UNION BANK OF INDIA Vs. GARDEN CERAMICS PVT LTD
DEBTS RECOVERY APPELLATE TRIBUNAL
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(1.) APPELLANT-Union Bank of India (hereinafter referred to as 'the appellant-Bank') filed O.A. 371/98 against 6 defendants who are respondent Nos. 1 to 6 herein (hereinafter referred to as 'the defendant Nos. 1 to 6') for the recovery of Rs. 88,56,535.16 with interest thereon @ 17.34% per annum with quarterly rest's from the date of O.A. till the recovery of the amount. The learned Presiding Officer of the Debts Recovery Tribunal, Jaipur (hereinafter referred to as 'the DRT') by his final order dated 26th July, 2001 ordered that the appellant-Bank is entitled to recover this amount from defendant Nos. 1,4, 5 and 6 with interest @ 6% per annum from the date of filing the O.A. He held that defendant Nos. 2 and 3 are not responsible for this amount. Aggrieved, the appellant-Bank has approached this Tribunal with this appeal with a prayer for directing all the defendant Nos. 1 to 6 to pay the amount with interest @ 17.34% per annum with quarterly rests from the date of O.A. till realisation. The defendant Nos. 1 to 6 did not file any reply to this appeal. The learned Counsel for the defendant Nos. 2 and 3 stated that he will address arguments opposing the appeal.
(2.) I have heard the Counsel for both the sides, and perused the records.
The case of the appellant-Bank, as set out in the O.A., in brief is as follows:
Initially defendant Nos. 2 and 3 were the Directors of the 1st defendant-Company, and the defendant Nos. 4 to 6 also became the Directors on 27th August, 1996.
1st defendant-Company approached the appellant-Bank for certain credit facilities. On 25th July, 1995, the loan documents were executed, and the defendant Nos. 2 and 3 gave personal guarantees for the repayment of the credit facilities advanced to the 1st defendant by executing letters of guarantee. The 1st defendant-Company also created a mortgage by depositing the title deeds in respect of the property mentioned in the O.A.
Subsequently, on 27th August, 1996, the defendant Nos. 4 to 6 became Directors of the 1st defendant-Company and for the due payment of the amount, apart from executing the loan documents, they also gave their personal guarantee by executing the letter of guarantee in favour of the appellant-Bank. The 1st defendant-Company also agreed to pay minimum interest of 17.5% with quarterly rests. The 1st defendant-Company, which had availed the credit facilities, did not repay the amount in time.
(3.) THAT is why O.A. 371/98 was filed before the DRT. The defendants 2 and 3 filed written statement to the O.A. urging as follows:
By resolution dated 27th August, 1996, the defendant Nos. 4 to 6 were appointed as Directors. There was a pre-condition that the defendant Nos. 4 to 6 would operate the Bank account, and no other Director would do so. Defendant Nos. 2 and 3 had no objection to the same. For this purpose, resolution-Exhibit 25 dated 27th August, 1996 was passed. The total project was placed before the appellant-Bank by defendant Nos. 4 to 6, and it was informed that the defendant Nos. 4 to 6 will soon become the owner of the Company. The defendant Nos. 4 to 6 also took the responsibility to repay the loan to the Bank, and instead of the personal guarantee and documents executed by the defendant Nos. 2 and 3, defendant Nos. 4 to 6 agreed to execute fresh documents. The appellant-Bank also agreed to the same, and informed defendant Nos. 4 to 6 to execute the documents and personal guarantees afresh. As per this proposal, defendant Nos. 2 and 3 would be released from their personal liability. The defendants 4 to 6 executed the documents Exhibits A-26 to A-36. The appellant-Bank informed the defendant Nos. 2 and 3 that the documents Exhibit A-5 to Exhibit A-23, which defendant Nos. 2 and 3 had earlier executed, have become null and void, and thus, they are free from liability. The documents executed by defendant Nos. 2 and 3, namely, Exhibits A-5 to A-23 were cancelled. Therefore, the appellant-Bank has no claim against defendant Nos. 2 and 3, and the appellant-Bank is estopped from claiming any amount from the defendant Nos. 2 and 3. The interest claimed is excessive and unlawful. The respondent-Bank has executed documents exonerating the personal liability of defendant Nos. 2 and 3, and fixing the liability with defendant Nos. 4 to 6.;
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