Decided on July 19,2005



Motilal B.Naik, - (1.) APPELLANTS herein are defendant Nos. 2, 4, 5 and 6 in Original Application No. 543/1999 on the file of D.R.T.-I, Delhi. The respondent financial institution herein instituted the said Original Application against these appellants and the principal borrower for recovery of certain amounts. The suit was proceeded with but however could not reach a finality.
(2.) In the meantime, the principal borrower i.e. the defendant No.1 in Original Application moved the BIFR for appropriate rehabilitation under SIC Act. The BIFR registered the representation of the principal borrower who is defendant No.1 in Original Application case No. 331 of 2000. The BIFR having taken into consideration totality of issues made certain arrangements which are reflected in sub-para (e) and (1) of para 17 which is as under: The financial institutions and banks could continue their suit filed earlier against the company before the company got registered in terms of the Act, but no decree could be executed or no fresh suit was allowed to be filed against the company without specific prior permission of the Board. The cut-off date would be 31st March, 2002. Basing on the arrangements made by the BIFR, these appellants who are guarantors/ defendant Nos. 2,4,5 and 6 in the Original Application filed petition in IA No. 454/2004 and IA No. 784/2004 seeking stay of all further proceedings against these appellants. The Court below on the basis of submissions made by the parties, ordered thus: These two IAs have been filed by defendant No.2, 4, 5, 6 and defendant No.3 for stay of the proceedings. As the BIFR has given permission to continue with the proceedings of this Original Application vide its order dated 1st November, 2001, so the proceedings of this Original Application cannot be stayed. However, execution proceedings can be stayed as per this order. For passing of final order, there is no stay as per the orders of the BIFR. I do not find any force in both these applications and the same being devoid of any merit are hereby rejected. List the case now before Registrar for marking exhibits on documents on 20th September, 2004 and thereafter for final arguments before this Tribunal on 18th October, 2004.
(3.) THIS order is under challenge in this appeal. It is contended by Mr. C. S. Gupta, learned Counsel for the appellants that the BIFR while making arrangements on 1st November, 2001 permitted the financial institutions and banks to continue the suit filed earlier only against the company which is the principal borrower. Counsel stated in terms of the order passed by BIFR on 1st November, 2001, the suit proceedings could have been proceeded with only against the company, the principal borrower which is the defendant No.1 in the suit and not against these appellants who are guarantors/defendant Nos. 2,4,5 and 6 in the Original Application. While laying emphasis on this submission, learned Counsel drew the attention of this Court to the provisions contained in Section 21 of SIC Act, 1985. The learned Counsel also cited a decision of the Hon'ble Supreme Court in Patheja Bros. Forgings and Stamping v. I.C.I.C.I. Ltd. A.I.R. 2000 2553. It is further submitted the Tribunal ignored these factors and rejected the application filed in IA No. 454 of 2004 filed by these appellants seeking stay of all further proceedings against these appellants.;

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