The main legal point established in the judgment is that the determination of the guarantor's liability was not incidental to the winding up proceedings and did not concern the effective winding up of the company. The court refused to exercise its discretion to adjudicate the matter, dismissing the application.

( 1 ) THIS application has been filed by Sri Khalid Mukhtar son of the late Mukhtar Hamid Ali, resident of Mukhtar Manzil, Civil Lines, Aligarh, under Section 446 of the Companies Act, 1956 ("the Act"), in the matter of Buckeye Batteries (P.) Ltd. (in liquidation) praying to quash the recovery certificate dated March 29, 2001, issued by Pradeshiya Industrial and Investment corporation of U. P. Ltd. (PICUP) to the Collector, Aligarh ; and to stay proceedings against the applicant as a guarantor of financial assistance granted to the company (in liquidation ).

( 2 ) BY notice dated March 29, 2001, the court did not find any ground to grant interim relief and directed the petitioner to file a supplementary affidavit annexing a copy of the contract of guarantee. The required supplementary along with the bond of guarantee executed in favour of picup in Legal Form No. 2 was filed on April 12, 2001. On the same date, the court granted an interim protection to the effect that no coercive action shall take place against the petitioner for realization of the dues claimed by PICUP and for which certificate of recovery has been sent by picup to the Collector, Aligarh. On April 16, 2001, this court by a detailed order found that prima facie at that stage the claim set up by the applicant can be examined under Section 446 (2) (d) of the Companies Act, 1956, and required PICUP to file a detailed counter-affidavit. Counter-affidavit was filed by PICUP to which a rejoinder-affidavit has also been filed. The facts giving rise to the above application are stated as below : picup sanctioned a term loan of Rs. 30 lakhs to the company (in liquidation), outof which Rs. 29. 75 lakhs was disbursed to the company. Sri Khalid Mukhtar, Dr. Aslam Qadeer and Sri khursheed Ahmad Khan were promoters of the company for setting up a project for manufacturing of dry cells at Sikandrapur, District Aligarh. On April 30, 1999, the accounts position of the company with PICUP stood as follows : (Rs. in lakhs) (i) Disbursed term loan 29. 45 loan repaid 12. 67 (ii) Principal 16. 78 (iii) outstanding Interest overdue 83. 18 (iv)Total 99. 96 a rehabilitation was sanctioned by way of funding of interest and resche-dulement of instalments and to agree for pari passu charge, with Canara Bank for their working capital term loan. Since the performance of the company did not improve, PICUP initiated proceedings under section 29 of the State Financial Corporations Act and took over physical possession on August 23, 1995. In the meantime Company Petition No. 29 of 1993 was filed on November 22, 1993, and a winding up order was passed on April 17, 1995. On November 29, 1995, the court gave order to the official liquidator to take over possession of the assets from PICUP. The official liquidator took over the possession of the assets on December 20, 1995, and prepared inventories.

( 3 ) SRI Khalid Mukhtar has executed a bond of guarantee in favour of PICUP to repay the loan. PICUP invoked the bond of guarantee and issued a recovery certificate to the Collectoraligarh, on March 29, 2001, for realization of Rs. 89,96,651. 56 and in addition 16. 5 per cent. annual interest with effect from February 1, 2001, as well as 10 per cent. recovery charges, under the u. P. Public Money (Recovery of Dues) Act, 1972. In para. 5 of the recovery certificate, it was stated that in respect of the aforesaid loan Sri Khursheed Ahmad Khan, Dr. Aslam Qadeer and khalid Mukhtar had executed bonds of personal guarantee on September 16, 1983, to the effect that in case the company failed to pay the loan amount, they shall pay the same as guarantors from their entire movable and immovable properties for which the PICUP had invoked the personal guarantee by notice of demand issued on October 11, 1999.

( 4 ) THE term loan given by PICUP was secured by equitable mortgage by deposit of title deeds in respect of the companys immovable properties with PICUP and also by bond of guarantee given b