Holding

Due to conflicting judgments on the interpretation of Section 22(1) of SICA, the matter is referred to a larger bench for resolution.

Summary

The appellants, a sick industrial company and its guarantor, sought to enforce a personal guarantee for a loan after the company defaulted. The respondent invoked Section 31(1)(aa) of the State Financial Corporations Act, 1951, while the guarantor claimed protection under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The High Court held that Section 22 did not bar proceedings against the guarantor, but the Supreme Court noted two conflicting decisions of its own benches: Kailash Nath Agrawal, which limited protection to "suits" only, and Paramjit Singh Patheja, which read "suit" to include other proceedings. The Court examined the legislative intent to protect sick companies and their guarantors during BIFR proceedings. Finding the divergent interpretations untenable, the Court decided to refer the matter to a larger bench for a definitive ruling. The appeal was therefore not decided on merits but sent for further consideration.

Issues considered

The scope of Section 22(1) of SICA: does the term 'suit' extend to other proceedings, such as actions under the State Financial Corporations Act, against guarantors?
Whether a guarantor's liability can be enforced while the principal debtor is under BIFR protection.
Whether the High Court erred in holding that Section 22 does not bar proceedings against guarantors.

Legislation cited

Sick Industrial Companies (Special Provisions) Act, 1985s. 22
State Financial Corporations Act, 1951s. 31(1)(aa)

Subjects

SICASection 22guarantorsuit vs proceedingBIFRState Financial Corporations Actinterpretation of statutescoordinate bencheslarger bench referral

Judgment

~·

ZENITH STEEL TUBES AND INDUSTRIES LTD. AND ANR. A
v.
SICOM LIMITED

NOVEMBER 21, 2007
B
•._J ' [AL TAMAS KABIR AND B. SUDERSHAN REDDY, JJ.)

Sick Industrial Companies (Special Provisions) Act, 1985-s. 22-
Expression 'suit' whether includes other proceedings before legal
forum-Divergent views of co-ordinate Benches-Matter referred to c
larger Bench-State Financial Corporation Act, 1951-s. 31 (I)(aa).

The first appellant-Company obtained financial assistance
amounting to Rs.1.42 lacs from respondent. It created a security for
' repayment of amount by hypothecating plant and machinery. On the D
..( same day, the second appellant executed a personal guarantee for
repayment of the loan amount in case of default by the appellant-
company. The first appellant company defaulted in repayment of the
amount. Inspite of several notices demanding the payment, the first
appellant failed to make payment. E
" The respondent issued a notice to second appellant to pay the entire
amount by invoking the personal guarantee given by the second
_, appellant. The second appellant also did not make the payment as
" demanded and consequently respondent filed a petition against the
--i F
second appellant under s.31(1 )( aa) of the State Financial Corporation
Act, 1951 for enforcing the personal guarantee given by the said
appellant.

Single Judge of the High Court held that the liability of the
guarantor was independent of that ofthe principal debtor and accordingly G
,,__; the guarantee could be invoked. On appeal, the Division Bench of the
High Court held that the provision of s.22 of SICA, as amended in 1994,
did not prohibit any proceeding, other than a suit for enforcement of

413 H
414 SUPREME COURT REPORTS [2007] 12 S.C.R.

A any security against the guarantor. On such finding and also upon holding
that the liability of the guarantor was co-extensive with the principal
debtor and that the creditor was not required to exercise his right as a
mortgagee before proceeding against the guarantor, the Division Bench
dismissed the appeal.
B
In appeal to this Court, appellants contended that the decision in
*Kai/ash Nath Agrawal's case had been rendered by this Court in the
context of interpretation of the expressions 'suit' and 'proceedings' used
ins. 22(1) of SICA, 1985. In construing the said two expressions, this
C Court was of the view that while the expression 'proceedings' used in
s. 22(1) would have to be confined to companies alone, the expression
'suit' had been introduced by amendment to extend the protective cover
ofs. 22 to guarantors as well; that the purpose for which such amendment
had been effected, namely, to extend the protective cover of s.22 to
D guarantors also, would be rendered meaningless if coercive action
continued to be taken against guarantors who could even be the
Directors of the company in question; that the continuing ambiguity was
sought to be explained in the **Paramjit Singh Patheja case wherein it
was explained that the expression 'suit' would have to be understood
E in a larger context to include other proceedings as well before a legal
forum.
Referring the matter to larger Bench, the Court

