CENTRAL BANK OF INDIA Vs. RAJ REXINE PVT LTD

JUDGEMENT

(1.) THIS order shall dispose of IA No. 347/03 earlier moved by learned Counsel for defendant under Order VII Rule 11 read with Section 151 of CPC and Section 22 of the Act whereby learned Counsel for defendant has sought rejection of the instant OA qua-defendant No. 2 in so far as he stands in the capacity of a legal heir only and defendant Nos. 3 and 5. Reply was filed on behalf of the applicant Bank (AB) and arguments of both sides were heard on last date i.e. 5.5.2004.

(2.) Learned Counsel for the defendants had submitted that the applicant Bank has concealed many material facts and information from this Tribunal and has not approached with clean hands and fair intentions in so far as the liabilities of defendant Nos. 2, 3 and 5 are concerned. It is interesting to note that where as defendant No. 2 has been arrayed as one of the defendants in the instant OA. He has also been impleaded as one of the LRs of late Shri Desh Raj Manchanda who had expired much prior to the filing of the OA. Similarly, defendant Nos. 3 and 5 have been joined as LRs of deceased Shri Desh Raj Manchanda.

(3.) HOWEVER, as per the facts borne out from the OA itself the third party guarantee of late Shri Desh Raj Manchanda stood automatically released upon the renewal of credit limit by the Bank after the death of Shri Desh Raj Manchanda because the applicant Bank has got defendant Nos. 1, 2 and 4 executed afresh set of security documents on 1.8.2000 in their alleged personal capacities. Learned Counsel for the defendants strenuously harping upon this aspect of the matter relying upon Section 62 of Contract Act submitted that with the Bank having so opted for execution of fresh set of security documents subsequently after the death of Shri Desh Raj Manchanda on 1.8.2000 by defendant No. 1 company and option of third party defendant Nos. 2 and 4 only the third party guarantee of the deceased guarantor late Shri Desh Raj Manchanda automatically stood released by virtue of the provision of the Section 62 of the Contract Act. Because according to him Bank by doing so or by opting so had got fresh set of security documents signed and executed by different set of persons especially giving rise to a new contract between the parties which so facto released Shri Desh Raj Manchanda from his personal guarantee and as such with the demise of such guarantee of Shri Desh Raj Manchanda or release thereof his legal heirs in their capacity as LRs could not be arrayed as defendant in the instant OA and no liability could be foisted on them to be discharged on the basis of the guarantee earlier given by Shri Desh Raj Manchanda.