STATE BANK OF INDIA Vs. RESHA WIRES PVT LTD

JUDGEMENT

(1.) THE Bank filed Original Application (O.A.) against the defendants 1 to 6 for realisation of the amount due to the Bank. THE O.A. was decreed for a sum of Rs. 1,68,29,174.90 p. as against defendant Nos. 1,2 and 4 jointly and severally with subsequent interest at 16.08.% p.a. and the O.A. was dismissed as against defendant Nos. 3,5 and 6. Aggrieved against the dismissal Order as against defendant No. 3 alone the Bank has preferred this appeal. THE respondents even though served, they did not appear. Hence, the arguments of the appellant Counsel is being heard and the Order is passed on merit.

(2.) Counsel for the appellant Bank submits that the 3rd defendant executed the guarantee under Ex. A-9 and as it is a counter guarantee the 3rd defendant is liable for the suit claim. On a perusal of Ex. A-9 document, it is seen that it is a continuing guarantee and defendant No. 3 has executed that continuing guarantee for a sum of Rs. 42 lacs along with defendant No. 2. The Presiding Officer, D.R.T., has found that the other defendant Nos. 1,2 and 4 have executed revival of the documents the guarantees and the revival letters are marked as Exs. A-35, A-36 and defendant No. 3 is not a party to these documents and since defendant No. 3 is not a signatory for the revival letters, defendant No. 3 is not liable even for the amount under Ex. A-9. The Presiding Officer, D.R.T., has observed in his Order that "As could be seen from Ex. A-9 the said guarantee was in respect of Cash Credit to the extent of Rs. 42 lacs but apart from the Cash Credit facility the Bank extended other facilities and even under Ex. A-9, defendant No. 3 is not liable". The Presiding officer, D.R.T. has further observed that the Bank unfortunately did not segregate and give a breakup of the liability corresponding to each facility and Ex. A-9 cannot be accorded the status of a continuing guarantee and there is no other document to which defendant No. 3 subscribed his signature and so the attempt of the applicant Bank to mulct defendant No. 3 with the liability of Cash Credit facility covered by Ex. A-9 as also other credit facilities on the false ground of Ex. A-9 being a continuing guarantee must fail and Ex. A-9 cannot be accorded the status of a continuing guarantee and inasmuch as Ex. A-9 did not provide for an authorisation in favour of defendant No. 1 to acknowledge the liability on behalf of the guarantors as well defendant No. 3 is bound to be absolved and the applicant Bank failed to show that the claim against defendant No. 3 remained in force.

(3.) APPEAL partly allowed. Order passed by the Presiding Officer, D.R.T., Bangalore, is modified to the extent indicated above.