HARIHAR NATH Vs. STATE BANK OF INDIA
LAWS(SC)-2006-4-29
SUPREME COURT OF INDIA (FROM: PATNA)
Decided on April 04,2006

HARIHAR NATH Appellant
VERSUS
STATE BANK OF INDIA Respondents





Cited Judgements :-

SUJITNATH S/O SUDHANSHUKUMAR BANERJEE VS. OPADMA WD/O MOTILAL KOTECHA [LAWS(BOM)-2015-4-5] [REFERRED TO]
S. VATSALA VS. K.S. MOHAN AND ORS. [LAWS(MAD)-2016-1-38] [REFERRED TO]
ETA ENGINEERING PRIVATE LIMITED VS. TEXMACO RAIL AND ENGINEERING LIMITED [LAWS(MAD)-2014-7-170] [REFERRED TO]
IN RE: DABRIWALA STEELS AND ENGINEERING CO. LTD. VS. STATE [LAWS(P&H)-2009-3-164] [REFERRED TO]
SASHIKANT K GANDHI VS. STATE OF GUJARAT [LAWS(GJH)-2014-1-38] [REFERRED TO]
ROSHAN LAL VS. DDA [LAWS(DLH)-2010-2-290] [REFERRED TO]
K R STEEL UNION LTD VS. POYSHA INDUSTRIAL COMPANY LTD [LAWS(BOM)-2007-3-75] [REFERRED TO]
ERACH BOMAN KHAVAR VS. TUKARAM SRIDHAR BHAT [LAWS(BOM)-2007-3-226] [REFERRED TO]
SUBRAMANIAN SWAMY VS. V.N. NARAYANAN [LAWS(KER)-2022-2-84] [REFERRED TO]
STATE OF M.P. VS. M/S. HUKUMCHAND MILLS LTD [LAWS(MPH)-2018-5-373] [REFERRED TO]
ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED VS. A.P. REFRACTORIES LIMITED [LAWS(APH)-2008-2-110] [REFERRED TO]
NUNNA RAMA KRISHNA ANANTHA SUBRAHMANYAN VS. SUDARSAN CHITS INDIA LTD [LAWS(APH)-2011-7-50] [REFERRED TO]
KUNDANMAL DABRIWALA VS. DABRIWALA STEELS AND ENGG. CO. LTD. [LAWS(P&H)-2009-3-169] [REFERRED TO]
HARYANA FINANCIAL CORPORATION VS. DEV PAPERS P. LTD. [LAWS(P&H)-2008-12-138] [REFERRED TO]
G P ISPAT PRIVATE LIMITED VS. AUTHORIZED OFFICER AND CHIEF MANAGER, STATE BANK O [LAWS(CHH)-2017-8-50] [REFERRED TO]
MURLI INDUSTRIES LTD VS. PRIMO PICK N PACK PVT. LTD [LAWS(BOM)-2018-11-84] [REFERRED TO]
POYSHA INDUSTRIAL COMPANY LIMITED VS. K R STEELUNION LIMITED [LAWS(BOM)-2007-3-151] [REFERRED TO]
BALWINDER SINGH VS. RAJENDRA SINGH CHAHAL AND ORS. [LAWS(JHAR)-2015-4-32] [REFERRED TO]
BHERUJI ESTATE VS. OFFICIAL LIQUIDATOR OF SHREE AMBICA MILLS LTD. [LAWS(GJH)-2022-9-1363] [REFERRED TO]
R. VIJAYAKUMAR VS. C. NATESAN [LAWS(MAD)-2009-7-796] [REFERRED TO]
BOARD OF TRUSTEES OF THE PORT MUMBAI VS. BARGE MADHWA AND ANR. [LAWS(BOM)-2020-5-11] [REFERRED TO]
MURLI INDUSTRIES LIMITED VS. OFFICIAL LIQUIDATOR AS PROVISIONAL LIQUIDATOR [LAWS(BOM)-2018-11-54] [REFERRED TO]
SARDAR HARBHAJAN SINGH AND ORS. VS. RAJENDRA SINGH CHAHAL AND ORS. [LAWS(JHAR)-2015-4-26] [REFERRED TO]
CITICORP INTERNATIONAL LIMITED VS. SHIV-VANI OIL & GAS EXPLORATION SERVICES LTD [LAWS(DLH)-2018-7-638] [REFERRED TO]
OFFICIAL LIQUIDATOR OF COMMERCIAL AHMEDABAD MILLS LTD. VS. MANAGER, STATE BANK OF INDIA AND ORS. [LAWS(GJH)-2015-3-378] [REFERRED TO]
POYSHA INDUSTRIAL COMPANY LIMITED VS. POYSHA INDUSTRIAL COMPANY LTD [LAWS(BOM)-2007-3-232] [REFERRED]
VIJAY AGARWAL VS. HARINARAYAN G. BAJAJ [LAWS(BOM)-2013-2-116] [REFERRED TO]
PIYUSH RASTOGI VS. MOULIK FINANCE AND RESORTS LTD. [LAWS(ALL)-2008-4-307] [REFERRED TO]
UNIT HEAD NATIONAL JUTE MANUFACTURERS CORPN LTD VS. SAROJ AGRAWAL [LAWS(PAT)-2007-8-27] [REFERRED TO]


