The liability of the surety is coextensive with that of the principal debtor unless otherwise provided by the contract, and the Corporation is not bound to adopt only one of the remedies provided under the State Financial Corporation Act.

( 1 ) THIS appeal under Order 43, Rule 1 (r), C. P. C. has been preferred by the defendant against the order dated 6-1-2001 of Civil Judge (Senior Division), Kanpur Nagar, by which injunction application filed by the plaintiffs was allowed and the defendant-appellant has been directed to take recourse to proceedings under S. 29 of the State Financial Corporation Act (hereinafter referred to as the Act) and to recover the amount by enforcing the personal liability only if entire amount due is not recovered in the aforesaid manner.

( 2 ) THE case set up by the plaintiffs-respondents is as follows. The plaintiffs Nos. 1 and 2 are companies registered under the provisions of Indian Companies Act and plaintiffs Nos. 4 and 5 are common directors in both the companies. The plaintiffs applied for loan and the Uttar Pradesh Financial Corporation (for short UPFC) granted a term loan of Rs. 45. 50 Lacs a working capital term loan of Rs. 55 lacs and ERS loan of Rs. 81 lacs to the plaintiff No. 1. The plaintiff No. 2 was sanctioned a working capital term loan of Rs. 13 lacs. There was some dispute with the authorities of Central Excise Department, due to which working of the unit was stopped. The plaintiffs made request to the defendant for rescheduling the payment of the balance amount. The assets and properties of plaintiffs Nos. 1 and 2 are mortgaged with the defendant. The defendant intimated on 9-2-2000 to the plaintiffs that it had decided to issue recovery certificates against the directors of the plaintiff-companies. The defendant had not taken any step under S. 29 of the Act to take over the assets of the companies and it was threatening to issue personal recovery against the plaintiffs Nos. 3, 4 and 5 who are the directors of the companies. The relief claimed in the suit is that a decree for permanent injunction be passed restraining the defendant from realising any amount from the plaintiffs or their guarantors without resorting to action under S. 29 of the Act i. e. disposing of assets and primary security which have been mortgaged.

( 3 ) THE plaintiffs also moved an7 application under Order 39, Rules 1 and 2 read with S. 151, C. P. C. praying that an ad interim injunction be passed in favour of the plaintiffs restraining the defendants and its officials from realising any amount from the plaintiffs or their guarantors without resorting to action under S. 29 of the Act i. e disposing of assets /primary security already mortgaged till the final disposal of the suit. The application was accompanied with an affidavit of plaintiff No. 5 wherein the same facts have been stated as in the plaint.

( 4 ) THE defendant-appellant filed an objection against the injunction application filed by the plaintiffs. The case set up in the objection is that an amount of Rs. 2,24,44,177. 00 was due against plaintiff Nos. 1 and an amount of Rs. 13,67,704. 00 was due against plaintiff No. 2. The plaintiffs No. 1 and 2 had neither paid the principal amount nor the interest on the due dates as per the agreement. The defendant rescheduled the instalments of the loan but even after availing of the said facility, the plaintiffs did not pay the instalments as per the agreed re-schedulement. It was also pleaded that the directors of the plaintiff companies had stood as guarantors or sureties and they are also liable to repay the loan in their personal and individual capacity. The UPFC was entitled to take legal proceedings both against the principal borrower and also the guarantors to recover the entire amount. The liability of the guarantors was co-extensive with the laibility of the borrower and therefore personal recovery certificate could be issued against the guarantors of the loan under the terms of the personal guarantee bonds executed by them. It was also asserted that the plaintiffs have neither prima facie case nor balance of convenience in their favour and the injunction application filed by the plaintiffs was misconceived and it i