Decided on June 01,2004



K.S. Kumaran, (J.) Chairperson - (1.) THIS appeal has been directed against the order dated 4.3.1998 passed by the Presiding Officer of the Debts Recovery Tribunal, Delhi (hereinafter referred to as 'the DRT') on an application filed by the respondents 4 and 5 herein (who are defendants 2 and 3 before the DRT; and hereinafter referred to as "the defendants 2 and 3") for impleading the appellants herein as defendants 11 to 13 in the O. A., 633/95. The learned Presiding Officer of the DRT (by the impugned order) ordered that the appellants be impleaded as such.
(2.) Ist respondent-Canara Bank (hereinafter referred to as "the respondent-Bank") has filed said O.A. 633/95 against (1) M/s. Shivani Synthetics Ltd., (2) Mr. C.P. Modi, (3) Mr. K.K. Aggarwal (defendants 1 to 3 respectively) and seven others, for the recovery of Rs. 2,72,41,481.52 with interest from defendants 1 to 9 jointly and severally. The respondent-Bank has averred in para 2 of the O.A. that the Ist defendant is the borrower and that the defendants 2 and 3 are not only the directors of the Ist defendant, but also the guarantors for the loans advanced by the respondent-Bank. The defendant 2 and 3 filed a Miscellaneous Application before the DRT for impleading the appellants herein as defendants 11 to 13. In support of this application, the defendants 2 and 3 urged that the appellants--Rajiv Aggarwal and Rakesh Gupta--agreed to purchase the entire shareholdings of the defendants 2 and 3, which were accordingly transferred to them between March 1992 and July 1992. The defendants 2 and 3 also urged that the respondent-Bank had notice of the change of the management, and also the taking over of the liabilities under the personal guarantees of the new management and accordingly, their (2nd and 3rd defendants') personal guarantees stood discharged. The defendants 2 and 3 have urged that the appellants not only took over the management of the Ist defendant-company, but also assumed the liability of the company, and orally agreed with them (defendants 2 and 3) that they (defendants 2 and 3) would be discharged of their guarantees. They have also averred that these two persons (Mr. Rajiv Aggarwal and Mr. Rakesh Gupta) would assume the liability formally by executing letters of guarantees in favour of the respondent-Bank. The defendants 2 and 3 have urged that once they (defendants 2 and 3) are able to establish that the appellants had taken over and assumed full liability of the defendants 2 and 3, the appellants would be liable to suffer the issuance of the recovery certificate against them, in case, the claim of the respondent-Bank is allowed.
(3.) THIS application was opposed by the respondent-Bank. The respondent-Bank pleaded as follows: Defendants 2 and 3 are personal guarantors, and the takeover of the Ist defendant company by transfer of shares, if any, does not affect their liability as guarantors. The respondent-Bank never discharged them. The disputes between defendants 2 and 3 and the appellants is not relevant to decide the O.A. filed by the respondent-Bank for the recovery. There was no transfer of the personal guarantee given by defendants 2 and 3. The respondent-Bank did not have notice of the change of management and the take over of the liabilities as alleged. The personal guarantees, being untransferable, such transfers, if any, do not affect the respondent-Bank's rights. The respondent-Bank has not got any personal guarantee from the appellants. Therefore, they are not necessary parties to the O.A. The appellants herein filed a reply opposing the application. They pleaded as follows: The proposed defendants are neither the principal borrowers nor guarantors. They have purchased the share holdings of defendants 2 and 3, but it is denied that the personal guarantees given by the defendants 2 and 3 were transferred to them (appellants). The personal guarantees of defendants 2 and 3 arc not discharged. They (appellants) did not agree to execute any letters of guarantee in favour of the respondent-Bank. At no point of time, the appellants assumed the responsibility or the liabilities or regard to discharge defendants 2 and 3 from the Bank guarantee. The learned Presiding Officer of the DRT, by the impugned order dated 4.3.1998, held that the impleadment of the appellants as parties will assist the Tribunal in determining the issues in this case. He, therefore, allowed the application for impleading the appellants as defendants.;

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