TaxTMI 
TaxTMI 
2000 (7) TMI 852
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....NT Bharucha, J. - The question in this appeal is whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 ('the Act') covers a suit against the guarantor of a loan or advance that has been granted to the concerned industrial company. 2. On 31-3-1999 the first respondent filed a suit inter alia against the first appellant to recover the amounts of the loans that had been given to the latter. To the said suit were impleaded the guarantors (including the second appellant) and the guarantees were sought to be enforced. A notice of motion was taken out in the suit for ad interim relief, which was granted on 1-4-1999. 3. On 8-4-1999 the reference made by the first appellant to be declared a sick undertaking with....
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....at the provisions of section 22 were clear that thereunder no suit for the enforcement of any guarantee in respect of any loan or advance granted to the concerned industrial company would lie or could be proceeded with except with the consent of the Board or the appellate authority under the said Act. The learned Solicitor General, appearing for the first respondent, submitted that the suit contemplated by section 22 was a suit only against the industrial company and that it was only when the industrial company was itself the guarantor or it was sued by a guarantor on subrogation that the provisions of section 22 would apply. He also submitted that the provisions of section 22 had to be read in harmony with other provisions of the said Act ....
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....ide that no suit- (a)for the recovery of money, or (b)for the enforcement (i)of any security against the industrial company, or (ii)of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with except with the consent of the Board or the appellate authority under the said Act. For our purposes, therefore, the relevant words : "no suit . . . for the enforcement . . . of any guarantee in respect of any loans or advance granted to the industrial company" shall lie without the consent of the Board or the appellate authority. The words are crystal clear. There is no ambiguity therein. It must, therefore, be held that no suit for the enforcement of a guarantee in respect of a l....
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.... fact that, as indicated above, the language of section 22 is explicit, the scheme would provide for the repayment of the loan or advance and, therefore, would take within its ambit the claim on the guarantee; the question of proceeding with the suit against the guarantor would not arise. On the other hand, if the industrial company cannot be revived by a scheme, the embargo under section 22 would cease to operate. 8. Section 22A of the Act empowers the Board to direct the industrial company not to dispose of, except with its consent, any of its assets. The learned counsel for the first respondent pointed out that there was no provision in the said act which empowered the Board to order the guarantor of a loan or advance to an industrial....