SURINDER SINGH NIJJAR, C.J. - (1.) THIS appeal has been filed against the judgment and/or order passed by the learned single judge dated February 11, 2005, whereby the winding up petition filed against the appellant -company has been admitted for a sum of Rs. 3 crores together with interest at the rate of 5 per cent, per annum from April 1, 2003, until realisation.
(2.) AT the outset, we may notice here that the petitioning creditor here is a financial institution, namely, I.C.I.C.I. Bank Ltd. In the usual course of business, the petitioner granted financial assistance to Coventry Coil -O -Matic (Haryana) Ltd. (hereinafter referred to as the 'Coil -O -Matic') on the request of Coventry Spring and Engineering Co. Ltd. (hereinafter referred to as the 'Coventry Spring'). Coil -O -Matic was granted a number of loans in foreign currency the details of which are set out in the petition. During the negotiation and/or execution of the loan agreements, Coventry Spring represented that Coil -O -Matic is its alter ego. It was further represented that Coventry Spring being the promoter of Coil -O -Matic, it would be the obligation of Coventry Spring to ensure full repayment of all dues of the petitioner and not to commit any breach which might jeopardize the securities against which the petitioner agreed to grant credit facilities. Apart from the share capital having been subscribed by members of the Bafna family, the management of both the companies was with them. It was, therefore, represented to the petitioners that Coventry Spring will be fully responsible for repayment of all the dues. Coventry Spring is stated to be in control of Coil -O -Matic, the management being common. The loans advanced to Coil -O -Matic were duly guaranteed by its promoters. However, Coil -O -Matic did not adhere to the repayment schedule. Sometimes thereafter Coil -O -Matic was declared a sick company by the Board for Industrial and Financial Reconstruction (hereinafter referred to as 'the BIFR').
(3.) IN the proceedings before the BIFR, directions were issued granting concessional benefits to Coil -O -Matic. The repayment schedule was modified. However, in terms of the order passed by the BIFR, Coventry Spring executed corporate guarantee dated August 13, 2001, thereby guaranteeing due repayment of the loans taken by the Coil -O -Matic. The bank guarantee was an independent contract. It was also an irrecoverable and continuing guarantee. The guarantee contains a default clause by which Coventry Spring had committed that in the event of any default on the part of the Coil -O -Matic, Coventry Spring would be treated as the principal borrower and would repay the entire outstanding dues of the petitioner. The guarantee also contains an indemnity clause. The default clause and the indemnity clause are as under: 2. In the event of any default on the part of the borrower in payment/repayment of any of the moneys referred to above, or in the event of any default on the part of the borrower to comply with or perform any of the terms, conditions and covenants contained in the sanctioned scheme, the guarantor shall, upon demand, forthwith pay to the lender for itself and on behalf of the other lender without demur all the amounts payable by the borrower under the sanctioned scheme.;