Decided on July 16,2004



H.T. Sampat, Presiding Officer - (1.) THIS is a Transferred Application for recovery of Rs. 3,20,56,782.67 (Rupees three crores twenty lakhs fifty-six thousand seven hundred eighty-two and paisc sixty-seven only).
(2.) The applicant is constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The defendant No, 1 is a Company now under liquidation and is represented by the Official Liquidator appointed by the Hon'ble High Court of Judicature at Bombay, The defendant No. 3 was original guarantor whose guarantee was substituted by the guarantee of the defendant No. 2. The defendant No. 3 is no more. His legal representatives are brought on record. The defendant Nos. 4 and 5 are Financial Institution and Banks having interest in the securities. The defendant No. 1 Company had been availing various credit facilities from the applicant Bank. The defendant No. 3 had guaranteed the repayment of the amounts those may be found outstanding against the defendant No. 1. The defendant No. 1 had failed in regularising the accounts. The applicants had, therefore, instituted a suit in the Hon'ble High Court, bearing No. 2337/1988 for recovering the then outstanding amounts. The defendant No. 3, had meanwhile approached the Board for Industrial and Financial Reconstruction (BIFR) under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985, (SICA). The BIFR ordered the winding up. The Order passed by the BIFR was earned in the Appeal to the Appellant Authority of Industrial and Financial Reconstruction (AAIFR). During the said proceedings, the AAIFR approved a scheme which was framed at the instance of the defendant No. 2 for the rehabilitation of the defendant No. 1. Under the said scheme, the defendant No. 2 had to take over the management of the defendant No. 1 Company from the defendant No. 3, along with the rights and liabilities of the defendant No. 1. All the share holdings of defendant no. 1 Company, held by the defendant No. 3, were to be transferred in favour of the defendant No. 2. The defendant No. 2 in turn had to furnish a guarantee to the applicant-Bank to repay the amounts due against and payable by the defendant No. 1 Company. The applicant was to withdraw the Suit No. 2337/1988 filed against the defendant Nos. 1 and 3.
(3.) IN pursuance of the said agreement and arrangement; the defendant No. 2 gave a guarantee to repay the then outstanding amount of Rs. 80 lakhs to the applicant-Bank. The Consent Terms were thereafter filed before the High Court in Suit No. 2337/1988 by virtue of which the suit against the defendant No. 3 came to be dismissed as withdrawn and the suit against the defendant No. 1 was allowed to be withdrawn with a liberty to file a fresh suit.;

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