Decided on October 12,2004



Pratibha Upasani, - (1.) THIS Regular Appeal is filed by the appellant/original applicant being aggrieved by the Judgment and Order dated 30.9.1999 passed by the learned Presiding Officer of DRT, Bangalore, in OA-778/1995. By the impugned Judgment and Order, the learned PO has allowed the Bank's claim against original defendant Nos. 1, 2, 4 and 5, and disallowed the same as against original defendant No. 3. The Bank is aggrieved because the learned PO exonerated defendant No. 3 and hence the appeal.
(2.) I have heard Mr. S. Krishnamurthy, Advocate for the appellant Bank. Respondent No. 3 (Defendant No. 3) is absent though duly served. Other respondents are also absent though duly served. I have also gone through the proceedings which reveal that in the Tribunal, only defendant No. 3 appeared and contested the matter and other defendants were absent though duly served. Few facts which are required to be stated are as follows. The Bank filed OA against five defendants for recovery of their dues from the defendants. Defendant No. 1 is a Private Limited Company, while D2 to D5 were its Directors. The 1st defendant is the principal borrower who availed loan facilities from the applicant bank in the form of Term Loan of Rs. 4 lakhs agreeing to repay the same with interest at 14% p.a. compounded quarterly. The 1st defendant Company executed all the documents along with hypothecation of machineries and other collateral securities. The first defendant also obtained a Term Loan of Rs. 3,40,000/-repayable with 16.5% interest and 2% overdue interest and all the required documents were executed. Further, an Overdraft (OD) facility up to a limit of Rs. 50,000/- was sanctioned to the 1st defendant repayable with 15% interest p.a. compounded quarterly. Again, with respect to this transaction, documents were duly executed by the defendants. Thus, there was a, renewal of enhanced Overdraft facility up to a limit of Rs. 1,50,000/- for which due security documents were executed. The defendant No. 1 obtained enhanced additional OD of Rs. 30,000/- and yet another enhanced OD of Rs. 20,000/-. Defendants 2 to 5 being the Directors, executed guarantee documents and as on the date of suit, the sum due and payable by the defendants was Rs. 37,40,582.57p. with costs current and future interest.
(3.) ORIGINAL suit being OS No. 2732/1992 was filed by the Canara Bank in the City Civil Court, Bangalore, for recovery of its dues from the defendants. Upon the constitution of the Debt Recovery Tribunal under the Recovery of Debts to Banks and Financial Institutions (RDDB & FI) Act, 1993, the matter from the Civil Court came to be transferred to DRT, Bangalore. Notice was served to all the five defendants. However, defendants 1, 2, 4 and 5 remained ex parte while defendant No. 3 alone appeared. He had filed written statement in the City Civil Court itself. His defence is that he was the Director of the 1st defendant Company, he retired from the company in the year 1983 and was not a Director at the time of filing of the suit. According to him, renewal of the enhanced Overdraft facility was not within his knowledge and even the Overdraft facility was not within his knowledge. He, however, admitted that defendants 3,4 and 5 executed guarantee letter and that he executed Bank guarantee for Rs. 4 lakhs. He, however, disputed about the enhancement of the said facility submitting that it was not within his knowledge. It was his main defence that the suit was barred by limitation. Citing these reasons, it was prayed by D3 that the suit be dismissed.;

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