In Brief
Pradeshiya Industrial Development Corporation Ltd. (PICUP) collected money through bonds guaranteed by the Uttar Pradesh State Government. When PICUP failed to repay and honour the contractual interest rates, bondholders petitioned the High Court. The High Court directed the State to fulfill its guarantee obligations. The State and PICUP appealed, arguing the writ petition was not maintainable. The Supreme Court upheld the High Court, holding that the State's guarantee obligation cannot be avoided because the borrower is in financial difficulty. Following Article 142, the Court ordered the State to pay principal amounts plus contractual interest rates until repayment, then 11% interest thereafter, with 18% interest if payments are delayed.
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