adjudicatory process. If that were so, the legislature which is deemed to have knowledge of existing statute would have made the necessary provision, like it did, in inserting in the first limb of Section 22 of SICA, where the expression proceedings for winding up of an industrial company or execution, distress, etc. is followed by the expression or 'the like' against the properties of the industrial company. There is no such broad suffix placed alongside the term 'suit'. The two appellants are guarantors and notwithstanding the principal borrower company being a sick industrial company, the Debts Recovery Tribunal as also the Debts Recovery Appellate Tribunal have rightly opined that proceedings under Recovery of Debts due to Banks and Financial Institutions Act, 1993 can continue against the two. The writ petitions are dismissed.
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