https://www.taxtmi.com/caselaws?id=215014 A court-sanctioned scheme of arrangement under the Companies Act, 1956 binds all creditors and may extinguish the principal debtor's remaining liability. Where the sanctioned composition finally reduces and extinguishes the debt, the surety cannot be proceeded against for that same extinguished liability because the surety's obligation is co-extensive with the principal debt. On that basis, a recovery notice issued against the guarantor under the State Financial Corporations Act, 1951, is without jurisdiction and cannot stand. Cases where only the remedy was barred, rather than the debt itself extinguished, were distinguished. en-us Tue, 20 Dec 2011 00:00:00 +0530 Tue, 12 Feb 2013 12:26:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=215014 A court-sanctioned scheme of arrangement under the Companies Act, 1956 binds all creditors and may extinguish the principal debtor's remaining liability. Where the sanctioned composition finally reduces and extinguishes the debt, the surety cannot be proceeded against for that same extinguished liability because the surety's obligation is co-extensive with the principal debt. On that basis, a recovery notice issued against the guarantor under the State Financial Corporations Act, 1951, is without jurisdiction and cannot stand. Cases where only the remedy was barred, rather than the debt itself extinguished, were distinguished. Case-Laws Companies Law Tue, 20 Dec 2011 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=215014