2001 (2) TMI 919 - HC - Companies Law

Summary

Issues Involved:
Claim for interest, Liability of drawer of Bills of Exchange, Application of section 22 of Sick Industrial Companies (Special Provisions) Act.

Analysis:

1. Claim for Interest:
The plaintiff sought payment of Rs. 1,39,69,099, including the principal amount and interest at 18% per annum. The claim was based on the Negotiable Instruments Act, 1881, specifically section 80, which allows for interest on dishonored bills.

2. Liability of Drawer of Bills of Exchange:
The first defendant, as the drawer of the Bills of Exchange, was held liable under section 30 of the Negotiable Instruments Act. The court emphasized that the drawer is bound to compensate the holder in case of dishonor, and notice of dishonor had been duly given to the first defendant.

3. Application of Section 22 of Sick Industrial Companies Act:
The first defendant argued that, as a surety after acceptance of the bill, they were entitled to protection under section 22 of the Sick Industrial Companies Act. However, the court rejected this argument, stating that section 22 applies only to suits for the enforcement of guarantees in respect of loans granted to a sick industrial company. Since the bills were discounted and the amounts paid to the drawer, not the industrial company, section 22 did not apply.

4. Judgment:
The court found no merit in the first defendant's defense and made the summons for judgment absolute. The plaintiff was granted a decree against the first defendant for the principal amount with interest at 18% per annum from the date of the suit until payment or realization, along with costs.

5. Conclusion:
The judgment clarified the liability of the drawer of Bills of Exchange, the application of relevant legal provisions, and emphasized the specific requirements for the application of section 22 of the Sick Industrial Companies Act. The court's decision upheld the plaintiff's claim and provided a comprehensive analysis of the legal principles involved in the case.