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Issues:
Challenge against recovery certificate under Sick Industrial Companies Act, applicability of section 22, distinction from Supreme Court decision, impact on rehabilitation, constitutional validity of the Act. Analysis: The petition challenged a recovery certificate under the Sick Industrial Companies Act, focusing on section 22's bar on recovery against guarantors. The petitioners, as Directors and Guarantors of a limited liability company, relied on the Act's provisions. However, the Court distinguished a Supreme Court decision cited by the petitioners, emphasizing that section 22 only bars suits for recovery against guarantors. As no suit was filed against the petitioners, the Court found no benefit applicable. Additionally, the Court highlighted the Act's objective of industry rehabilitation, stating that staying recovery against guarantors does not aid in this goal. The respondent presented a counter-affidavit detailing the financial institution's challenges in recovering dues due to cases pending before the relevant authorities for over 15 years. The counter-affidavit emphasized the adverse impact of blocked dues on industrial growth and prosperity. It also highlighted the failure of the Sick Industrial Companies Act to achieve its intended purpose. The respondent's affidavit included instances of loan sanction, non-repayment, and lack of efforts towards rehabilitation, supporting the argument against granting relief under section 22 to guarantors. In a notable observation, the Court expressed concerns about the Act's constitutionality, citing potential discrimination in favor of rich businessmen. The Court criticized the Act for protecting wealthy individuals while neglecting similar safeguards for the poor. The Court recommended the Central Government to consider repealing the Act due to its perceived failure in serving its intended purpose and enabling unscrupulous practices detrimental to workers, the government, and financial institutions. The Court emphasized the need for laws benefiting weaker sections of society and highlighted the Act's adverse effects on financial institutions and banks due to blocked dues under section 22. In conclusion, the Court dismissed the petition challenging the recovery certificate, emphasizing that section 22 does not stay recovery against guarantors unless through a suit. While not deciding on the Act's constitutional validity in this case, the Court recommended its repeal based on its observed negative impact and failure to achieve its objectives. The Court's detailed analysis highlighted concerns regarding discrimination, adverse effects on financial institutions, and the Act's failure to aid industry rehabilitation.
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