INDERJEET ARYA Vs ICICI BANK LTD
Bench: K.S. RADHAKRISHNAN,A.K. SIKRI
Case number: C.A. No.-011029-011029 / 2013
Diary number: 31391 / 2012
Advocates: Vs
ARUN KUMAR BERIWAL
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NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 11029 OF 2013 @ (Special Leave Petition (C) No.35942 of 2012)
Inderjeet Arya and another …. Appellants
Verses
ICICI Bank Limited …. Respondent
J U D G M E N T
K.S. RADHAKRISHNAN, J.
Leave granted.
2. We are, in this case, concerned with the question
whether the appellants who are Directors and Guarantors
of a sick company and are entitled to get the protection of
Section 22(1) of the Sick Industrial Companies (Special
Provisions) Act, 1985 (for short “the SICA).
3. M/s Rajat Pharmachem Pvt. Ltd. (RPL) was engaged
in the business of manufacturing, trading and export of
generic pharmaceuticals formulations and products. First
appellant is the Chairman-cum-Director of RPL, while
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second appellant is its Director. The Bank of Rajasthan,
prior to its amalgamation with the respondent–ICICI Bank
Limited, instituted recovery proceedings in the Debt
Recovery Tribunal (DRT), Delhi and the same was
registered as OA No.118 of 2009. In those proceedings,
the State Trading Corporation of India Ltd. (STC) was
defendant No.1, while RPL along with its Directors and
Guarantors were arrayed as Defendant Nos.2, 3 and 4
respectively. By way of recovery proceedings, Bank of
Rajasthan (Now ICICI Bank) sought recovery of
Rs.26,55,35,824.50 which included interest to the tune of
Rs.2,79,43,736/- till the date of institution of action in
DRT. Future interest @ 18% per annum was also sought.
RPL apprehending institution of recovery proceedings took
steps seeking registration of its reference under Section
15 of the SICA. Later Board for Industrial and Financial
Reconstruction (BIFR) intimated its registration and
accorded Case No.14 of 2009.
4. The Bank instituted Original Application OA No.118 of
2009 in DRT on 13.05.2009. In the recovery proceedings
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notices were issued by the DRT to all the defendants,
which included the appellants as well. On 14.12.2009 the
appellant, along with RPL preferred an application under
Section 22(1) SICA which was registered as OA No.1046 of
2009. They sought dismissal of IA since the same was
filed without prior permission of the Appellate Authority for
Industrial and Financial Reconstruction (for short
“AAIFR”)/BIFR in terms of Section 22(1) of SICA. The DRT
took the view that the execution of the decree had to be
kept in abeyance until the question whether the
guarantors were entitled to protection under Section 22(1)
of SICA stood decided by the Apex Court. On appeal, the
DRAT set aside the order passed by the DRT. The matter
was ultimately brought to the High Court wherein the
correctness of the two orders passed by the DRAT on
29.08.2011 in OA No.118 of 2009 and the orders dated
30.05.2011 and 03.05.2010 passed by the DRT were
examined.
5. The primary issue that came for consideration before
the High Court was whether the protection under Section
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22(1) of SICA can be extended to the appellants in their
capacity as guarantors of debt owned by RPL. The High
Court upheld the judgment dated 19.08.2011 passed by
the DRAT and the orders dated 30.05.2011 and
03.05.2010 passed by the DRT. The High Court also held
that the protection of Section 22(1) of SICA would not be
available to the appellants who are Directors and
Guarantors of sick industrial company, in view of the
Judgments rendered by this Court in Kailash Nath
Agarwal and others v. Pradeshiya Industrial &
Investment Corporation of U.P. Ltd. And another
(2003) 4 SCC 305, KSL and Industries Limited v.
Arihant Threads Limited and others (2008) 9 SCC 763
and Nahar Industrial Enterprises Limited v. Hong
Kong and Shanghai Banking Corporation (2009) 8
SCC 646 etc. Aggrieved by the same, this special leave
petition has been preferred.
6. We need not labour much to answer the question of
law raised in this appeal since, as rightly pointed out by
the High Court, the same stands covered by various
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Judgments of this Court referred to earlier. Appellants,
who are the guarantors, can obtain the protection of
Section 22(1) of SICA only if the action filed by the bank
comes within the ambit of the term ‘suit’. If the action
filed by the respondent bank in the nature of ‘proceedings’
and not a ‘suit’, protection under Section 22(1) would not
be available, especially, when the appellants are
guarantors.
7. This Court, in KSL and Industries Limited (supra)
took the view that even though both the conflicting
statutes SICA and Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (for short the “RDDB”)
contain a non-obstante clause, in case of conflict the
RDDB Act, 1993 will prevail over SICA, so far as public
revenue recoveries are concerned. This Court also
emphasized that the liability of surety or guarantor is co-
extensive with that of the principal debtor in Kailash
Nath Agarwal and others (supra). In Nahar Industrial
Enterprises Limited (supra) this Court reiterated the
term ‘suit’ have to be confined in the context of sub-
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section (1) of Section 22 of SICA to those actions which
are dealt with under the Code and not in the
comprehensive over-arching proceedings so as to apply to
any original proceedings before any legal forum. The
term ‘suit’ would apply only to proceedings in civil court
and not actions or recovery proceedings filed by banks
and financial institutions before a tribunal such as DRT.
8. In our view, all the legal points raised by the
appellants stand covered by the Judgments referred to
hereinbefore and hence a further examination of the same
is unnecessary. The appeal, therefore, lacks merits and
the same is dismissed, however, there will be no order as
to costs.
…………………………………J. (K.S. Radhakrishnan)
………………………………...J. (A.K. Sikri)
New Delhi, December 13, 2013