JUDGMENT - GOKHALE H.L., J.:—This appeal seeks to challenge the order passed by a Single Judge dated 22nd April, 2002 granting the Summons for judgment taken out by the respondent herein (original plaintiff) against the appellant (original defendant) and thereby granting a decree in the Summary Suit.

2. The suit claim was with respect to the unpaid lease rentals in an Agreement of Lease Finance for Equipment, the payment of which rentals was guaranteed by the appellant. The outstanding principal amount due as on the date of filing of the suit was Rs. 43,05,960/- to which interest at the rate of 18% per annum for the unpaid period till filing of the suit (i.e. an amount of Rs. 5,49,983/-) was added leading to a claim of Rs. 48,55,943/- with further interest at the rate of 18% per annum on the principal amount from the date of filing of the suit till payment and/or realisation. The appeal was admitted on 5th July, 2002 and the impugned decree was directed to be stayed on the appellant depositing a sum of Rs. 20,00,000/- in this Court. The appellant preferred a Special Leave Petition against this conditional order, but the same was dismissed by the Apex Court by its order dated 13th December, 2002. The Apex Court, however, observed that the High Court may consider hearing of the appeal as early as possible. Accordingly the appeal has been heard early. It is, however, material to record that the appellant has not deposited any amount contrary to the order passed at the admission stage.

3. As can be seen from the order of the learned Single Judge, the only submission canvassed before him was that the affairs of the Company, to which the equipment was given on lease, were under investigation before the Board for Industrial and Financial Reconstruction ("BIFR" for short) and, therefore, the suit could not proceed against the guarantor (appellant) in view of the provisions of section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "SICA"). However, in this appeal, it has been additionally argued that the lease finance was essentially a loan or advance granted to the industrial company and, therefore, also the suit should not have been proceed. Thus two points arise for our determination in this appeal, and they are as follows:-

(i) Whether the learned Single Judge had erred in proceeding with the suit against the appellant/guarantor when the industrial company, to which the lease finance was given (and the repayment of which was guaranteed by the appellant), was before the BIFR?

(ii) Whether the lease finance granted by the respondent to the industrial company was in fact a loan or advance and, therefore, the suit had to be suspended in view of the provisions of section 22(1) of SICA?

4. Before we deal with these points, it will be necessary to refer to the few necessary facts leading to the above suit and this appeal.

(i) The respondent is a public limited company which carries on business of manufacture, trade, purchase, sale and leasing of various assets on rental basis. The appellant is the Managing Director of one Prakash Industries Ltd., a public limited company.

(ii) The respondent entered into an agreement of Lease Finance on 18th March, 1994 with the said Prakash Industries Ltd. As per that agreement, the respondent arranged for the finance for purchase of heavy structural Rolling Mill Rolls and leased out the machinery to the said Prakash Industries Ltd., on the terms and conditions as contained in the agreement. The amount spent was over Rs. 70,00,000/-. The same was to be repaid through lease rentals spread over 20 equated instalments. The appellant was the Managing Director of this Prakash Industries and had guaranteed payment of these instalments in his personal capacity and for that purpose he executed a personal guarantee before a Special Metropolitan Magistrate on the same day. Clause 4 of the agreement clearly recorded that the property in the equipment shall at all times re

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