Full Judgment Text
:1: :1: :1:
2005:BHC-OS:3174
IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O.O.C.J. O.O.C.J. O.O.C.J.
MISCELLANEOUS PETITION NO.37 OF 2001 MISCELLANEOUS PETITION NO.37 OF 2001 MISCELLANEOUS PETITION NO.37 OF 2001
SICOM Limited ..... Petitioner
versus
Shri Balkrishna
Himmatramka and Ors. ..... Respondents
WITH WITH WITH
MISCELLANEOUS PETITION NO. 38 OF 2001 MISCELLANEOUS PETITION NO. 38 OF 2001 MISCELLANEOUS PETITION NO. 38 OF 2001
SICOM Limited ..... Petitioner
versus
Shri Balkrishna
Himmatramka and Ors. ..... Respondents
WITH WITH WITH
MISCELLANEOUS PETITION NO. 39 OF 2001
MISCELLANEOUS PETITION NO. 39 OF 2001 MISCELLANEOUS PETITION NO. 39 OF 2001
SICOM Limited ..... Petitioner
versus
Shri Balkrishna
Himmatramka and Ors. ..... Respondents
WITH WITH WITH
MISCELLANEOUS PETITION NO. 22 OF 2002 MISCELLANEOUS PETITION NO. 22 OF 2002 MISCELLANEOUS PETITION NO. 22 OF 2002
MSFC Limited ..... Petitioner
versus
Shri Balkrishna
Himmatramka and Ors. ..... Respondents
Kevil Setalvad with M.P. Rege for the petitioner.
Mr. L. Bansal or respondent nos.1, 5, 7 and 8.
CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J.
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DATE : 14TH MARCH, 2005. DATE : 14TH MARCH, 2005. DATE : 14TH MARCH, 2005.
JUDGMENT : JUDGMENT : JUDGMENT :
1. The present petition is filed under the
provisions of section 31(1) (aa) of the State
Financial Corporation Act, 1951. The petitioner is a
financial institution. Some time in or about
February, 1993 the company known as Sanjivani Agro
Industries approached the petitioner with a request
to grant a loan of more than Rs.110.00 Lacs for
setting up a plant for solvent extraction and oil
refinery at Plot no.A/1 in the Palus Industrial Area
of MIDC within the village limits of Palus,
Taluka-Tasgaon, District-Sangli.
2. The said application for grant of term loan
was sanctioned by the company and the said loan
amount was advanced by the petitioner to the said
company. The company executed an indenture of
mortgage dated 16.8.1993 securing the said loan
amount and mortgaged the plant, machinery and
building of the company with the said financial
institution. The respondent herein being respondent
no.1 to 4 have executed the deed of guarantee dated
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16.8.1993 and the respondent no.2 and 5 has executed
the deed of guarantee dated 20.9.1993 in favour of
the petitioner herein guaranting the repayment of the
aforesaid amount by the respondent company which is a
principal debtor.
3. The said guarantee is unequivocal and
inter-alia recites that on the default being
committed by the company to make payment of any
instalment amount the guarantors would be liable to
repay the said amount to the petitioner herein.
Pursuant to the aforesaid arrangement the loan amount
was disbursed to the company and the company has
utilised the same. The company made defaults in
repayments of the aforesaid amount from time to time
and thus committed breach of the terms and conditions
of the said loan agreement. In the circumstances a
legal notice was issued on 9.1.1998 by the petitioner
recalling the said loan amount from the company.
4. It is the case of the petitioner that inspite
of various demand notices and reminders the repayment
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of the loan amount was not effected by the company
and therefore the petitioner invoked the guarantees
by notice dated 21.1.2000 and called upon the
respondents to repay the aggregate dues of
Rs.1,14,15,000/- . The company was declared sick by
the board for industrial and financial reconstruction
under the provisions of the Sick Industrial Company
(Special Provisions ) Act, 1985 and ultimately the
board rejected the reference and recommended that the
company should be wound-up. By order dated 17.1.2000
the said company has been wound up. In the
circumstances the petitioners seek to recover the
said amount against the respondent guarantors. The
claim of the petitioner as on the date of the filing
up of the petition is Rs.1,94,25,180.00/-. In
pursuance of the directions of the apex court in the
case of Central Bank of India vs. Ravindra and Ors.
reported in (2002) 1 SCC 367. The petitioner has
filed an affidavit in rejoinder setting out the up to
date claim. The claim amount as on the said dated is
of sum of Rs.4,37,69,240/-.
5. The affidavit filed by the petitioner
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inter-alia states that the aforesaid amount of
Rs.4,37,69,240/- was arrived at after giving due
credit of Rs.1,30,00,000/- received towards the sale
proceeds of the mortgaged properties. the said
mortgaged properties were sold by the petitioner in
exercise of power conferred under section 29 of State
Financial Corporation Act, 1951.
