CENTRAL BANK OF INDIA Vs. KRISHNA GANPAT KAREKAR
LAWS(DR)-2005-7-12
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on July 15,2005

Appellant
VERSUS
Respondents

JUDGEMENT

Pratibha Upasani, - (1.) THIS substantive appeal is filed by the appellant/original applicant Central Bank of India, being aggrieved by the judgment and order dated 13th December. 2002 passed by the learned Presiding Officer of the Debts Recovery Tribunal-III, Mumbai in Original Application No. 3287 of 1999. By the impugned judgment and order, though the learned Presiding Officer allowed the application with costs and interest at the rate of 16% p.a. from the date of suit till realization of the amount and ordered the defendant Nos. 1 to 1(C) to pay to the applicant Bank jointly and severally a sum of Rs. 1,00,25,449.14, he absolved the defendant No. 2 respondent herein Krishna Ganpat Karekar from the liability as a guarantor. Hence, this appeal to that limited extent.
(2.) Few facts, which arc required to be stated, are as follows: The defendant No. 1 Geeta Poultry Farm is a partnership firm of which defendant Nos. 1(A) to 1(C) are partners. The defendant No. 2 is a guarantor for the repayment of the amount, which the applicant Bank disbursed to the defendant No. 1 firm. The applicant Bank sanctioned certain facilities to the defendant No. 1 firm, which were availed by it. The facilities consisted of term loan and cash credit facility etc. The usual security documents like D.P. Note, hypothecation agreement etc., were executed by the defendants. The defendant No. 2 executed guarantee deed on 28th October, 1991 and accepted the liability for the repayment of the amount, which was advanced to the defendant No. 1 firm. The term loan facility at the request of the defendants was increased and additional loan limit was sanctioned to the tune of Rs. 9,40,000/-. The defendant No. 2 executed letter of guarantee on 8th April. 1992 for Rs. 42,59,000/-. Thereafter, there was again additional term loan of Rs. 3,90,000/- and defendant No. 2 again accepted the liability to the extent of Rs. 46,40,000/- by executing guarantee deed on 29th September, 1992. The defendant No. 1(A) also deposited title deed of his property situated at village Gavane, Tal Lanja, Distt. Ratnagiri and thereby created equitable mortgage in respect of the amount advanced by the applicant Bank on 29th June, 1991, 3rd November, 1991 and 1st November, 1992. However, these defendants to whom demand was made, failed to make payment. So notice was issued to the defendants calling upon them to settle their account but still there was no reply from them, though the amount was acknowledged by the defendants from time to time and thereby accepted the liability. Therefore, suit came to be filed by the applicant Bank in the Court of Civil Judge, Sr. Division, Ratnagiri for recovery of the Bank's amount and the enforcement of the securities. The defendant No. 1(A) appeared and filed his written statement denying all the contentions of the Bank. The defendant No. 1(B) and 1(C), so also defendant No. 2 did not file their written statement. Therefore, the suit proceeded without written statement against them. It was contended by the defendant No. 2's Advocate that no liability could be fastened on defendant No. 2, as there was no demand made by the applicant Bank from the defendant No. 2, who was the guarantor. It was pointed out that the suit was bad as there was a clear provision made as against the defendant No. 2, because there was breach and violation of the terms and conditions of the guarantee deed, which required the applicant Bank to demand the amount before filing the suit. The learned Presiding Officer after verifying the record, indeed, found out that such a condition was mandatory condition in the guarantee deed. But in spite of this, no notice was sent to the defendant No. 2. He therefore, held that when there was no demand made by the applicant Bank to the guarantor and when there was clear breach of the conditions in the guarantee deed, no liability could be fastened upon him. Observing this, he absolved the defendant No. 2 from liability.
(3.) I have heard Mrs. Maravarman for the appellant Bank and Mr. Upadhyay for the respondent. I have also gone through the proceedings including the impugned judgment and order, especially guarantee deed executed by the defendant No. 2 and in my view, the learned Presiding Officer has not committed any error.;


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