ORDER

1. The appellant had granted a lease to Respondent 2 Hindustan Forest Company (P) Ltd. (hereinafter referred to as "the Company") for felling trees in 1961. In terms of the agreement executed between the appellant and the Company, the Company was liable to pay royalty on the timber so felled to the appellant. This lease was initially valid up to 1968 and was then extended up to 1971.

2. In 1972 the Company passed a resolution that it should be wound up voluntarily under Section 484 of the Companies Act, 1956. The final order for winding up was passed by the High Court of Punjab and Haryana on 7-2-1975.

3. In June 1975 a suit was filed by the Bank against the Company and the appellant for various reliefs including a decree for payment of money by the appellant to the Bank. The case of the Bank in the suit was that the Company was its constituent. From time to time the Bank had advanced loans to the Company. The Companys financial affairs deteriorated sometime in 1969. The Company approached the respondent Bank for further financial assistance. The Bank was not willing to advance any money unless the repayment of the amount sought to be advanced was guaranteed by the State. The