Ruma Pal, J. - (1.) Leave granted.
(2.) The scope of the protection afforded to guarantors under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (referred to as SICA) is in issue in these appeals. The Pradeshiya Industrial and Investment Corporation of U.P. Ltd., respondent No. 1 herein (referred to as PICUP hereafter) had given loans to a company, M/s. Shefall Papers Ltd., the respondent No. 2 before us (hereinafter referred to as the company). By way of security the company mortgaged its immovable properties and hypothecated its assets to PICUP. In addition the appellants executed bonds of guarantee in consideration for the grant of loans to the company.
(3.) On 1st December, 1997, the Company was declared sick by the Board for Industrial and Financial Reconstruction (BIFR) in terms of Section 3(1)(o) of the SICA. The BIFR appointed IFCI as the operating agency under Section 17(3) of the Act "to examine the viability and submit its report for revival of the company". While the proceedings before the BIFR were pending, on 6th February, 2002 three separate notices of demand were served on the appellants as personal guarantors in respect of the loans granted to the company by PICUP. The total amount claimed was Rs. 8,90,84,259.06 p. Each of the appellants was called upon to pay the demand within 30 days along with the interest at the rates specified in the notice failing which PICUP said that it would take legal measures to recover its outstanding dues from each guarantor. The appellants replied to the notice stating that because of the decisions of this Court on the scope of Section 22(1) of the Act, PICUP could not enforce its demand against the appellants. PICUP rejected the stand of the appellants and called upon the appellants to liquidate its dues failing which recovery certificates would be issued against the appellant.;