9911796707
TMI Blog2000 (2) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rs. 25,000 directing thereby the defendant No. 2 to pay to the plaintiff or order at Mumbai an aggregate amount of Rs. 1,20,000 on demand. The said bills of exchange were accepted by the defendant No. 2 and delivered to the plaintiff on the same day, i.e., on 18-8-1997. On 18-9-1997 the plaintiff presented the said bills of exchange to the defendant No. 2 and demanded the amount due thereunder aggregating to Rs. 1,20,000. The defendant No. 2 dishonoured the same by non-payment. The plaintiff brought this fact immediately to the notice of the defendant No. 1 and demanded the said sum of Rs. 1,20,000. The defendant No. 1 also failed and neglected to pay due amount or any part thereof despite various demands, though it was assured that the entire amount due along with accrued interest shall be paid to the plaintiff. It is the case of the plaintiff that ultimately the defendant No. 1 issued three cheques of the aggregate value of Rs. 1,20,000; one cheque of the amount of Rs. 50,000 was drawn on Bank of Baroda, Mangaldas Market, Mumbai, and two cheques of the amounts of Rs. 45,000 and Rs. 25,000, respectively, were drawn on Bank of Baroda, Vashi, New Bombay. These cheques were disho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking under the SICA, the summons for judgment deserves to be dismissed against all the defendants or adjourned sine die so long as the 1st defendant remains a sick company or sick industrial undertaking. According to the learned counsel for the defendants, the defendant Nos. 2 to 5 are being sued as guarantors and once the borrower or the principal debtor is a sick industrial undertaking or a sick company, section 22 is attracted and proceedings cannot continue against the guarantors. In this connection, the learned counsel for the defendants heavily relied upon the judgment of this Court in Industrial Credit Investment Corpn. of India Ltd. v. Dhanesh D. Ruparelia [2000] 99 Comp. Cas. 181 . The relevant portion of the judgment in Industrial Credit Investment Corpn. of India Ltd. s case ( supra ) relied upon by the learned counsel for the defendants reads thus : "We may therefore have a look at the various situations which have been provided for under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. The section before its amendment provided that no proceedings for winding up of the company or for execution, distress or the like against any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Section 127 reads as under :- Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee. It is thus clear that the principal debtor and guarantors have to be distinct persons. A company, therefore, considering sections 126 and 127, cannot be a guarantor for itself as in that event there would be no principal debtor. Also the language of the section would be rendered, otiose if the meaning assigned by the Division Bench is accepted. Suits for recovery of money against the company would also include suits in respect of guarantee given by it. The object of the legislation has also to be borne in mind. Section 128 makes the liability of the surety co-extensive with that of the principal debtor, unless it is otherwise provided by a contract. Some other relevant sections are section 140 and section 141. Section 140 of the Indian Contract Act provides that where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, must mean guarantee given to the industrial company. Therefore, suits in respect of such guarantees for loans or advances cannot lie or be proceeded with. Normally, in the event a Single Judge comes to the conclusion that the law as interpreted by a Division Bench requires to be reconsidered the matter has to be referred. However, as pointed out what is to be considered is what is the ratio decidendi of the judgment. In the instant case, I have pointed out what was directly in issue was whether the expression suit would include execution proceedings. Considering the ratio decendi of the judgment, I am of the opinion that there is no need for referring the matter as the issue was not directly in issue. It may also be noted that the law as interpreted by the Division Bench was before the judgment of the Apex Court in the case of Real Value Appliances Ltd. v. Canara Bank AIR 1998 SC 2064. By that judgment, the Apex Court reversed the decision of this Court which was relied on by the Division Bench. The Apex Court has now held that once proceedings are registered all further proceedings in the suit must be stayed. Considering the above, I am clearly of the opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the surety ; the person in respect of whose default the guarantee is given is called the principal debtor , and the person to whom the guarantee is given is called the creditor . A guarantee may be either oral or written." A careful reading of section 37 of the Negotiable Instruments Act and section 126 of the Indian Contract Act and a minute comparison thereof leaves no manner of doubt that an acceptor of a bill of exchange cannot be considered to be guarantor since he is the principal debtor himself. The liability of acceptor is independent since by operation of law, an acceptor of bill of exchange is also a debtor. It is not even necessary under law for the creditor to file a suit against the drawer of a bill of exchange since it is open to such creditor to file a suit for recovery of an amount of bill of exchange against the acceptor of a bill of exchange alone because acceptor of a bill of exchange is the principal debtor himself. 8. Section 22 of the SICA, which has been pressed in service by the learned counsel for the defendants reads thus : "Suspension of legal proceedings, contracts, etc. (1) Where in respect of an industrial company, an enquiry under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bilities accruing or arising there-under before the said date, shall remain suspended or shall be enforceable with such adaptations and in such manner as may be specified by the Board: Provided that such declaration shall not be made for a period exceeding two years which may be extended by one year at a time so, however, that the total period shall not exceed seven years in the aggregate. (4) Any declaration made under sub-section (3) with respect to a sick industrial company shall have effect notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other law, the memorandum and articles of association of the company or any instrument having effect under the said Act or other law or any agreement or any decree or order of a court, Tribunal, officer of other authority or of any submission, settlement or standing order and accordingly ( a )any remedy for the enforcement of any right, privilege, obligation and liability suspended or modified by such declaration, and all proceedings relating thereto pending before any court, Tribunal, officer or other authority shall remain stayed or be continued subject to such declaration; and ( b )on the declarat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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