Karnataka High Court
Sri.T.S.Viswanathan vs Bank Of Baroda on 8 June, 2018
Bench: Chief Justice, Krishna S Dixit
W.P.No.8101/2018
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF JUNE, 2018
PRESENT
HON'BLE MR.JUSTICE DINESH MAHESHWARI, CHIEF JUSTICE
AND
HON'BLE MR.JUSTICE KRISHNA S. DIXIT
WRIT PETITION NO. 8101/2018 (GM-DRT)
BETWEEN:
SRI.T.S.VISWANATHAN
S/O LATE SRI.T.V.SUBRAMANIAM
AGED ABOUT 61 YEARS
OCC: RETIRED
ADDRESS: NO.223 YMCA BUILDING
NSC BOSE ROAD
CHENNAI - 600 001 ... PETITIONER
(BY SRI.T.S.VISHWANATHAN, PARTY-IN-PERSON)
AND:
1. BANK OF BARODA
BENGALURU MAIN BRANCH
PRITHIVI BUILDING
K.G. ROAD, BENGALURU - 560 009
REPRESENTED BY ITS
AUTHORIZED OFFICER
2. MR.S.HARINIVAS CHOWDARY
NO.65, NETAJI SUBASH CHANDRA
BOSE ROAD, CHENNAI - 600 001
3. M/S. MURUGAN POWER SYSTEMS PVT. LTD.
REGISTERED OFFICE NO.333-A
OLD MADRAS ROAD
VIJAMAPURA, K.R.PURAM
BENGALURU - 560 016
REPRESENTED BY ITS
OFFICIAL LIQUIDATOR
HIGH COURT OF KARNATAKA
BENGALURU
(COMPANY LIQUIDATED BY THE ORDER
W.P.No.8101/2018
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DATED 08.10.2002 MADE IN COP NO.19-1999
PASSED BY THE HON'BLE HIGH COURT
OF KARNATAKA)
... RESPONDENTS
---
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO SET
ASIDE THE ORDER DATED 26.10.2017 MADE IN
R.A.NO.53/2009 PASSED BY THE DEBT RECOVERY
APPELLATE TRIBUNAL, CHENNAI, BEING ARBITRARY,
ERRONEOUS AND OPPOSED TO LAW EQUITY AND JUSTICE
(ANNEXURE-A), AND ETC.
THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING THIS DAY, CHIEF JUSTICE, MADE THE FOLLOWING:
ORDER
Learned counsel Sri P.D.Subramanya, briefed in the matter is present. However, the petitioner has moved a memo seeking to prosecute this petition in person. At the request of petitioner, the learned counsel stands discharged.
Having heard the petitioner-in-person and having examined the material placed on record, we find no error or infirmity in the order dated 26.10.2017 passed by the Debts Recovery Appellate Tribunal, Chennai so as to consider interference in the writ jurisdiction.
Put in brief, the relevant background aspects of the matter are as follows:
W.P.No.8101/2018-3-
The respondent No.1 - Bank extended the facilities of cash credit, term loan, bills purchase, etc. to the respondent No.3 (company in liquidation), wherefor, the present petitioner and the respondent No.2 stood as guarantors. The due amount having remained unpaid, the respondent No.1 - Bank preferred O.A.No.62/2001 before the Debts Recovery Tribunal, Bengaluru ('DRT') that was decreed exparte on 09.08.2001. The present petitioner thereafter approached DRT for setting aside the exparte order whereupon, by the order dated 18.10.2007, the DRT not only set aside the exparte order but also dismissed the OA against the petitioner, inter alia, with the finding that the negligence of the creditor Bank resulted in reducing the value of the hypothecated machinery, etc. lying in its possession and that resulted in discharge of the petitioner from the liability of payment.
Aggrieved by the order passed by the DRT, the creditor Bank preferred the appeal (R.A.No.53/2009) that has been considered and allowed by the Debts Recovery Appellate Tribunal at Chennai ('DRAT') by the impugned order dated 26.10.2017 holding the petitioner liable to the tune of `10,98,000/- as per his guarantee. The DRAT took note of W.P.No.8101/2018 -4- the contentions of the parties and after having examined the matter in its totality, observed and held as under:
"11. On a careful perusal of pleadings of the parties, submissions of the learned counsel for the parties on record, it becomes clear that Respondents availed loan facility and became defaulters, hence bank had preferred OA No.52/2006 for recovery of a sum of Rs.58,47,023/- and obtained exparte decree. To release the pressure R2 gave that letter on 20.06.2002 for sale of machinery, etc. In the meanwhile other creditors mounted pressure of recovery of the money and winding up proceedings began against the Respondents. Official Liquidator sold the machinery, etc. for Rs.66,000/- and there is nothing on record to show whether it was having a valuation of Rs.25 lakhs or Rs. 1 crore. Nothing could have prevented the Respondents also to participate in the auction proceedings; hence there appears no substance in the objection of valuation.