HELD: In the decisions of this Court two divergent views have
F been expressed in respect of the same issue involved in this appeal. In
*Kai/ash Nath Agrawal 's case this Court has taken the view that the
legislature appears to have knowingly used two different expressions
in s.22(1) of SICA, namely, 'proceeding' in the first part and the
expression 'suit' in the second part and the protection of s.22 extended
G to guarantors in respect of suits alone and the use of the expression
'proceeding' could not be extended to include suits as well nor could \_.-

the expression 'suit' be extended to include the expression 'proceeding'
also. On the other hand, in **Paramjeet Singh Patheja 's case it was held
that the expression 'suit' which extends the protection of s. 22(1) to
H guarantors, would have to be interpreted to include 'proceeding' also,
ZENITH STEEL TUBES AND INDUSTRIES LTD. v. 415
SICOM LIMITED [ALTAMAS KABIR, J.]
in view of the intention of the legislature to protect sick industrial A
companies where references were pending before the BIFR. It is also
evident from the decision in **Paramjeet Singh Patheja 's case thatthe
views expressed in *KailashNathAgrawal 's case had not been brought
to the notice of the learned Judges who decided the matter. Even if this
Court agree with one of the two interpretations, the anomalous situation B
will continue since the decisions are that of coordinate Benches.
[Para24] (424-A-E]

Industrial Corporation of Maharashtra Ltd, (1993] 2 SCC 144;
PathejaBros. Forgings&StampingandAnr. v.ICICILtd and Ors., (2000] C
6 SCC 545; Madalsa International Ltd v. Central Bank of India, AIR
(1998) Born 247; *Kai/ash Nath Agrawal & Ors. v. Pradeshiya Industrial
& Investment Corporation of UP. Ltd & Anr., (2003] 4 SCC 305;
**Paramjit Singh Pathejav. ICDS Ltd, JT (2006) 10 SC 41; State Bank
ofHyderabadv. Vasudev Anant Bhide etc., (1969] 2 SCC 491; Pandurang D
Ramchandra Mandlikv. Shantibai Ramchandra Ghatge and Ors., (1989]
Supp 2 SCC 627; Secretary ofState v. Mask and Company, AIR (1948)
PC 105; Dewal Singhal v. State ofMaharashtra, (2001) 106 Company
Cases 587; BSI Ltd and Anr. v. Gift Holdings Pvt. Ltd and Anr., [2000)
2 SCC 737 and Gujarat State Financial Corporation v. Mis. Natson E
Manufacturing Co. (P) Ltd., (1979] 1 SCR 372, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5347 of
2007 .
., .
From the Judgment and final Order dated 29.1.2007 of the High F
Court of Judicature at Bombay in Appeal No. 1/2007 in Misc. Petition
No. 64 of 2000.
Shekhar Naphade, Shivaji M. Jadhav, Himanshu Gupta, B1ij Kishor
Sah and Rahul Joshi for the Appellants.
G
Jay Savla and Meenakshi for the Respondent.
The Judgment of the Court was delivered by
ALT AMAS KABIR, J. 1. Leave granted.
H
t
416 SUPREME COURT REPORTS [2007] 12 S.C.R.

