KAILASH NATH AGRAWAL AND ORS. versus PRADESHYA INDST. & INV. CORP. OF U.P. AND ANR.

Citation: [2003] 1 S.C.R. 1159 · Decided: 14-02-2003 · Supreme Court of India · Bench: RUMA PAL · Disposal: Leave Granted & Dismissed

Cited by 5 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

.., 
.... 
KAILASH NATH AGRAWAL AND ORS. 
A 
v. 
PRADESHY A INDST. & INV. CORP. OF U.P. AND ANR. 
FEBRUARY 14, 2003 
[RUMA PAL AND B.N. SRI KRISHNA, JJ.] 
B 
Sick Industrial Companies (Special provisions) Act, I985 : 
Sections 3(/) and 22(1): Loan given by a Government Company to a C 
private company against security and bonds of guarantee-Debtor company 
declared sick-BJ FR initiated action/or its revival-Issuance of demand notices 
to debtor/Guarantor and thereafter recovery certificates under UP. Act-
Challenge to-Writ Petition dismissed by High Court-On appeal, Held, the 
object of SICA is to facilitate rehabilitation/winding up of sick industry and 
not lo protect guarantor-Jn the absence of anything contrary to the joint and D 
several liability of guarantor in the contracts of loan transaction Governn1ent 
could issue demand notices under the UP. Act and it is not necessary to 
enforce its right through any_ legal forum/adjudicating process-Provisions of 
law under Section 22(1) does not provide protection to guarantor against 
recovery proceedings-UP. (Public Money Recovery of Dues) Act, I 972; 
Contract Act, I872; Section I 28-Interpretation of Statutes. 
E 
Section 22(/)-Suits and Proceedings-Distinction between-Discussed. 
The Pradeshiya Industrial and Investment Corporation of U.P. Ltd. 
(PICUP), Respondent No. I lent certain loan amount to a private company/ F 
Respondent No.2 against security and bonds of guarantee executed by the 
appellants/guarantors. The debtor company was declared sick by the 
Board for Industrial and Financial Reconstruction (BIFR). Pending 
proceedings for revival of the sick company recovery proceedings was 
initiated by the creditor/Government company by issuance of demand 
notices to appellant-guarantors. On failure to liquidate dues, recovery G 
certificates were issued under the provisions of U.P. Public Money 
(Recovery of Dues) Act (U.P. Act) against the guarantors. They preferred 
a writ petition which was dismissed by the High Court. Hence the present 
appeals. 
1159 
H 
1160 
SUPREME COURT REPORTS 
[2003] I S.C.R. 
A 
It was contended for the appellants that since Section 22(1~ of 
SICA prohilJited recovery of loan for the enforcement of any guarantee, 
the appellant/guarantor is entitled to such protection; and that the word 
'suit' includes any proceedings for the enforcement of guarantee. 
On behalf of PICUP (Respondent No.I) it was submitted that the 
B word 'suit' in Section 22(1) of SICA must be construed as judicial/ 
adjudicatory process; that the Parliament/Legislature drew a distinction 
between the word 'proceedings' and 'suit' and PICUP was entitled to 
enforce its claim for recovery of loan under the U.P. Act; and that recovery 
proceedings were prohibited oply against debtor company and not against 
C the guarantor. 
· 
Dismissing the appeals, the Court 
HELD: 1.1. The clauses of the guarantees executed by the appellant 
in favour of PICUP clearly show that the liability of the guarantors remain 
D unaffected by either the failure of PICUP to enforce its mortgage and 
hypothecation against the assets of the company. There is nothing in the , 
contracts which can in any way be construed as contrary to the joint and 
severally liability created under Section 128 of the Contract Act. Under 
the guarantees PICUP could raise and enforce a demand against the 
appellants under the U.P. Public Demands (Recovery of Dues) Act (U.P. 
E Act). (1156-A, H; 1166-AJ 
1.2. The procedure prescribed under the U.P. Act does not 
necessitate that PICUP must enforce its rights through any legal forum 
nor indeed after any adjudicatory process. The U.P. Act has also drawn 
F a distinction between certificate proceedings, suits and arbitrations and 
the demand and its enforcement are not required to be determined or 
realised through Court or after any adjudicatory process. (1166-C, GJ 
2.1. There is an apparent distinction between the expressions 
'proceeding' and 'suit' used in Section 22(1), while it is true that two 
G different words may be used in the same statute to convey the same 
meaning, that is the exception rather than the rule. The general rule is 
that when two different words are used by the same statute, prima facie 
one has to construe these.different words as carrying different meanings. 
(1169-C, DJ 
H 
Kanhaiyalal Vishindas Gidwani v. Arun Dattatray Mehta, (2001 J 1 SCC 
K.N. AGRAWAL, .. PRADESHYA INDST & INV. CORP OF U.P. 
1161 
789; Ghantesher Ghosh v. Mada

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