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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