A 2. The appellant no. I company was carrying on business of
manufacturing galvanised pipes. In November, 1992 the appellant-
company approached the respondent for financial assistance amounting
to Rs.1,42,000/- to meet a part of the cost for setting up a factory in
village Madap, Taluq Kolhapur in the District of Raigarh for the
B manufacture of galvanised pipes. The said amount was duly sanctioned
and the said sum of Rs.1,42,000/- was advanced by the respondent to
the appellant company. An agreement was entered into for a term loan
and the appellant-company also created a security for repayment of the
amount by hypothecating its plant and machinery and creating an equitable
C mortgage ofits factory premises situated in the above mentioned village.
A loan agreement was executed on 30.3.1993 for repayment of the loan
in various instalments. On the same day, the second appellant executed a
personal guarantee for repayment of the loan amount in case of default
by the appellant-company.
D
3. The appellant-company committed several defaults in repayment
of the loan amount compelling the respondent to issue a notice on 16.10.98
calling upon the appellant-company to pay the overdue amount within a
stipulated period. Despite such notice, the appellant-company failed to
E make payment and accordingly, by a further notice dated I 0.1.1999 the
respondent called upon the appellant-company to repay the entire amount
due and payable to the respondent by 3.2.1999 failing which the
possession of the assets of the appellant-company would be taken on
5.2.1999.
F 4. Since, despite such notice the appellant-company failed and
neglected to pay the entire amount as demanded, the respondent issued
a notice to the appellant no.2 on 13 .6.2000 calling upon him to pay the
entire amount by invoking the personal guarantee given by the second
appellant. As in the case of the appellant-company, the second appellant
G did not also make the payment as demanded, and consequently, the
respondent filed a petition against the second appellant under Section
31(1 )(aa) of the State Financial Corporations Act, 1951, on I0.10.2000
for enforcing the personal guarantee given by the said appellant.
5. In the meantime, the appellant-company applied to the Board for
H
+
ZENITH STEEL TUBES AND INDUSTRIES LTD. v. 417
SI COM LIMITED [ALTAMAS KABIR, J.]
Industrial and Financial Reconstruction (BIFR) and was declared a sick A
company by the BIFR under the provisions of the Sick Industrial
Companies (Special Provisions) Act, 1985, (SICA), and the company is
still under the said Board.
6. Taking advantage of the aforesaid position, the second appellant
.. B
contended before the single Judge of the Bombay High Court that in view
-'
of Section 22 of the aforesaid Act, the personal guarantee given by the
second appellant could not be invoked. It was also contended that the
respondent could not enforce the guarantee till such time as the assets
which had been mortgaged in its favour had not been realised. Both the C
said contentions were rejected by the learned single Judge upon holding
that the liability of the guarantor was independent of that of the principal
debtor, and accordingly, the guarantee could be invoked and the amount
could be recovered from the guarantor. The guarantor was directed to
pay Rs.1,67,89,225/-with further interest on the principal amount ofRs.92 D
lakhs from the date of the petition till payment at the rate of 12%. The
said decision of the learned single Judge was challenged by the appellants
herein before the Division Bench of the Bombay High Court in Appeal
No.l/2007. The Division Bench on consideration of the different decisions
of this Court came to the conclusion that the provisions of Section 22 of E
SICA, as amended in 1994, did not prohibit any proceeding, other than
a suit for enforcement of any security against the guarantor. On such finding
and also upon holding that the liability of the guarantor was co-extensive
with the principal debtor and that the creditor was not required to exercise
his right as a mortgagee before proceeding against the guarantor, the F
Division Bench dismissed the appeal with costs on 29.1.2007. It is the
decision both of the learned single Judge as also the Division Bench of
the High Court which is the subject matter of this appeal.
7. Appearing in support of the appeal, Mr. Shekhar Naphade,
learned Senior Advocate, submitted that both the learned single Judge G
---1 and the Division Bench of the High Court had erred in giving a narrow
meaning to the word 'suit' as used in Section 22 of SICA. He submitted
that the context in which the expression 'suit' had been used in Section
22 of the aforesaid Act made such expression all pervasive to include
other proceedings as well before a court or other authority empowered H
418 SUPREME COURT REPORTS [2007] 12 S.C.R.

