SANGLI BANK LTD Vs. PRABHA K MAHESHWARI
LAWS(DR)-2005-9-10
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on September 20,2005

Appellant
VERSUS
Respondents

JUDGEMENT

Pratibha Upasanl, J. (Chairperson) - (1.) THIS appeal is filed by the appellants original applicant Sangli Bank Ltd. being aggrieved by the judgment and order dated 2nd July, 2004 passed by the learned Presiding Officer of the DRT-II, Mumbai in Original Application No. 204/2000 (High Court in Suit No. 3691 of 1995). By the impugned judgment and order, the learned Presiding Officer allowed the original application in favour of the Bank with no order as to costs against all the defendants subject to that liability of legal representatives of defendant No. 7 Madhusudan Kamani (deceased) would be restricted to the extent of available estate, if any, in her hands from deceased Madhusudan Kamani and the learned Presiding Officer ordered the defendants to pay jointly and severally to the applicant Bank a sum of Rs. 15,00,000/- with interest at the rate of 16.5% per annum with quarterly rests from 19th August, 1992 till the date of filing of the original application with further directions that the said amount would be adjusted/set off against to be adjudged pecuniary liability of the Bank in Small Causes Suits No. LEC ] 25/139, 126/140 both of 1994 and 3/4 of 1995 filed by the defendant Nos. 1 to 5. The learned Presiding Officer further ordered the balance if any, was to be recovered subsequently and directed issuance of recovery certificate in the above stated terms. The Bank however, is aggrieved because though its claim was adjudicated, the execution of the recovery certificate was deferred till final outcome of the suits filed by the defendants/landlord against the Bank which are pending in the Small Causes Court, Mumbai.
(2.) To understand the controversy, few facts, which are required to be stated are as follows : The applicant Sangli Bank Ltd. at the request of the defendant Nos. 1 to 5 agreed to grant loan of Rs. 30 lacs on the guarantee of defendant Nos. 6 to 10. The defendant Nos. 1 to 5 by their letters dated 11th August, 1992 requested the applicant Bank to pay to M/s. Kamani Buildings (defendant Nos. 6 to 10 are partners) a sum of Rs. 3 lacs on behalf of each of them. The applicant Bank acceded to the request. Accordingly, the defendant Nos. 1 to 5 delivered demand promissory notes dated 19th August, 1992 for Rs. 15 lacs with interest at the rate of 19.75% per annum. The defendant Nos. 6 to 10 executed the guarantee agreement. Accordingly, a sum of Rs. 15 lacs was released. However, the repayment was not made. Therefore, the Bank demanded the amount from the borrowers and subsequently invoked the guarantee. However, no payment was even then made. Therefore, the Bank was constrained to file the original application. The defendant Nos. 1 to 5 appeared and filed their joint written statement wherein they admitted that the loan was sactioned by the Bank and that the guarantee was also given by them. It was further their contention that they forwarded blank documents like demand promissory notes, guarantee etc. to the applicant Bank for releasing facility to the extent of Rs. 30 lacs. The Bank subsequently filed the matter in the documents including the date 19th August, 1992 showing that the documents were executed on that day. It was their contention that they had so given blank documents because the applicant Bank was licensee in respect of certain premises owned by M/s. Kamani Buildings of which defendant Nos. 1 to 5 were partners. According to the applicant Bank, they wanted to expand their business and had requested for giving additional premises, which was agreed by them (defendant Nos. 1 to 5) with the consent of landlord Kamani Buildings. It was contended that the Bank in the Board meeting held on 8th September, 1989 agreed to sanction the loan in question to be utilized for payment of taxes to BMC, repairs of the building and for clearing old dues of the defendants sister concern payable to the Bank. It was agreed that repayment was to be made from the lease rentals. The documentation in respect of allotment of additional premises was to be done by Little and Co. (it was not done). There were several meetings between the parties for completion of the transaction including final negotiations between the Chairman of the Bank and Mr. Ashok Kamani, which were held on or about 19th August, 1992. The Bank however, did not take additional premises which were lying vacant, thereby compelling the defendant Nos. 1 to 6 to file suit against the Bank (High Court Suit No. 315 of 1995) for recovery of Rs. 15 lacs for committing breach of the contract. It was contended that the letters dated 11th August, 1992 given by the defendant Nos. 1 to 5 mention that loan of Rs. 3 lacs was sanctioned on that date. It was also contended that the guarantee agreement did not corroborate the contract with the borrowers since it mentions that the sum mentioned of Rs. 16 lacs was to be disbursed as against actual disbursement of Rs. 15 lacs. The contention was also with respect to the rate of interest being wrongly mentioned. On these grounds, it was prayed that the original application be dismissed.
(3.) THE guarantors (defendant Nos. 6 to 10) filed common written statement in which identical submissions were made.;


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