9911796707
TMI Blog1999 (7) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... ue as it is covered by the judgment of the Division Bench of this Court in the case of Madalsa International Ltd. others v. Central Bank of India, . It is pointed out that in para 22 of the said judgment the very issue which has arisen here has been decided and the Division Bench whilst answering the issue has observed as under:-- In the circumstances the words of any guarantee in respect of any loans, or advance granted to the industrial company in the context will have to be read the guarantee given by the industrial company itself and none else. 3. The question therefore is whether the issue is concluded by the judgment of the Division Bench of this Court. The appeal arose from an order of a learned Single Judge. The learned Judge dismissed the Chamber Summons for stay of execution on the ground that on mere filing of proceedings by the company. Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 was not attracted. The other contention before the learned Single Judge was that proceedings against the guarantors should be stayed was not decided. The Division Bench in appeal in para 8 was considering the issue whether proceedings for stay of execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans 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. It was contended before the Division Bench that proceedings in 'execution' includes proceedings in the suit. This arose because under the section as it stood before its amendment, proceedings for execution and the like against the properties of the 'sick' company could not be proceeded with. After the amendment even suits cannot be filed or if filed can be proceeded with except by the consent of the Board or the Appellate Authority. As the decree was sought to be executed against the guarantors it was contended that the expression suit would include proceedings in execution on the premise, that after the amendment no suit could be filed or proceeded with also against the Guarantors. After considering the case law cited, the Division Bench held that proceedings in execution would not fall within the expression suit . The Division Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the rules, certain work is to be heard by Division Benches, others by benches constituting Single Judges. Under Clause 15 of the Letters Patent of this Court an intra Court appeal is provided for against judgment of a Single Judge. In other words, an appellate Bench as such is not a Higher Court but consisting of Judges of the same Court sitting as a Division Bench. Even here, it is an accepted judicial principle, if there is a judgment of a Bench normally a Single Judge would follow the said judgment. However, what is to be followed is the ratio decendi of the judgment. To be the ratio decendi amongst others the minimum requirements are : -- 1) that the matter was directly in issue; 2) that the issue needs to have been decided, and 3) the matter has been decided by giving reasons, For case law as to what would constitute ratio decendi useful reference may be made to the judgment in Maharashtra General Kamgar Union v. CIPLA Ltd. others, . 5. In so far as the judgment of the Division Bench of this Court in Madalsa International Ltd. (supra) in my opinion, after the Court had come to the conclusion that suit would not include execution, the issue whether af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f money would take within its ambit also suit on guarantees given by the industrial company. Even otherwise the plain language of the section is 'of any guarantee in respect of any loans, or advance granted to the industrial company'. This can only mean guarantees in respect of loans advanced to the company. The Division Bench as pointed out earlier has held expression to mean that guarantee given by the industrial company itself and none else. The question of a principal giving a guarantee to oneself with respect to the Division Bench will not arise, if certain provisions of the Indian Contract Act itself are referred to and to which its attention was not invited. In fact before the Division Bench the facts as they stood was that the proceedings in execution were for forcible possession of properties by the Receiver and not enforcement of guarantees. Word guarantee is not defined under the Sick Industrial Companies (Special Provisions) Act, 1985. It is also not defined under the Companies Act or Industrial (Development and Regulations) Act, 1951 in terms of section 3(2)(a) and section 3(2)(b) of the Sick Industrial Companies (Special Provisions) Act, 1985. Being a Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction is read in its proper perspective it would mean that no suit for recovery of money can lie against the guarantors. The meaning assigned by the Division Bench, however, can encompass the expression securities given by the company. For example in a case of an inter-corporate loan the amount may be secured by mortgaging property. It is in this context the word 'security' will have to be read. In fact in Madalsa International Ltd. (supra) the issue arose out of a consent decree for forcible possession of securities where a Receiver was to stand appointed in case of breach of terms of the consent decree. The expression guarantee in respect of the loan or advance granted to the industrial company if construed in this background means guarantee given by a guarantor to the industrial company which has taken a loan or advance. This obviously, cannot mean that the guarantor is the Industrial Company but a person distinct from the company. Any suit therefore filed for enforcing such a guarantee will also have to be stayed. The meaning assigned by the Division Bench also cannot be accepted for the following reasons. If the guarantee is for repayment of debt then that would be cov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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