Section 22 SICA and guarantor liability: recovery proceedings before the DRT remain maintainable despite the 1994 amendment.

Section 22(1) of SICA, as amended in 1994, was read as giving only limited protection to guarantors, because the legislature used the broader term "proceedings" in one limb and the narrower term "suit" in the guarantee-related limb. The text distinguishes civil court suits from recovery proceedings before the DRT, and treats the amendment as not immunising guarantors from every recovery action. On that basis, KSL & Industries Ltd. was said not to have altered the settled position on recovery proceedings under the RDDBFI Act against guarantors of a sick industrial company, and such proceedings remain maintainable.

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Issues: Whether the decision in KSL & Industries Ltd. altered the settled position on Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 so as to bar recovery proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 against guarantors of a sick industrial company.

Analysis: Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 was examined in its statutory setting and in light of the amendment of 1994, which inserted the words concerning suits for recovery and enforcement of guarantees. The Court distinguished between the wider expression "proceedings" in the first limb of the provision and the narrower expression "suit" in the second limb, holding that the legislative choice was deliberate. It relied upon the later Supreme Court authorities explaining that the purpose of the amendment was to afford only limited protection to guarantors and not to immunise them from every form of recovery action. The Court further held that KSL & Industries Ltd. dealt with a different question, namely the primacy of SICA vis-a -vis the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 in the context of completed recovery proceedings, and did not alter the principle that proceedings under the recovery statute may continue against guarantors.

Conclusion: The decision in KSL & Industries Ltd. did not change the legal position, and recovery proceedings against the guarantors were held to be maintainable. The challenge to the continuation of those proceedings failed.

Ratio Decidendi: Under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, the expression "suit" is confined to civil court proceedings and does not extend to recovery proceedings before the Debt Recovery Tribunal against guarantors; the 1994 amendment granted only limited protection to guarantors.

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