CAV JUDGMENT

(PER: HON'BLE MR JUSTICE SREENIVAS HARISH KUMAR)

This is an appeal preferred under Section 32 (9) of the State Financial Corporation Act (‘SFC Act’ for short). The material facts that led to this appeal being filed are as below:

2. The appellant initiated action under Section 31 (1) (aa) of SFC Act to recover a sum of Rs.2,98,30,100.04 with interest from the respondents 2 and 3 who were sureties to the loan granted by the appellant to the first respondent. Initially, a sum of Rs.30 Lakhs was sanctioned to the first respondent in the year 1981, and at that time itself respondents 2 and 3 stood as sureties by executing an irrevocable deed of continuing guarantee. The first respondent having become a defaulter approached the BIFR in the year 1989. The BIFR directed the appellant to sanction a further sum of Rs.25 Lakhs, and it was sanctioned also. Rs.66.26 Lakhs was the sum that had accrued towards interest on the original loan amount of Rs.30 Lakhs, and it was funded, however penal interest of Rs.8,47,627.67 was waived. Again the respondent became a defaulter. The BIFR declared the first respondent a sick company and ordered for its winding up. In the meantime the appel