A to recover debts and other dues against the company. It was urged that
in the case of Maharashtra Tubes Limited v. State Industrial
Corporation of Maharashtra Ltd., [1993] 2 SCC 144, it had been held
that the expression "proceedings" in Section 22(1) of SICA must be widely
construed and could not be confined to legal proceedings understood in
B the narrow sense of proceeding in a court of law or a legal tribunal for
attachment and sale of the debtor's property. However, since the said
decision could be applied to companies only and not to guarantors, the
legislature amended the provisions of Section 22(1) so as to extend the
protection given to companies to guarantors also so that they too were
C given the protection of Section 22 of the Act. Mr. Naphade submitted
that the object with which the 1985 Act was enacted was primarily to
assist sick industries which had failed to meet their financial obligations.
It was urged that in certain cases it was the Directors of the company
who themselves stood guarantee for the loans advanced to the company
D and the enforcement of such guarantee against the Directors would cause
obstructions in the way of the BIFR to revive the said company, which
was also one of the objects of the 1985 Act.
8. In this regard, Mr. Naphade also referred to the decision of this
Court in Patheja Bros. Forgings & Stamping and Anr. v. ICICI Ltd.
E and Ors., (2000] 6 SCC 545, where the question involved was whether
Section 22 of the SICA would cover a suit against a guarantor of a loan
or advance that had been granted to an industrial company. Mr. Naphade
pointed out that upon holding that the words of Section 22 were crystal
clear and there was no ambiguity therein, this Court had held that no suit
F for enforcement of a guarantee in respect of a loan or advance granted
to the industrial company concerned would lie or could be proceeded
with without the consent of the Board or the Appellate Authority under
the Act. Mr. Naphade also submitted that while dealing with the aforesaid
question, this Court had overruled the decision of the Bombay High Court
G in Madalsa International Ltd. v. Central Bank of India, AIR (1998) ~-
Born 247, wherein it had been held that Section 22 would apply to
companies only and not to guarantors who would be affected personally
and the words "of any guarantee in respect of any loan or advance granted
to the industrial company'' would have to be read as the guarantee given
H
ZENITH STEEL TUBES AND INDUSTRIES LTD. v. 419
-·.......,-- SICOM LIMITED [ALTAMAS KABIR, J.]
by the industrial company itself and none else. A
9. To emphasise his aforesaid submission Mr. Naphade laid
particular emphasis on the decision of this Court in Paramjit Singh
Patheja v. !CDS Ltd. JT (2006) 10 SC 41 where in connection with
the enforcement of an arbitral award and the issuance of an insolvency
B
"'~ notice under Section 9(2) of the Presidency Towns Insolvency Act, 1909
this Court, inter alia, held that it is a well established rule that a provision
must be construed in a manner which would give effect to its purpose
and to cure the mischief in the light of which it was enacted. It was further
observed that the object of Section 22 of SICA in protecting guarantors
from legal proceedings pending a reference to BIFR by the principal
c
debtor was to ensure that a scheme for rehabilitation would not be defeated
by isolated proceedings adopted against the guarantors of a sick company.
In order to achieve such purpose, it was imperative that the expression
' "suit" in Section 22 be given its plain meaning, namely, any proceedings
D
-i,
adopted for realisation of a right vested in a party by law.
10. Mr. Naphade then submitted that the Bombay High Court had
wrongly relied upon the decision of this Court in Kai/ash Nath Agrawal
& Ors. v. Pradeshiya Industrial & Investment Corporation of UP.
Ltd. & Anr., [2003] 4 SCC 305, wherein the decision rendered by this E
Court in the Maharashtra Tubes case (supra) as also in Patheja Bros.
Forging case (supra) were distinguished and it was held that in both the
cases while considering the effects of the amendment to Section 22(1) of
SICA, the Courts were concerned with 'suits' which had been dealt with
.. in the case of Patheja Bros, and not with 'proceedings' indicated in the F
first part of Section 22(1) of the 1985 Act. Mr. Naphade added that the
decision in the Maharashtra Tubes case (supra) had been rendered prior
to the amendment of Section 22(1) of SICA, where as Patheja's case,
as also the case of Paramjit Patheja were rendered after the amendment
was effected, to extend the protection of Section 22 to guarantors as well. G
~

11. Mr. Naphade submitted that the decision in Kai/ash Nath
Agrawal 's case had been rendered by this Court in the context of
interpretation of the expressions 'suit' and 'proceedings' used in Section
22(1) of SICA, 1985. In construing the said two expressions this Court H
420 SUPREME COURT REPORTS [2007] 12 S.C.R.

