INDIAN BANK Vs. TOPPACT APPARELS PVT. LTD.
LAWS(DR)-2014-7-1
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on July 17,2014

Appellant
VERSUS
Respondents

JUDGEMENT

Ranjit Singh, J. (Chairperson) - (1.) THIS Appeal is filed by Indian Bank against the order passed by the Tribunal below holding the Bank entitled to recover a sum of Rs. 11,62,922/ - from the defendant Nos. 1, 2, 3, 4 and 7 jointly and severally along with costs, pendente lite and future interest ® 12% p.a. w.e.f. 16th May, 1990. The liability of defendant Nos. 4 and 7 is limited only to Rs. 10,66,023/ - alongwith costs, pendente lite and future interest @12% p.a. whereas the claim against defendant Nos. 5 and 6 has been dismissed as it was found not proved. The Bank is aggrieved against that part of the order whereby its claim against defendant Nos. 5 and 6 (Mr. Suresh Kochar and Mr. Raja Singh, respondent Nos. 5 and 6 herein) has been dismissed and also against that part of the order whereby the liability of defendant Nos. 4 and 7 (Smt. Sweety Jain and Mr. Jagnadan Prashad, respondent Nos. 4 and 7 herein) has been limited to Rs. 10,66,023/ - alongwith costs and interest. The respondent Company No. 1 had been maintaining a current account with the appellant Bank. On the request made through its Directors (respondent Nos. 2 to 6) the Bank sanctioned a Foreign Bills Purchase Discounting facility of Rs. 3 lacs on 20th January, 1987. In January -February, 1987, the Bank granted Foreign Bills purchase/discounting facility against export documents tendered for negotiation drawn under Letter of Credit opened by the prime Banks to the extent of Rs. 10 lacs. This was again on the request made by the respondents. The necessary documents were executed on 12th February, 1987 and to secure the repayment, respondent Nos. 4, 5, 6 who were Directors as well as respondent Nos. 2 and 7 (Mr. S.C. Jain and Mr. Jagnadan Prashad) executed their personal guarantees respondent Nos. 2 and 7 also created equitable mortgage of their property, respondent Nos. 2, 4, 5 to 7 again executed guarantee deeds on 14th May, 1987 to confirm their liability to pay the loan, respondent No. 2 also created equitable mortgage of his property, respondent No. 1, after executing documents availed the Foreign Bills purchase/discounting facility of Rs. 10 lacs from time -to -time. The amounts of these bills were credited to the current account of respondent No. 1. Respondent No. 1 also requested for grant of Overdraft in the current account and executed various documents which included D.P. Note dated 28th January, 1988 for Rs. 2 lacs and letter of continuity. This overdraft facility was availed by respondent No. 1 from time -to -time, but it failed to pay the loan amount. It requested the appellant Bank for more time to pay the loan. They renewed the loan documents in the Foreign Bills purchased Foreign Bills negotiated account on 3rd February, 1990. Balance confirmation -cum -acknowledgement letter with regard to outstanding in OD account was executed on 3rd February, 1990 confirming the debit balance of Rs. 80,976.20 as on 31st December, 1989. The Board of Directors meeting held on 3rd February, 1990 also confirmed the correctness of Banks outstanding and its liability to pay the same.
(2.) ONCE the respondents were not able to maintain the financial discipline, their account was declared NPA and the Bank filed O.A. for the recovery of the outstanding amount. In response to the notice, respondent Nos. 1, 2, 4, and 7 did not appear despite service and they were proceeded ex parte. Respondent Nos. 5 and 6 filed their separate written statement. Respondent No. 5 in his Written Statement raised a preliminary objection that there was no cause of action against him. As per the said respondent, his signatures, being a Director of the respondent company, was obtained fraudulently in collusion by respondent Nos. 2, 3, 4 and 7 on blank and printed form and same were filed without his consent. Respondent No. 5 also maintained that his signatures on the guarantee deed were obtained in a fraudulent manner on blank papers. He had also rescinded the same vide registered notice dated 2nd September, 1988 and thus the same had come to an end after three months from the date of the said notice given by him. Respondent No. 5 also raised plea of limitation against him. He also stated that respondent No. 6 had retired from the directorship of the company vide his resignation letter dated 16th January, 1988, which was accepted on 23rd January, 1988. Respondent No. 5 has also retired pursuant to his letter dated 15th June, 1988, which was accepted on 16th June, 1988. At that time respondent Nos. 2 to 4 were the Directors.
(3.) LIKE respondent No. 5, respondent No. 6 also filed separate Written Statement stating that he had rescinded the guarantee vide his letter dated 17th February, 1988. The written statement filed by respondent No. 6 was more or less the verbatim reproduction of the Written Statement of respondent No. 5. Accordingly, he also pleaded that his signatures on the documents were fraudulently obtained, in regard to which he had written a letter dated 11th June, 1988, which was duly received by the Bank.;


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