6. The learned counsel appearing for the
respondents have inter-alia contended before me that
the present petition should be dismissed in the light
of legal position narrated hereunder. It has been
contended by the learned counsel for the respondent
that the present petition is not maintainable in view
of the judgment of the division bench of this court
in the case of Maharashtra State Financial
corporation vs. M/s. Jaycee Drugs and
Pharmaceuticals Pvt. Ltd and Ors. reported in 1991
2 SCC 637. It was contended that in so far as the
provisions of the SFC Act is concerned the same does
not cover the cases of guarantor and it only applies
in respect of mortgaged property. Thus the present
petition cannot lie under the provisions of the said
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Act. The learned counsel for the respondent
corporation has rightly drawn my attention to the
judgment of the apex court in the case of Mahrashtra
State Financial Corporation vs/. Jaycee Drugs and
Pharmaceuticals Pvt. Ltd and Ors reported in 1991 2
SCC 637 by which the division bench judgment of this
court referred to above has been set aside and the
appeal therefrom has been allowed. In so far the
aforesaid contention of the respondent is concerned
the Supreme court has expressly negatived the same in
para-23 of the said judgment and in view thereof I do
not find any substance in the arguments advanced by
the learned counsel for the respondent and on the
aforesaid count I reject the same.
7. The second contention of the learned counsel
for the respondent that the sale proceeds which was
received by the petitioner by disposing off the
assets of the company has not been given credit.
Even in respect of the said contention I do not find
any merits because in the affidavit dated 4.1.2004
the petitioners have pointed out that the necessary
credit has been given and after giving the necessary
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credit the aforesaid amount is still outstanding and
payable. In view thereof I do not find any merits in
respect thereof.
8. The third contention of the learned counsel
for the respondent that this court has no
jurisdiction because the factory of the principal
debtors i.e. the company is situated at Thane and
the assets which were mortgaged were also situated in
Thane and thus this court cannot invoke the
jurisdiction. The said contention is plainly
required to be rejected for the simple reason that
all the eight respondents are residing at Bombay.
The present petition is not filed either against the
principle debtor or in respect of the mortgaged
property but filed against the respondents in their
capacity as guarantors. The deed of guarantees are
admittedly executed in Mumbai and the amount
thereunder is also payable at Mumbai. Admittedly the
petition is filed only for receiving the claim
arising under the deed of guarantee. There are no
securities in respect of the said claim and thus in
my opinion this court shall have jurisdiction because
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all the respondents are residing at Bombay. Thus
looking from either of the angle i.e. where the
respondents are residing or where material part of
cause of action has arose this court alone shall have
jurisdiction to entertain and try the jurisdiction.
I therefore do not find any merits in the aforesaid
contention and therefore reject the same.
9. This leads me to the next contention advanced
by the learned counsel for the respondent that the
present petition is liable to be dismissed for non
joinder of necessary parties. According to him the
principle debtor is the necessary party and in
absence of the principle debtor the present petition
cannot be determined. Alternatively the learned
counsel has also contended that there are two deeds
of guarantees and in respect of both the guarantees
separate proceedings should have been filed by the
petitioner and there is a misjoinder of cause of
action as well as respondents and therefore also the
present petition is liable to be dismissed. In my
opinion both the aforesaid alternate contention lacks
any merits whatsoever. The present petition is filed
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against the respondents in their capacity as the
guarantors and that the amount received is also one
single amount which is advanced to the principal
debtor. Merely because two sets of gurantees are
executed by two different sets of respondents I do
not think it is necessary to file two different
proceedings when cause of action is one and the same.
I am also of the further opinion that the principle
debtor is neither necessary not proper party to the
proceedings initiated against the guarantor. It is
well settled that liability of the guarantor and
principal debtor is joint and several and thus
independent suit and proceedings can be filed against
them without impleading each other parties to the
respective proceedings.
10. The last contention which is advanced by the
learned counsel for the respondent was that the claim
is barred by the law of limitation. According to the
him the first default has been committed by the
principal debtor long back and therefore the amount
should have been claimed by the petitioner
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immediately thereafter. The legal notice given is of
9.1.1998 and in the said notice the amount was
required to be repaid immediately. The principle
debtor which is the company has continuously
defaulted in making the payment thereafter. The
liabilities of the guarantors arises only after the
guarantees are invoked and not prior thereto and
therefore I find that the present petition is within
time. In any event under the deed of guarantee the
liabilities of the guarantors continue to subsist and
coexist as long as the amount is not repaid by the
principle debtor and therefore also I do not find any
substance in the contention of limitation advanced by
the learned counsel for the respondent herein. There
is no merits in the any of the contentions advanced
by the learned counsel for the respondents. In view
thereof I pass the following order.