JUDGEMENT

RAVEENDRAN, J. - (1.)THIS appeal directed against the order dated 1.9.1997 of the Patna High Court in LPA No.259/1996, relates to the applicability of Article 137 of Limitation Act, 1963 to a petition under Section 446(1) of the Companies Act, 1956, seeking leave of the Company Court to proceed with a pending suit.
(2.)NALANDA Ceramic and Industries Ltd. (second respondent herein, referred to as 'the company') was a company incorporated under the Companies Act, 1956 (for short 'the Act'). Appellant nos.1 to 3 were its Directors. The company had obtained certain credit facilities from the State Bank of India (first respondent herein and referred to as 'the bank'). The loans were secured by mortgage of the assets of the company. The repayment of the amounts advanced to the company was guaranteed by the appellants. On 28.11.1988, the bank filed a suit (Title Mortgage Suit No. 150/1988 on the file of the Special Subordinate Judge, Ranchi) against the company (defendant no.1), the appellants (defendants 2 to 4), and four others namely, State of Bihar, Bihar State Financial Corporation, I.F.C.I, and IDBI (defendant nos.5 to 8). In the said suit, the bank sought a decree for Rs.5,95,98,258.31 against defendants 1 to 4 (the company and the appellants) with interest thereon and several ancillary and consequential reliefs.
Even prior to the said suit, other creditors had filed petitions for winding up of the company, in Company Petition Nos. 1/79, 2/79 and 4/79 on the file of the Patna High Court, alleging that it was unable to pay its debts. During the pendency of the said company petitions, a notification dated 16/4/1984 was issued under the Bihar Relief Undertakings (Special Provisions) Act, 1982, declaring the company as a relief undertaking, thereby preventing further progress of the petitions for winding-up. As the company became sick, a reference was also made to the Board for Industrial and Financial Reconstruction which directed an inquiry under Section 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short 'SIC Act'). In view of the said reference, the first appellant (second defendant in the suit), filed an application on 16.9.1989 in the bank's suit under Section 22 of the SIC Act, for stay of further proceedings in the suit.

The bank resisted the said application, inter alia, on the ground that Section 22 of SIC Act had the effect of staying only proceedings in the nature of winding-up and execution and did not come in the way of progress of any suit for recovery of money due by the company by enforcing the security.

(3.)WHEN matters stood thus, an order for winding up the company was passed by the High Court on 24.10.1989. WHEN the said order came to its knowledge, the bank filed a further objection to the application under Section 22 of the SIC Act, contending that Section 22 of the SIC Act will not apply in view of the order for winding up. The bank also submitted that having regard to Section 446(1) of the Act, it required the leave of the court only to proceed against the company, but there was no bar for proceeding against the other defendants. The bank, therefore, prayed for dismissal of the application for stay (filed by appellant no.1 herein) and further prayed that while the proceedings as against the first defendant company may be kept in abeyance, the suit may be proceeded with against the other defendants.
The trial court disposed of the application by an order dated 9.3.1990. It rejected the application filed by second defendant (appellant no.1 herein) for staying the suit under Section 22 of the SIC Act. It, however, held that the suit against all the defendants will have to be stayed in view of the order of winding up. It was of the view that the liability to pay the amount due was on the principal-debtor, namely, the company, and that the guarantors would be liable only if the company defaulted; and that, therefore, if the proceedings against the company had to be stayed, it had also to be kept in abeyance against all defendants till the bank obtained an appropriate direction from the High Court. The bank challenged the said order in CRP No.388/1990 before the High Court.



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