A was of the view that while the expression 'proceedings' used in Section
22(1) would have to be confined to companies alone, the expression 'suit'
had been introduced by amendment to extend the protective cover of
Section 22 to guarantors as well. It was submitted that the purpose for
which such amendment had been effected, namely, to extend the
B protective cover of Section 22 to guarantors also, would be rendered
meaningless if coercive action continued to be taken against guarantors
who could even be the Directors of the company in question. It was urged
that the continuing ambiguity was sought to be explained in the Paramjit
Singh Patheja case (supra) wherein it was explained that the expression
C 'suit' would have to be understood in a larger context to include other
proceedings as well before a legal forum.
12. Mr. Naphade submitted that, in any event, the liability of the
appellant No. 2 under the guarantee given could be enforced under Section
D 31 (l)(aa) of the State Financial Corporations Act, 1951, only if and when
the appellant made a default in repayment of the loan. Having regard to
the fact that the appellant NQ. l had made a reference to the BIFR under
Section 15 of the 1985 Act, the liability of the appellant-company stood
suspended under Section 22 of the said Act. As the liability of the
E appellant-company stood suspended, there could be no question of any
default having been committed by the appellant company towards
repayment of the loan. According to Mr. Naphade, since the respondent
had filed an application under Section 3 l(l)(aa) of the above Act making
only a monetary claim against the appellant no.2, on a true construction
F of the above provisions the said Section permits enforcement only of the
security given by the guarantor and since in the instant case the respondent
had filed an application not for enforcement of any security but for claiming
only the amount of guarantee the same could not be enforced against the
appellant No.2. According to Mr. Naphade the appellant No.2 has not
G given any other security which could be proceeded against by the
respondent.
13. Mr. Naphade submitted that the Bombay High Court had no
jurisdiction to entertain the application made under Section 31 ( 1)(aa) of
the Act and the order passed there above was a nugity.
H
ZENITH STEEL TUBES AND INDUSTRIES LTD. v. 421
::......-· SICOM LIMITED [AL TAMAS KABIR, J.]
14. It was also submitted that I.A. No. I of 2007 was filed in the A
special leave petition for leave to place on record additional grounds as
set out in the application and prayed that the same be allowed to be placed
on record by way of additional grounds. Inasmuch as, such prayer was
objected to on behalf of the respondent, Mr. Naphade referred to the
decision of this Court in the Management of State Bank ofHyderabad B
~
.I v. Vasudev Anant Bhide etc., (1969] 2 SCC 491, wherein while
considering as to whether a claim was barred under Article 137 of the
Limitation Act, an objection was taken that such ground had not been
raised either before the Labour Court or even in the special leave petition
filed in this Court. In the said case, on an application made to permit the c
appellant to raise the question of limitation based upon Article 13 7 of the
Limitation Act, this Court permitted the appellant to raise such plea as
no fresh facts were required to be investigated and the matter could be
dealt with as a pure question of law.
' D
15. Mr. Naphade also referred to the decision of this Court in
~.
Pandurang Ramchandra Mandlik v. Shantibai Ramchandra Ghatge
and Ors., [1989] Supp 2 SCC 627 which was a case dealing with ousting
of jurisdiction of the Civil Court with regard to the provisions of Section
80 and Section 85 of the Bombay Tenancy and Agricultural Lands Act,
E
1948. Referring to the decision of the Judicial Committee in Secretary
of State v. Mask and Company, AIR (1948) PC 105, where it was
observed that the exclusion of the jurisdiction of the Civil Court was not
to be readily inferred, but that such exclusion must either be explicitly
expressed or clearly implied, it was held that there was nothing in the
F
"' language or context of Section 80 or Section 85 of the above Act to
suggest that the jurisdiction of the Civil Court was expressly or by
necessary implication barred with regard to the question as to whether
the defendants have become statutory owners of the land.
16. Mr. Naphade concluded his submissions by urging that both the G
v learned single Judge and the Division Bench of the Bombay High Court
had misconstrued the provisions of Section 22 of the 1985 Act, as
amended, in holding that the amended provisions granting protection to
guarantors in suits for enforcement, could not be stretched to include
proceedings for enforcement as well. H
422 SUPREME COURT REPORTS [2007] 12 S.C.R.
~

A 17. Appearing for the respondent, Mr. Jay Savla, learned advocate,
contended that the controversy regarding the protection given by Section
22 of SICA to guarantors had been set at rest by this Court in Kai/ash
Nath Agrawal 's case (supra). He submitted that while in the case of
Patheja Bros. Forgings & Stamping case (supra) this court had to
B consider whether a suit against a guarantor would be covered by the
protection provided under Section 22(1) of SICA, the question in Kai/ash
Nath Agrawal 's case this Court was concerned not with a "suit" but a
•
"proceeding" for recovery of dues and in those circumstances this Court
had examined the use of the expressions "proceeding" and "suit" used in
c different parts of Section 22(1) of SICA. It was in that context that this
Court distinguished the earlier decision in Patheja Bros. Forgings &
Stampings case and upon holding that since the legislature had expressly
chosen to make a distinction between suits for recovery of money and
enforcement of guarantees and proceedings for the recovery of money,
D such distinction had to be given effect to. It was held that even under the
amended provisions only a limited protection had been afforded to \
guarantors with regard to the recovery of dues by way of suit, but not by
way of proceedings, and, accordingly, a proceeding for recovery of money
against a guarantor would stand outside the protection afforded under
E Section 22(1) of the 1985 Act.
18. It was urged that in the instant case, a situation similar to that in
Kailash Nath Agrawal 's case had arisen, since the proceeding had been
initiated against the guarantor under the relevant provisions of the State
Financial Corporations Act, 1951, which stood outside the purview of
F
Section 22(1) of SICA.
19. Mr. Savla submitted that although the decision in Kailash Nath
Agrawal 's case was not referred to by the Division Bench of the Bombay
High Court, a similar decision rendered by the Division Bench of the
G Bombay High Court in Dewal Singhal v. State ofMaharashtra, (2001)
106 Company Cases 587, was relied upon. In the said decision it was \_;