. The respondent no.1 to 8 are ordered
and directed to pay jointly and severally to
the petitioner a sum of Rs.4,37,69,240/- with
interest thereon from the date of 1.2.2005 as
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per the loan agreement. The respondent no.1
to 8 are also ordered and directed to pay the
petitioner cost of the present petition.
. Learned counsel appearing for the respondent
seeks stay of the order and judgement. Learned
counsel appearing for the petitioner opposes for the
said stay. Stay granted upto 15.4.2005.
sd/-
*
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2005:BHC-OS:3174
IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O.O.C.J. O.O.C.J. O.O.C.J.
MISCELLANEOUS PETITION NO.37 OF 2001 MISCELLANEOUS PETITION NO.37 OF 2001 MISCELLANEOUS PETITION NO.37 OF 2001
SICOM Limited ..... Petitioner
versus
Shri Balkrishna
Himmatramka and Ors. ..... Respondents
WITH WITH WITH
MISCELLANEOUS PETITION NO. 38 OF 2001 MISCELLANEOUS PETITION NO. 38 OF 2001 MISCELLANEOUS PETITION NO. 38 OF 2001
SICOM Limited ..... Petitioner
versus
Shri Balkrishna
Himmatramka and Ors. ..... Respondents
WITH WITH WITH
MISCELLANEOUS PETITION NO. 39 OF 2001
MISCELLANEOUS PETITION NO. 39 OF 2001 MISCELLANEOUS PETITION NO. 39 OF 2001
SICOM Limited ..... Petitioner
versus
Shri Balkrishna
Himmatramka and Ors. ..... Respondents
WITH WITH WITH
MISCELLANEOUS PETITION NO. 22 OF 2002 MISCELLANEOUS PETITION NO. 22 OF 2002 MISCELLANEOUS PETITION NO. 22 OF 2002
MSFC Limited ..... Petitioner
versus
Shri Balkrishna
Himmatramka and Ors. ..... Respondents
Kevil Setalvad with M.P. Rege for the petitioner.
Mr. L. Bansal or respondent nos.1, 5, 7 and 8.
CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J.
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DATE : 14TH MARCH, 2005. DATE : 14TH MARCH, 2005. DATE : 14TH MARCH, 2005.
JUDGMENT : JUDGMENT : JUDGMENT :
1. The present petition is filed under the
provisions of section 31(1) (aa) of the State
Financial Corporation Act, 1951. The petitioner is a
financial institution. Some time in or about
February, 1993 the company known as Sanjivani Agro
Industries approached the petitioner with a request
to grant a loan of more than Rs.110.00 Lacs for
setting up a plant for solvent extraction and oil
refinery at Plot no.A/1 in the Palus Industrial Area
of MIDC within the village limits of Palus,
Taluka-Tasgaon, District-Sangli.
2. The said application for grant of term loan
was sanctioned by the company and the said loan
amount was advanced by the petitioner to the said
company. The company executed an indenture of
mortgage dated 16.8.1993 securing the said loan
amount and mortgaged the plant, machinery and
building of the company with the said financial
institution. The respondent herein being respondent
no.1 to 4 have executed the deed of guarantee dated
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:3: :3: :3:
16.8.1993 and the respondent no.2 and 5 has executed
the deed of guarantee dated 20.9.1993 in favour of
the petitioner herein guaranting the repayment of the
aforesaid amount by the respondent company which is a
principal debtor.
3. The said guarantee is unequivocal and
inter-alia recites that on the default being
committed by the company to make payment of any
instalment amount the guarantors would be liable to
repay the said amount to the petitioner herein.
Pursuant to the aforesaid arrangement the loan amount
was disbursed to the company and the company has
utilised the same. The company made defaults in
repayments of the aforesaid amount from time to time
and thus committed breach of the terms and conditions
of the said loan agreement. In the circumstances a
legal notice was issued on 9.1.1998 by the petitioner
recalling the said loan amount from the company.
4. It is the case of the petitioner that inspite
of various demand notices and reminders the repayment
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:4: :4: :4:
of the loan amount was not effected by the company
and therefore the petitioner invoked the guarantees
by notice dated 21.1.2000 and called upon the
respondents to repay the aggregate dues of
Rs.1,14,15,000/- . The company was declared sick by
the board for industrial and financial reconstruction
under the provisions of the Sick Industrial Company
(Special Provisions ) Act, 1985 and ultimately the
board rejected the reference and recommended that the
company should be wound-up. By order dated 17.1.2000
the said company has been wound up. In the
circumstances the petitioners seek to recover the
said amount against the respondent guarantors. The
claim of the petitioner as on the date of the filing
up of the petition is Rs.1,94,25,180.00/-. In
pursuance of the directions of the apex court in the
case of Central Bank of India vs. Ravindra and Ors.
reported in (2002) 1 SCC 367. The petitioner has
filed an affidavit in rejoinder setting out the up to
date claim. The claim amount as on the said dated is
of sum of Rs.4,37,69,240/-.
