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Issues involved:
The issues involved in the judgment are the jurisdiction of recovery proceedings u/s Uttar Pradesh Public Money's Recovery of Dues Act, 1972, the applicability of previous court decisions, the legality of recovery citation, the status of the principal debtor company being wound up, the role of the official liquidator, the right of State Financial Corporation (SFC) u/s SFC Act, 1951, and the actions permissible in case of a company under liquidation. Jurisdiction of Recovery Proceedings: The appellant challenged the recovery proceedings initiated against him u/s Uttar Pradesh Public Money's Recovery of Dues Act, 1972, on the ground that the respondent cannot proceed against him as a guarantor unless the property of the principal debtor is sold. The High Court dismissed the writ petition, upholding the proceedings against the guarantor since the company had been wound up, and the official liquidator was appointed. The Court found the recovery proceedings to be in order due to the company's winding up status. Applicability of Previous Court Decisions: The appellant relied on a previous court decision in Pawan Kumar Jain v. Pradeshiya Industrial and Investment Corporation of U.P. to support his claim that the recovery proceedings were illegal. However, the High Court distinguished this case as the principal debtor company in the present case had already been wound up, leading to a different legal scenario. The Court also referred to the decision in Kailash Nath Agrawal v. Pradeshiya Industrial and Investment Corporation of U.P. to support the action taken by the respondents. Role of Official Liquidator: The Court highlighted the role of the official liquidator in cases where the principal debtor company has been wound up. It emphasized that the official liquidator's consent is essential for actions related to realizing mortgaged properties. State Financial Corporations (SFCs) are required to seek appropriate directions from the Company Court if the official liquidator does not consent, and all actions must be taken under the supervision of the Company Court. Right of State Financial Corporation (SFC) u/s SFC Act, 1951: The judgment reiterated that the right of State Financial Corporation (SFC) to act unilaterally under Section 29 of the State Financial Corporation Act, 1951, is applicable only until there is no order of winding up against the debtor company. SFCs cannot realize mortgaged properties without the consent of the official liquidator and must seek directions from the Company Court for any actions in such cases. Conclusion: The Court found that the recovery efforts had been hindered, and the appellant had not taken concrete steps towards a settlement. Citing previous cases, the judgment emphasized the need to address defaulters sternly. Ultimately, the appeal was deemed without merit and dismissed, with costs imposed on the appellant.
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