JUDGMENT :

T.S. Thakur, J.

1. Leave granted.

2. In Pawan Kumar Jain v. Pradeshiya Industrial and Investment Corporation of U.P. Ltd. and Ors., (2004) 6 SCC 758, a two-Judge Bench of this Court declared that no proceedings for recovery of the outstanding loan amount can be taken against a guarantor so long as the property of the borrower which is mortgaged, charged or otherwise encumbered is not first sold. Section 4(2)(b) of the Uttar Pradesh Public Moneys (Recovery of Dues) Act, 1972 was in the process interpreted to be giving protection against recovery proceedings not only to the borrower of the loan but to his guarantor as well. The conclusion drawn by this Court is summed up in the following passage:

8. In our view, the above-set-out provisions of the U.P. Act are very clear. Action against the guarantor cannot be taken until the property of the principal debtor is first sold off. As the Appellant has not sold the property of the principal debtor, the action against the Appellant cannot be sustained. We, therefore, set aside the recovery notice.

3. Proceedings for the recovery of outstanding loan amount having been initiated against the Appellant Sobran Singh who stood guarantor fo