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Issues: Whether proceedings in a summary suit could continue against the acceptor of the bills of exchange and its partners when the drawer company was registered as a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985, and whether section 22 of that Act barred such proceedings.
Analysis: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 stays proceedings against the sick industrial company and extends to suits for recovery of money, enforcement of security, and guarantees in respect of loans or advances granted to the industrial company. However, section 37 of the Negotiable Instruments Act, 1881 treats the drawer before acceptance and the acceptor of a bill of exchange as liable as principal debtors, unless there is a contract to the contrary. Read with section 126 of the Indian Contract Act, 1872, the acceptor of a bill is not a guarantor but the principal debtor itself. On that basis, the statutory bar under section 22 did not prevent the suit from proceeding against the acceptor and the persons sued in that capacity, because the bar operated only against the sick company and not against independent principal debtors.
Conclusion: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 did not bar the proceedings against the acceptor of the bills of exchange and its partners. The summons for judgment was rightly made absolute against those defendants.
Final Conclusion: The proceedings were stayed only against the sick company, while the claim was allowed to proceed and succeed against the remaining defendants who were independently liable on the bills of exchange.
Ratio Decidendi: An acceptor of a bill of exchange is a principal debtor under section 37 of the Negotiable Instruments Act, 1881, and section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar proceedings against such independent liability merely because the drawer company is a sick industrial company.
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