K.Gnanaprakasam, J. (Chairperson) -
(1.) THIS regular appeal is directed as against the order dated November 27, 2003, passed by the DRT, Bangalore, in OA No. 496 of 1995. The second defendant in the O. A. is the appellant herein.
(2.) THE facts of the case are as follows :
The first defendant -company, namely, M/s, Southern Oils and Extractions Ltd. was a public limited company and M. K. Bhanu was the managing director of the said company. The second defendant in the O. A. who is the appellant herein, was one of its directors. The third defendant is an industrialist at Bangalore. During the year 1981 -82, the bank sanctioned loans to the extent of Rs. 41.86 lakhs on several heads. As the company was not paying the amount due to the bank regularly, the bank filed a company petition, C. P. No. 19 of 1983, for liquidation and the High Court of Karnataka by its order dated January 8, 1984, ordered the winding up of the company. That in respect of the loan account, the first defendant, as the managing director of the company, had executed a demand promissory note for Rs. 18 lakhs on December 29, 1981. In addition, he had also executed a personal guarantee on December 29, 1981, to the extent of Rs. 75 lakhs. The second defendant had executed a deed of guarantee on December 26,1981, accepting his personal liability to the extent of Rs. 76 lakhs. The: third defendant also executed a deed of guarantee on June 26, 1982 accepting his liability to the extent of Rs. 84.90 lakhs. All the guarantees executed by them are continuing guarantees and the guarantee shall be in addition to or shall not in any way be prejudicial or affect any collateral security now. hereafter to be held by the bank. As the defendants have not paid the amount due, the bank has filed the suit in respect of the SODH account only for recovery of a sum of Rs. 46,24,221.85 together with interest thereon.
The appellant who is the second defendant in the O. A., filed a lengthy reply statement stating that M. K. Bhanu was appointed as the managing director for a period of five years from March 24, 1978, and he ceased to be a managing director on March 23, 1983, and A. R. Kejriwal, the third defendant was appointed as a de facto managing director from May 6, 1982, till the order of winding up of the company, which was passed on January 9, 1984. On and from May 6, 1982, the management of the company changed hands as per the decision of the board of the company and the third defendant took over the company as a de facto managing director with the knowledge of the applicant -bank. The bank allowed the third defendant to take the money out of the company indiscreetly for which the second defendant was not liable. The guarantee agreement signed by the second defendant was consequential to the hypothecation agreement dated December 29, 1981, for Rs. 45 lakhs for the packing credit limit and SODH loans signed between the plaintiff and the company and it has nothing to do with the promissory note for Rs. 18 lakhs. The defendants signature was obtained in printed blank personal guarantee form as required by the applicant -bank and the amounts were filled up by the plaintiff at a later stage. The second defendant had sent a letter dated July 19, 1982 to the applicant -bank requesting it to relieve him from the personal guarantee thereby revoked the guarantee, for which he has not received any reply and, therefore, he was discharged from his liabilities. It is also contended that the suit is barred by time. As the management of the company was taken away from the first defendant on May 6, 1982, and it was given to the third defendant, the second defendant is discharged of his liability and if at all there is any liability, the third defendant alone is liable.
(3.) WITH the above said pleadings, the parties took up the trial and the DRT after taking into consideration all the aspects and materials placed before it, came to the conclusion that the defendants are liable to pay the amount and directed defendants Nos. 2 and 3 to pay the amount to the applicant -bank jointly and severally. Aggrieved by the same, the second defendant alone has preferred this appeal.;