STATE BANK OF INDIA Vs. D V S RAJU
LAWS(DR)-2004-1-4
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on January 28,2004

Appellant
VERSUS
Respondents

JUDGEMENT

A.Subbulakshmy, - (1.) THE Original Application (OA) was decreed by the PO, DRT, Hyderabad, as against the other defendants except defendant No. 3 and the OA was dismissed as against D3 by Order dated 18.6.2002. Aggrieved against this dismissal Order as against D3 the appellant Bank has come forward with this appeal.
(2.) Counsel for the appellant Bank submits that D3 is also liable for Suit claim since he executed the guarantee and the decree has to be passed as against D3 also. Counsel for the 1st respondent/3rd defendant submits that D3 resigned from his Directorship in the year 1981 and he was no longer the Director and he had no more claim over the 1st defendant Company and all the loan transactions were done by the next set of Directors and not by this respondent and the 1st respondent is not liable and the Order passed by the PO, DRT, is not to be interfered with. Counsel for the appellant Bank very much relied upon the guarantees executed by the 1 st respondent, other Directors and the 1st defendant Company and the Counsel for the appellant Bank submits that as per the guarantee executed the 1st respondent is liable since it is a continuing guarantee. He relies upon the guarantees Exs. A3 to A5. Ex. A3 is the Deferred Payment Guarantee executed on 22.6.1978 between the Bank and the D1 Company. The guarantee shall remain in force until 30.4.1989 unless a Suit or action to enforce a claim under the guarantee is filed within three months from that date. Exs. A4 and A5 are the Counter Guarantees dated 22.6.1978 executed by the D1 Company and the three Directors viz. N.V. Janarthana Rao, K. Srinivasa Rao and D.V.S. Raju.
(3.) COUNSEL for the 1st respondent pointed out this Ex. A5 guarantee was executed by the Directors only in their capacity as Directors and they never executed personal guarantee and after ceasing from the Directorship they are no longer responsible. Clause (b) of Ex. A5 Counter Guarantee state.s "The Bank shall be at liberty to debit the Current Account maintained by us at the Bank's Red-Hills Branch with any amount paid or payable by the Bank pursuant to Clause (a) of this Counter Guarantee." Clause (c) of the Guarantee states that "it is further agreed that this Counter-guarantee will remain in force until the Bank if finally discharged of the liabilities under the said guarantee and has obtained confirmation in writing thereof from the beneficiary and received therefrom the said guarantee duly redeemed." Clause (b) in this guarantee reveals that the Bank is at liberty to debit the Current Account maintained at the Bank's branch with any amount paid or payable by the Bank. Only in their capacity as Directors they have executed this guarantee. Admittedly, the 1st respondent resigned from his Directorship in the year 1981. So, after he resigned from the Directorship since he is no longer the Director of the company, he cannot be held liable for any subsequent dealings or for the amount due to the Bank and only the next set of Directors will be liable. After his resignation, D3 cannot be held responsible for any amount due to the Bank because he executed the guarantee only in his capacity as Director of that Company.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.