Decided on April 06,2004



A.Subbulakshmy, - (1.) AGGRIEVED against the order dated 31.1.2003 passed by the PO, DRT-I, Chennai, in dismissing the TA as against D4 and D5 after 13.8.1990 and awarding simple pendente lite and future interest @ 10% p.a., the Canara Bank has come forward with the appeal RA-34/2003. The defendants 4 and 5 have preferred the appeal RA-6/2004 challenging the final order passed against them. The PO, DRT has found that D4 and D5 are jointly and severally liable to pay the amount due as on the date of their registration i.e. on 13.8.1990 and afterward they are not liable. The PO, DRT has found that D4 and D5 have resigned from the D1 Company from 13.8.1990 and so they cannot be held responsible to pay the loan liability of the Company which was availed after their resignation from the company.
(2.) Arguments of the Canara Bank's Counsel already heard and the matter was again posted today for arguments on the defendants' side. No representation for the defendants. Counsel for the Bank alone present. Order is being passed on merits. Counsel for the Canara Bank pointed out that D4 and D5 have executed Continuing guarantee and as per the terms and conditions of the Continuing guarantee if the guarantors D4 and D5 want to revoke the guarantee they must follow the terms and conditions set out in the continuing guarantee and their Continuing guarantee can be revoked only as per the condition imposed therein. The terms and conditions set out in the continuing guarantee read as follows: "The liabilities of the guarantors under these presents shall be construed as joint and several. This guarantee shall be a continuing guarantee notwithstanding the death of any one or more of the guarantors and shall be binding on the representatives and the estates of the deceased guarantors until the expiry of six months after a notice in writing of revocation of the guarantee as hereinafter provided is received by the Bank."
(3.) THE PO, DRT, has relied upon the letter of the company dated 8.11.1990 wherein it is stated that the company has accepted the resignation of D4 and D5 at the meeting of the Board of Directors held on 8.11.1990 and thereafter the other two persons Mr. S. Viswanathan and Mrs. V. Bhavani are the only Directors of that company. It has further been reiterated in the minutes of the meeting that it is resolved to accept the resignations of D4 and D5 Mr. D. Magesh and Mr. M.B. Mohideen in pursuance of the resignations submitted by them on personal grounds on 13.8.1990 from the Additional Directorship and to relieve them of their responsibility with effect from 8.11.1990. So, THE company has relied upon those resignation letters and has passed the minutes passing resolution that with effect from 13.8.1990, D4 and D5 ceased to be the Directors of the company and (hey me not liable. D4 and D5 did not send any letter to the Canara Bank with regard to the revocation of their guarantee. THE Bank has sent letter dated 12.11.1996 to D4 and D5 stating that the Bank reserves its right to proceed against them for all their advances/loans granted to M/s. Arbeit Platz India (P) Ltd., and Ist defendant company and they do not take cognizance of their resignation from the said Company and they shall treat them as Directors of the company as long as the company's liability is with them.;

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