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TMI Blog2002 (8) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... Guarantors of the loan. The Company has approached the Board of Industrial and Finance Recons- truction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985. 4. In paragraph 7 of the petition it is stated that the Board of Industrial and Finance Reconstruction had registered the reference of the petitioner, but rejected the reference vide order dated 3-9-2000 on the ground that the petitioner is a small scale industrial undertaking vide Annexure 2 to the petition. 5. Aggrieved, the petitioner filed an appeal before the Appellate Authority for Industrial and Finance Reconstruction, and the appellate authority allowed the appeal and set aside the order dated 3-9-2000 passed by the Board of Industrial and Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or as the case may be, the appellate authority." 7. Learned counsel for the petitioner has relied on the Supreme Court decision in Patheja Bros. Forgings and Stamping v. ICICI Ltd. [2000] 26 SCL 404 and has contended that no recovery can be issued to a guarantor in view of the bar of section 22. 8. In our opinion the aforesaid decision of the Supreme Court is distinguishable, and hence we cannot agree with the submission of the learned counsel for the petitioner. 9. It may be noted that section 22 of the Act only bars a suit for recovery against a guarantor, and the aforesaid decision of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the counter-affidavit it has been stated that hundreds of cases of PICUP have gone to BIFR and AAIFR but none of the units could be revived by the Board. The bitter experience of PICUP in these cases has been that Industrial concerns and their guarantors used these proceedings as an umbrella against the lawful recovery measures of financial institutions, due to which huge public dues get blocked for decades. This has resulted in a situation where the financial institutions have themselves come to the verge of getting bankrupt . In view of the blockage of these huge amounts of money running into hundreds or thousands of crores of rupees the growth of industries in our economy has been adversely affected. If these amounts had been recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of guarantee is annexed as Annexure CA-4 to the counter-affidavit. 18. Since section 22 does not stay recovery against a guarantor, unless it is in pursuance of a suit, there is no force in this petition. It is accordingly dismissed. 19. Before concluding we may add that in this case by interim order dated 19-7-2002 we had observed: "Heard Sri S.C. Tripathi for petitioner, Sri Avnish Misra for respondent No. 1 and learned standing counsel. Petitioners are challenging the impugned recovery and one of the grounds taken by the petitioners who are guarantors of the loans is that the petitioners are entitled to the benefit of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (in short the Act ). We are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, we are not deciding the question of Constitutional validity of the Sick Industrial Companies Act as the petition is being decided on other points. However, we do recommended to the Central Government to consider repeal of the aforesaid Act since in our opinion it has not served any useful purpose, rather it has served the unscrupulous businessmen who merely by filing a reference before the BIFR get recovery under section 22 and in this way workers are not paid their wages, the Government is not paid their taxes and financial institutions cannot recover their loans. 21. The scheme of the Constitution is that while there should be equality among the people, the weaker and poor section of the society should be helped. Thus the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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