12. In so far as mere implement of Official Liquidator is concerned, it is contributory fault of both as well as the bank and the Respondents. In such a situation order of dismissal of OA against R2 is not sustainable order, rather OA should have been allowed against all the Respondents. However, it is made clear that R2 has signed guarantee letters for a sum of Rs.10,98,000/- in the year 1993 and 1994, hence liability of R2 is confined to that amount only along with interest.
13. Accordingly impugned order is set aside. OA stands allowed against all Respondents, but liability of R2 is confined for Rs.10,98,000/-. All pending IAs if any stands closed and disposed of. Appeal stands allowed in part as indicated above"W.P.No.8101/2018 -5-
The petitioner, who was respondent No.2 before the Debts Recovery Appellate Tribunal, Chennai has strenuously submitted before us that in fact, he was only giving technical and professional support to the company in question and he had signed the Guarantee Agreement in good faith, particularly when the Bank made him to believe that the other facilities granted to the borrower company would be further secured by the personal guarantee to be obtained from the other Directors. The petitioner contends that the Bank having not done so, had misrepresented the matter and misled him. The petitioner has particularly relied upon Section 144 of the Indian Contract Act, 1872 to argue that when he had given the guarantee only on the assurance that other persons would be joined as co-guarantors, his guarantee cannot be considered as valid when other persons were not so joined. The petitioner also submits that the steps taken by the Bank for selling off the plant and machinery, etc. only for a pittance of Rs.66,000/- had been unfair and the Bank, having not taken the requisite steps in the matter and having not realized the amount from the securities available, he should be taken as discharged.
W.P.No.8101/2018-6-
We are afraid, the submissions remain without substance and do not make out a case for interference.
The submissions made by the petitioner are knocked to the ground on a bare look at the relevant clauses in the Guarantee Agreement dated 30.04.1994, wherein, it was, inter alia, agreed to by the petitioner as under:
" 4. I/we expressly agree that the Bank shall have full discretionary power, without my/our further assent or knowledge and without discharging or in any way affecting my/our liability under this guarantee from time to time AND at any time to negotiate with the Principal and settle and or alter the terms and conditions, to promise, to grant time or indulgence to or not to sue the Principal or any person/s liable with or for Principal, whether as guarantor or otherwise or make any other arrangement with the Principal or any persons so liable with for the Principal as the Bank may think fit and to hold over, renew, vary, exchange or release in whole or in part and from time to time any securities held or to be held by the Bank for or on account of the moneys and liabilities intended to be hereby secured or any part thereof. I/We also agree that I/We shall not be discharged from my/our liability by your releasing the Principal debtor or by any act or omission of yours the legal consequence of which may be to discharge the Principal debtor or by any of your which would, but for this present provision, be inconsistent with my/our rights as surety or by your omission to do any act, which but for this present provision your duty to me/us would have required you to do. I/We hereby consent to each and every of the acts mentioned above as you may think fit. Moreover though as between the Principal debtor and me/us I am/we are sureties only, I/We agree that as between yourselves and W.P.No.8101/2018 -7- me/us, I am/we are Principal debtor(s) jointly with him and accordingly I/We shall not be entitled to any of the rights conferred on sureties by Sections 133, 134, 135, 139 and 141 of the Indian Contract Act. .................................."
Further in Clause 12 thereof, the petitioner agreed to the following effect:
"12. The guarantee shall not affect or be affected by any other or further securities taken or held by the Bank or by any loss of any collateral or other security nor by the Bank failing to recover by the realization of collateral securities or otherwise any such sum or sums due from the Principal or any other person/s, or any laches on the Bank's part, nor shall the Bank be responsible to me/us for any such loss or laches".
In the face of clear and unambiguous stipulations aforesaid, suggestion on the part of the petitioner about any alleged default on the part of the Bank to secure the loan by way of other guarantees or for failing to recover the amount by realization of collateral securities, remain without substance. It had clearly been a matter of contract between the parties that the petitioner would not be entitled to any of the rights conferred on the sureties by Sections 133, 134, 135, 139 and 141 of the Contract Act. It had further been the contract between the parties that the guarantee of the petitioner would not be affected by any other securities taken or held by the W.P.No.8101/2018 -8- Bank or for the loss of any collateral or other securities or for Bank's failure to recover from the collateral securities or otherwise.
In the given set of facts and circumstances, DRAT cannot be faulted in having mulcted the liability to the tune of `10,98,000/- on the petitioner with reference to the deed of guarantee executed by him.
In view of the above, this writ petition fails and is dismissed.
Sd/-
CHIEF JUSTICE Sd/-
JUDGE Snb/