held that the protection conferred on guarantors under Section 22 of SICA
is a limited protection and the bar is restricted only to a suit and did not
apply to any other proceedings.
H
ZENITH STEEL TUBES AND INDUSTRIES LTD. v. 423
SICOM LIMITED [AL TAMAS KABIR, J.]
.~-
20. Mr. Savla referred to the decision of this Court in BSI Ltd. and A
Anr. v Gift Holdings Pvt. Ltd. and Anr., [2000] 2 SCC 737, which
was rendered in a slightly different situation involving a fine imposed on a
company in a criminal case against the company and its Directors under
Section 138 of the Negotiable Instruments Act, 1881. It was held in that
case that the ban envisaged in Section 22(1) of SICA would not be B
attracted in case of punishment of fine imposed on the company for such
offence if it was with the consent of the BIFR. Furthermore, the ban
imposed underthe said provision of SICA against maintainability of a suit
for recovery of money would not cover prosecution proceedings for an
offence under Section 138 of the Negotiable Instruments Act. This Court C
observed that as the ambit of"suit" has been clearly delineated in Section
22(1) itself, it could not be stretched by employing the maxim that
contemporaneous exposition is the best and strongest in law.
21. Mr. Savla urged that a proceeding under the State Financial D
Corporations Act could not be equated with a suit as had been held by
this Court in Gujarat State Financial Corporation v. Mis. Natson
Manufacturing Co.(P) Ltd., [1979] 1 SCR 372 and having regard to
the decision in Kailash Nath Agrawal 's case (supra) such a proceeding
would not be entitled to the protection envisaged under Section 22(1) of E
SICA.
22. As to the second limb of Mr. Naphade's submission regarding
the right of the respondent to proceed against the guarantor before realising
its securities, Mr. Savla reiterated the High Court's view that the claim
against the guarantor was against him personally and was independent of F
the sureties given in mortgage by the Principal Debtor. Mr. Savla submitted
that the decision rendered in Kailash Nath Agrawal 's case does not
appear to have been brought to the notice of the Hon'ble Judges deciding
the Paramjeet Singh Patheja case (supra) and same was decided on
other earlier decisions of this Court which dealt essentially with suits for G
recovery of dues.
23. It was submitted that since the Division Bench of the High Court
took a view which finds support in Kailash Nath Agrawal 's case, no
case had been made out for interference with the same.
H
424 SUPREME COURT REPORTS [2007] 12 S.C.R.
--,,....!. :'
A 24. In the decisions of this Court cited before us, two divergent views
have been expressed in respect of the same issue involved in this appeal.
In the other decisions, this Court had no occasion to go into the said issue
which involved the interpretation of Section 22(1) of the SICA in respect
of either 'proceedings' or 'suits' respectively. In Kailash Nath Agrawal 's
B case (supra) this Court has taken the view that the legislature appears to
have knowingly used two different expressions in Section 22( 1) of SICA, •
namely, 'proceeding' in the first part and the expression 'suit' in the second
part and the protection of Section 22 extended to guarantors in respect
of suits alone and the use of the expression 'proceeding' could not be
C extended to include suits as well nor could the expression 'suit' be extended
to include the expression 'proceeding' also. On the other hand, in
Paramjeel Singh Patheja 's case (supra) it was held that the expression
'suit' which extends the protection of Section 22(1) to guarantors, would
have to be interpreted to include 'proceeding' also, in view of the intention
D of the legislature to protect sick industrial companies where references
were pending before the BIFR. It is also evident from the decision in
Paramjeet Singh Patheja 's case (supra) that the views expressed in
Kailash Nath Agrawal 's case (supra) had not been brought to the notice
of the learned Judges who decided the matter. Even if we are inclined to
E agree with one of the two interpretations, the anomalous situation will
continue since the decisions are that of coordinate Benches.
25. In such circumstances, we consider it fit and proper that the
matter should be referred to a larger Bench to resolve the existing anomaly
F resulting from the different views expressed in the two above-mentioned
cases.
26. Accordingly, the Registry is directed to place this matter before
the Hon'ble the Chief Justice oflndia for appropriate orders in the light
of what has been stated hereinbefore.
G
D.G. Matter referred to larger Bench.