Hyderabad High Court to decide on Sujana Universal Industries' plea soon

The company has challenged the order of a single judge in allowing a petition by the Mauritius Bank, seeking the liquidation of Mr Sujana’s company, which had stood as a guarantor to a Rs 100-crore loan availed by its subsidiary firm, Heistia Company Ltd, in Mauritius. A. Sudarsan Reddy, senior counsel appearing for Sujana Industries, contended that lenders could not seek liquidation of guarantor firms through company petitions. He said they only had the right to recover their money through filing civil suits in civil courts, and the Supreme Court too had rejected pleas of several such lenders who had applied Section 29 of the State Finance Corporation Act and had attached the properties of guarantors.

He submitted that the Supreme Court had clearly held in those matters that lenders could not directly attach the properties of guarantors. The Mauritius Bank told the Bench that guarantors were equally liable and hence a company petition was very much maintainable against a guarantor firm. The bank said that the guarantor firm had earlier agreed to repay the loan in several installments but had failed to fulfill its promise.