SYNDICATE BANK Vs. ALLAHABAD BANK
LAWS(DR)-2003-9-13
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on September 10,2003

Appellant
VERSUS
Respondents

JUDGEMENT

A.Subbulakshmy, - (1.)THE appeal is directed as against the interim Order dated 18.2.2003 passed by the Tribunal to pay the admitted amount of guarantee as admitted by the appellant Syndicate Bank. THE interim Order was passed on the ground that the appellant Syndicate Bank admitted the amount of guarantee as the Syndicate Bank executed guarantee for the amount and the Syndicate Bank is required to fulfil the obligation in terms of guarantee.
(2.)It is the case of the respondent Allahabad Bank that the Syndicate Bank has issued two Bank guarantees BG No. 34/1989 & BG No. 35/1989 in favour of the 2nd defendant M/s. Dhanalakshmi Consolidates Industries Ltd., Chennai, guaranteeing payment of Rs. 1,25,00,000/- (BG No. 34/1989) and also guaranteeing payment of a further sum of Rs. 3,75,00,000/- (BG No. 35/89) to the 2nd defendant and both these guarantees were executed by the Syndicate Bank on 29.4.1989 but the Bank Guarantee BG No. 34/89 stands discharged as the lease rentals due under it were paid of by the Syndicate Bank, So, there remains only the Bank guarantee bearing BG No. 35/89 and the interim decree is passed by the DRT on the ground that the Syndicate Bank admitted the fact that the 2nd defendant M/s. Dhanalakshmi Consolidates Industries Ltd., Chennai, assigning its rights under Bank guarantee bearing No. 35/89 in favour of the plaintiff M/s. Allahabad Bank issued notice of assignment to the plaintiff Bank in the present TA. It is also stated that the Syndicate Bank conveyed its acceptance to the said assignment by its letter dated 3.5.1989.
It is also further stated that the Syndicate Bank has pleaded that the assignment is notified to the Syndicate Bank and has been duly recognised and registered under the. Agreement and the Bank has agreed to comply with the terms of assignment and to make payment of monthly rentals to the Allahabad Bank in the event of the 1st defendant (M/s. Mangalore Chemicals & Fertilizers Ltd., Bangalore) committing default for making the payment. It is also stated that the Bank Guarantee further issued by the Syndicate Bank in favour of M/s. Dhanalakshmi Consolidates Industries Ltd., provides that the Syndicate Bank irrevocably and unconditionally guarantees that M/s. Mangalore Chemicals & Fertilisers Ltd., Bangalore, shall pay M/s. Dhanalakshmi Consolidates Industries Ltd., Chennai, the monthly rentals and in the event of any default by M/s. Mangalore Chemicals & Fertilisers Ltd., for any reason whatsoever in paying the monthly rentals on the due dates, it was also open to the Dhanalakshmi Consolidates Industries Ltd., Chennai, to invoke the Bank Guarantee and demand immediate payment of the defaulted monthly rent or the entire rent payable for the whole period of lease. It is also stated that the maximum amount payable by the Syndicate Bank in respect of the guarantee is limited to Rs. 3,75,00,000/- with interest @ 16.5% p.a. or at such rates as may be prescribed by the Reserve Bank of India from time-to-time for the interest payment commercial loans from the date of default. The Syndicate has to perform all the obligations under the Bank guarantee to the Allahabad Bank and shall pay all the monthly rentals in the event of default by the Mangalore Chemicals & Fertilisers Ltd., to the Allahabad Bank. On these facts, the interim decree was passed by the PO, DRT-1 Chennai, directing the Syndicate Bank to pay the decree amount to Allahabad Bank Aggrieved against that Order in the present appeal is preferred by the Syndicate Bank.

(3.)COUNSEL for the Syndicate Bank submitted that there is no admitted liability and the Syndicate Bank never admitted to pay the amount under the guarantee and there is no admitted liability at all and the interim decree passed is not proper and the PO, DRT-1 can pass a well considered Order in the OA after considering all the aspects and the interim decree passed is not sustainable.


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