DENA BANK Vs. DAWOOD AND CO
DEBTS RECOVERY APPELLATE TRIBUNAL
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(1.) THE guarantors have been sued in this Original Application (O.A.) for recovery of Rs. 67,17,573/- with interest @ 12.5% p.a. from the date of filing the Original Application till full realization.
(2.) The facts giving rise to this O.A. are that one Samta Charmodhyog Co-operative Society Ltd. (for short 'the Society'), having 1850 members, manufactures handmade leather footwear and leather articles. Its production is supplied exclusively to defendant No. 1 of which defendant Nos. 2 and 3 are partners.
At the request of the Society in March 1995 the applicant sanctioned to 400 members of the Society a loan of Rs. 25,000/- each aggregating Rs. 100 lacs. The members of the Society executed Term Loan Agreements inter alia agreeing to repay the amounts in 36 instalments of Rs. 700/- each, Letters of Authority and Demand Promissory Notes. The defendants and the Society gave the requisite letters, undertakings and deed of guarantee in favour of the Bank. The applicant credited the loan amount in current account of the Society as requested by the society. The Borrowers thus availed of the loan. The society paid instalments up to June, 1996 whereafter however no payments were made. The Bank therefore by letter dated 24.2.1997 addressed to the principal borrowers called upon to pay the remaining 21 instalments of Rs. 700/- p.m. per member with interest. The payment however was not made. Therefore, this Original Application.
(3.) THE defendants in their common written statement (Exh. 41) have at the outset denied one and all contentions in the O.A. and also the outstandings. In the special pleadings, it is averred that the officers of the applicant Bank in collusion with office bearers of the society established the sham society with bougs members as also subsequently found by the police in the investigation of a complaint. It is further averred that the Bank has therefore impleaded neither the society nor its members as defendants, which is why the defendants stand discharged. THE contention on the facts is that the Bank never received any application from 400 members of the society and did not open accounts in the name of each member. THE amount was also not consequently disbursed in their accounts. THErefore, the guarantee agreement, if proved, is inoperative. THE Original Application is sought to be dismissed on these grounds.;
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