# In the matter of Tamil Nadu Industrial Investment Corporation Limited vs. Pulsar Electronics Ltd. & Ors.

> HC judgment dated 2025-01-07. Citation: TCN-2025-HC-00057. The Tamil Nadu Industrial Investment Corporation Limited (TIIC) filed a petition against M/s.Pulsar…

- **Court:** HC
- **Order date:** 7 Jan 2025
- **Citation:** TCN-2025-HC-00057
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/tamil-nadu-industrial-investment-corporation-limited-vs-pulsar-electronics-ltd-o-ac6cc955

## Summary

### Background

The Tamil Nadu Industrial Investment Corporation Limited (TIIC) filed a petition against M/s.Pulsar Electronics Ltd and its guarantors to recover a loan amount. Pulsar Electronics had availed a term loan of Rs.60 lakhs from TIIC in 1987 for setting up a factory. Respondents 2 to 8 acted as guarantors, executing deeds of guarantee. Due to default in repayment, TIIC took possession of the mortgaged property in 1994. A winding-up petition was filed against Pulsar Electronics in the High Court, and an Official Liquidator was appointed. TIIC participated in the liquidation proceedings and received Rs.55 lakhs. Claiming a balance amount of Rs.12,18,39,232.60/-, TIIC filed the present petition under Sections 31(a), 31(aa), and 32 of the State Financial Corporations Act, 1951.

## Facts

In 1987, M/s.Pulsar Electronics Ltd. obtained a Rs.60 lakh term loan from Tamil Nadu Industrial Investment Corporation Limited (TIIC) to establish a factory for manufacturing electronic bush buttons for telephones. The loan was secured by hypothecation of machinery and personal guarantees from respondents 2 to 8. Due to repayment defaults, TIIC took possession of the mortgaged land and building in 1994. A winding-up petition was filed against M/s.Pulsar Electronics Ltd. in the High Court, leading to the appointment of an Official Liquidator. TIIC participated in the liquidation proceedings and received Rs.55 lakhs. TIIC then filed a petition seeking to recover the remaining balance of Rs.12,18,39,232.60/- from the respondents. Respondents 6 and 7 argued that their

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## Issues and analysis

### Issue 1: Whether the petitioner/TIIC, after liquidation of the 1st respondent Company and receiving its …

**Ratio:** The liability of a surety is co-extensive with that of the principal debtor, and the

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**Reasoning:** The court relied on several precedents, including Lalit Kumar Jain v. Union of India,

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**Interpretation:** Section 31 of the State Financial Corporations Act, 1951, provides a special

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**Application:** The court applied the ratio to the facts of the case, finding that TIIC's right

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## Parties

- **Judges:** DR.JUSTICE…
- **Appellants:** Tamil Nadu…
- **Respondents:** M/s.Pulsar…
- **Other parties:** Kohi…

## Timeline

- **1987-05-07 — Loan Sanc…**: TIIC sanctioned a term loan of Rs.60…
- **1987-12-04 — Deed of Hypot…**: M/s.Pulsar Electronics Ltd. hypothecated…

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