2003 (10) TMI 389 - HC - Companies Law

Summary

Issues:
1. Impugning recovery certificate by the guarantor.
2. Inter-mixing of personal and company status in the petition.
3. Competency of respondents to realize loan dues.
4. Recovery against guarantor under SICA.
5. Issuance of recovery certificate based on liabilities superseding previous agreements.

Analysis:

1. The petitioner, a guarantor seeking to challenge a recovery certificate, was associated with a company that defaulted on loans. The recovery certificate was issued against the guarantor personally, separate from the company's liabilities. The court noted the inter-mixing of personal and company status in the petition, emphasizing the distinct legal positions.

2. The court examined the competency of respondents to realize loan dues, considering the legal framework under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The petitioner's argument regarding the non-inclusion of PICUP as a financial institution under relevant laws was refuted, leading to the failure of this argument.

3. Regarding recovery against the guarantor under the Sick Industrial Companies (Special Provisions) Act, the court referred to a Supreme Court judgment that highlighted the lack of protection for guarantors against recovery proceedings. The court dismissed the petitioner's contention based on this legal interpretation.

4. The petitioner argued that the recovery certificate could not be issued based on liabilities superseding previous agreements due to a scheme proposed by BIFR. The court analyzed the legal aspects of novation and alteration of contracts under the Indian Contract Act, finding no merit in the petitioner's argument. The court emphasized the petitioner's failure to accept the scheme proposed by BIFR, leading to the dismissal of this argument.

5. Ultimately, the court concluded that the petitioner, as the Managing Director and guarantor, failed to fulfill liabilities despite opportunities for revival provided by BIFR. The court found no equity in favor of the petitioner and dismissed the writ petition, stating that the petitioner had no prima facie case. The judgment was delivered without any order as to costs.

This comprehensive analysis covers the legal issues involved in the judgment, highlighting the key arguments made by the parties and the court's reasoning in arriving at the decision.