Original Application No. 1249 of 2000. Case: Viral Filaments Ltd. and Ors. Vs Indusind Bank Ltd.. Mumbai Debt Recovery Tribunals

Case NumberOriginal Application No. 1249 of 2000
CounselFor Appellant: P. Kumar and Co. and For Respondents: Vishal, Adv., i/b., K. Ashar and Co.
JudgesH.T. Sampat, Presiding Officer
IssueSick Industrial Companies (Special Provisions) Act, 1985 - Sections 22, 22(1) and 25
CitationII (2006) BC 248
Judgement DateFebruary 09, 2005
CourtMumbai Debt Recovery Tribunals


H.T. Sampat, Presiding Officer

  1. This appeal is filed against the order passed by the learned Recovery Officer under which he directed to take formal possession of three properties described at Item Nos. 4, 5 and 6 in the warrant of attachment.

  2. The properties belong to the guarantors. The principal borrower company is before the Board of Industrial Finance & Reconstructions (BIFR). These properties were admittedly not mortgaged with the respondent Bank.

  3. In the light of these facts it is contended by the appellants that since the principal borrower was before BIFR, the bar under Section 22(1) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) would be applicable and no action for recovery of the outstanding amount can be taken over against the guarantors in view of the judgment of the Hon'ble Supreme Court in Patheja Brothers Forgings and Stampings v. I.C.I.C.I. AIR 2000 SC 2553 much less against the property which was not mortgaged with the Bank.

  4. I have heard the learned Counsel for of both the parties. In view of the judgment of Hon'ble Bombay High Court in Madalsa International Ltd. v. Central Bank of India I (1999) BC 333 (DB): AIR 1998 Mum. 247, such protection would not be available to the guarantors in the recovery proceedings.

  5. On behalf of the appellant it was argued that the judgment of Bombay High Court in Madalsa case was reversed by the Hon'ble Supreme Court in Patheja's case and the law laid down in Madalsa's case, was no longer a good law.

  6. With due respect to the learned Counsel of the appellant, this submission is not quite correct. In Madalsa's case, the Hon'ble Bombay High Court has laid down two propositions. Firstly, that under Sections 22 and 25 of SICA word "suit" was used. The recovery proceedings would not come in the ambit of the "suit" and hence the guarantor would not get any protection of Section 22 in the recovery proceedings, and secondly, that the protection of Section 22 was not available to the guarantor at all. Only the second proposition was reversed by the Hon'ble Supreme Court in Patheja's case. However the first proposition, that the recovery proceedings did not fall within the ambit of the word "suit" and therefore the protection under Section 22 of SICA was not...

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