INDIAN BANK Vs. HUMERA MUMTAZ
DEBTS RECOVERY APPELLATE TRIBUNAL
Humera Mumtaz and Ors.
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K. Gnanaprakasam, J. -
(1.) THE applicant Bank in OA is the appellant. Aggrieved by the order dated 28.12.2001, passed by the DRT -I, Chennai, the Indian Bank has preferred this appeal.
Brief facts which are necessary to dispose of this appeal are as follows :
1. The appellant Bank sanctioned credit facilities to the 1st defendant such as packing credit, and foreign bills purchase/foreign bills negotiated. That in order to secure due repayment of those facilities, the 1st defendant had executed demand promissory note, agreement of hypothecation of movable plants and machinery. Defendants 2 to 4 executed agreement of guarantee and they have also created an equitable mortgage by deposit of title deeds of their properties in favour of the appellant Bank. The 2nd defendant is the husband of the proprietrix of the 1st defendant. As the defendants have not repaid the amount, the appellant Bank filed OA for the recovery of a sum of Rs. 3,66,78,382/ - together with interest @ 21.75% p.a. with quarterly rests.
(2.) AS the appeal has been filed as against the discharge of defendants 3 and 4 alone, facts leading to the case of defendants 1 and 2 are not given below. The defendants 3 and 4 filled a separate reply statement, stating that the OA filed against them is not maintainable and it is barred by time. It is their further case that they are not liable for the loans granted to Mrs. Humera Mumtaz, and their signatures were obtained in blank papers and subsequently filled up and fabricated by the Bank. They have not executed any revival letters extending the period of limitation. The Bank also failed to recover the amounts from the defendants 1 and 2. Hence, prayed for the dismissal of the OA. The DRT after considering the facts of the case passed order/decree on 28.12.2001, holding that the 1st defendant alone was liable to pay the said amount. Subsequently, the order was modified by its order dated 14.3.2002, whereunder the defendants 1 and 2 were made liable. However, the order was further modified by order dated 7.6.2002, whereunder also the liability was fastened only against the defendants 1 and 2 for various reliefs. The defendants 3 and 4 were discharged. As against the same, the Bank has preferred this appeal.
Heard the learned Advocate for the appellant and the respondents 3 and 4.
Points for consideration are :
(1) Whether Clause 9 in the Agreement of Guarantee that the amount confirmed by the borrower or any acknowledgement of liability by the borrower would renew the liability of the guarantors also?
(2) Whether the claim against defendants 3 and 4 is barred by time?
Point Nos. 1 and 2 :
(3.) THE learned Advocate for the appellant would contend that in respect of the loan sanctioned in favour of the 1st defendant, the defendants 2 to 4 have executed Agreements of Guarantee. The defendants 2 to 4 have also created an equitable mortgage by deposit of title deeds of their properties. The defendants 1 and 2 have acknowledged their liabilities in respect of Packing Credit, Foreign Bills purchased/ negotiated/ADOVEXBIR and temporary overdraft facility by their confirmation letters dated 30.6.1994 That in the Agreement of Guarantee executed by 3rd and 4th defendants, they have consented to the Bank for making any variance as the Bank think fit in terms of the contract with the borrower including enlarging or varying the credit limits. Under Clause -9 of the agreement, they have further agreed that, "The guarantors also agree that any balance or debts confirmed by the borrower, or his authorised agent or any acknowledgement of liability concerning the same made and signed by the borrower or his authorised agents shall be binding on the guarantors in the same manner as if the borrower or his authorised agent was their authorised agent to make such acknowledgement of liability or confirming the balance and the said acknowledgement and confirmation shall be binding on them, as if made by themselves. They further agree that every such acknowledgement by the borrower or his authorised agent would renew their liability as guarantors and the guarantors would be liable for the payment of acknowledged debts in the same way as for the debts hereby guaranteed". Based upon this Clause, the appellant argues, even though the guarantors have neither acknowledged the debt nor given confirmation letter within time i.e. in the year 1994, as the defendants 1 and 2 did on 30.6.1994, they are liable as the principal borrowers have acknowledged the debt in time, that is sufficient to clamp the liability, on the guarantors also.
The appellant lays its claim under Clause 13 of the Agreement of Guarantee also which reads, "The guarantee hereby given shall be a continuing security and shall not be determined unless 3 calendar months' written notice is given by the guarantors and in the event of the guarantor's death or their coming under a disability, the liability of the guarantors estate shall continue unless three calendar months' notice of their instructions to determine the guarantee in writing is given to the Bank by the legal representatives of the guarantors." It is the case of the appellant that the guarantee given by defendants 3 and 4 is not only a continuing guarantee which would extend to a series of transactions but the liability of the surety is co -extensive with that of the principal borrower unless it is otherwise provided by the contract as stated in Section 128 of the Indian Contract Act, 1872. The continuing guarantee given by the defendants 3 and 4, could be revoked by them at any time but it would only enure in respect of the future transactions. But in the instant case, the defendants 3 and 4 have not revoked the guarantee nor they have given any notice to the creditor. That in the absence of the same, the liability of the guarantors, continues till the debt is live.;
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