JUDMENT: The applicant herein guarantor has filed the above application to set aside the Insolvency Notice No.76 of 2002 under Sec.9(2) of the Presidency Towns Insolvency Act.

2. In the affidavit filed in support of the above application it is stated that the principal debtor M/s. TTG Industries Limited is a Public Limited Company and on account of accumulated losses, the net worth of the said principal debtor was fully eroded and therefore a reference was made under Sec.15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter called as “the Act”) to BIFR and the reference was registered vide No.111 of 2001. The BIFR has also initiated further proceedings under Sec.16 (2) of the Act. The respondent herein had initiated arbitration proceedings against the first debtor Company M/s. TTG Industries Limited in A.P.No.17 of 1999, claiming a sum of Rs.76,51,296 together with interest at 3 % per annum. The award was passed on 4.8.2000, directing the petitioner herein to pay a sum of Rs.76,51,296 together with interest at 21% per annum from 1.12.1998, till the date of realisation.

3. It is further stated that questioning the said arbitration proceedings, an appeal was filed before the District Court, Mangalore. The said appeal was dismissed as time barred, a against which the petitioner preferred on appeal before the High Court of Karnataka at Bangalore on 16.9.2001. By order dated 7.2.2002, the High Court of Karnataka at Bangalore rejected the appeal. Against the said order of the Karnataka High Court, the applicant preferred Special Leave Petition before the Hon’ble Supreme Court and the same is pending. In the meanwhile, the respondents have filed E.P.No.120 of 2001 before the Sub Court, Poonamallee for executing the award. A counter has been filed, challenging the maintainability of the petition as the judgment debtor is a Sick Industrial Company. The petitioner herein is a guarantor to the principal debtor, which is a Sick Industrial Companies Act, the immunity under these provisions applicable to a Sick Industrial Company, accordingly the very same provision would also apply to the guarantor herein. With these particulars the petitioner has filed the present application to set aside the Insolvency Notice No.76 of 2002.

4. The petitioning creditor first respondent - M/s. Manipal Finance Company filed a counter affidavit disputing various averments made in Appln.No.415 of 2002. It is settled that till date their company has not received any amount from 4.8.2000 either from the applicant or from M/s. TTG Industries. As per the award or decree, the decree holder can execute the decree or award according to law. The said award is passed jointly and severally against the applicant and M/s. TTG Industries. Sec.22(1) of the Sick Industrial Companies Act is not applicable to this case.

5. In the light of the above pleadings, I have heard the learned counsel for the applicant as well as the respondent-petitioning creditor.

6. The only point for consideration in this application is whether any ground is made out to set aside the Insolvency Notice No.76 of 2002 issued under Sec.9(2) of the Presidency Towns Insolvency Act?

7. I have already referred to the case of both parties. The applicant herein is the guarantor and the principal debtor is M/s. TTG Industries, which is a Public Limited Company. Among other factual details, it is asserted that the principal debtor has been declared as a Sick Industrial Undertaking under Sec.3(1) of the Sick Industrial Companies Act, 1985 and reference in 111 of 2001 is pending before the BIFR for enquiry. The fact that the applicant is the guarantor to the principal debtor which is a Sick Industrial Company and the same provision is applicable to the applicant/guarantor has been specifically stated in para 8 of the affidavit.

8. In the counter affidavit filed by the petitioning creditor the said factual aspect has not been denied. In this regard, learned counsel appearing for the applican

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