Guarantor recovery under sick company law not barred unless the proceeding is a suit for recovery.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 was treated as a bar only to recovery proceedings in the nature of a suit for recovery against a guarantor. Where the petitioners faced a recovery certificate and demand based on their personal guarantee, and not a suit, the statutory protection was held inapplicable. The text also notes that staying recovery against guarantors would not further rehabilitation of the sick industrial company, which is the object of the statute. On that basis, the challenge to the impugned recovery proceedings failed.

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Issues: Whether the bar under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 prevents recovery proceedings against the petitioners as guarantors where no suit for recovery has been filed against them.

Analysis: Section 22 was held to prohibit proceedings for recovery against a guarantor only in the context of a suit for recovery. The petitioners were not facing a suit, but a recovery certificate and demand based on their personal guarantee. The protection under the provision was therefore held inapplicable. It was further observed that staying recovery against guarantors would not advance the rehabilitation of the sick industrial company, which is the object of the statute.

Conclusion: The statutory bar did not apply to the impugned recovery proceedings against the petitioners, and the challenge failed.

Ratio Decidendi: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar recovery proceedings against a guarantor unless the proceeding is a suit for recovery.

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