5. The affidavit filed by the petitioner
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:5: :5: :5:
inter-alia states that the aforesaid amount of
Rs.4,37,69,240/- was arrived at after giving due
credit of Rs.1,30,00,000/- received towards the sale
proceeds of the mortgaged properties. the said
mortgaged properties were sold by the petitioner in
exercise of power conferred under section 29 of State
Financial Corporation Act, 1951.
6. The learned counsel appearing for the
respondents have inter-alia contended before me that
the present petition should be dismissed in the light
of legal position narrated hereunder. It has been
contended by the learned counsel for the respondent
that the present petition is not maintainable in view
of the judgment of the division bench of this court
in the case of Maharashtra State Financial
corporation vs. M/s. Jaycee Drugs and
Pharmaceuticals Pvt. Ltd and Ors. reported in 1991
2 SCC 637. It was contended that in so far as the
provisions of the SFC Act is concerned the same does
not cover the cases of guarantor and it only applies
in respect of mortgaged property. Thus the present
petition cannot lie under the provisions of the said
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:6: :6: :6:
Act. The learned counsel for the respondent
corporation has rightly drawn my attention to the
judgment of the apex court in the case of Mahrashtra
State Financial Corporation vs/. Jaycee Drugs and
Pharmaceuticals Pvt. Ltd and Ors reported in 1991 2
SCC 637 by which the division bench judgment of this
court referred to above has been set aside and the
appeal therefrom has been allowed. In so far the
aforesaid contention of the respondent is concerned
the Supreme court has expressly negatived the same in
para-23 of the said judgment and in view thereof I do
not find any substance in the arguments advanced by
the learned counsel for the respondent and on the
aforesaid count I reject the same.
7. The second contention of the learned counsel
for the respondent that the sale proceeds which was
received by the petitioner by disposing off the
assets of the company has not been given credit.
Even in respect of the said contention I do not find
any merits because in the affidavit dated 4.1.2004
the petitioners have pointed out that the necessary
credit has been given and after giving the necessary
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:7: :7: :7:
credit the aforesaid amount is still outstanding and
payable. In view thereof I do not find any merits in
respect thereof.
8. The third contention of the learned counsel
for the respondent that this court has no
jurisdiction because the factory of the principal
debtors i.e. the company is situated at Thane and
the assets which were mortgaged were also situated in
Thane and thus this court cannot invoke the
jurisdiction. The said contention is plainly
required to be rejected for the simple reason that
all the eight respondents are residing at Bombay.
The present petition is not filed either against the
principle debtor or in respect of the mortgaged
property but filed against the respondents in their
capacity as guarantors. The deed of guarantees are
admittedly executed in Mumbai and the amount
thereunder is also payable at Mumbai. Admittedly the
petition is filed only for receiving the claim
arising under the deed of guarantee. There are no
securities in respect of the said claim and thus in
my opinion this court shall have jurisdiction because
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:8: :8: :8:
all the respondents are residing at Bombay. Thus
looking from either of the angle i.e. where the
respondents are residing or where material part of
cause of action has arose this court alone shall have
jurisdiction to entertain and try the jurisdiction.
I therefore do not find any merits in the aforesaid
contention and therefore reject the same.
9. This leads me to the next contention advanced
by the learned counsel for the respondent that the
present petition is liable to be dismissed for non
joinder of necessary parties. According to him the
principle debtor is the necessary party and in
absence of the principle debtor the present petition
cannot be determined. Alternatively the learned
counsel has also contended that there are two deeds
of guarantees and in respect of both the guarantees
separate proceedings should have been filed by the
petitioner and there is a misjoinder of cause of
action as well as respondents and therefore also the
present petition is liable to be dismissed. In my
opinion both the aforesaid alternate contention lacks
any merits whatsoever. The present petition is filed
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:9: :9: :9:
against the respondents in their capacity as the
guarantors and that the amount received is also one
single amount which is advanced to the principal
debtor. Merely because two sets of gurantees are
executed by two different sets of respondents I do
not think it is necessary to file two different
proceedings when cause of action is one and the same.
I am also of the further opinion that the principle
debtor is neither necessary not proper party to the
proceedings initiated against the guarantor. It is
well settled that liability of the guarantor and
principal debtor is joint and several and thus
independent suit and proceedings can be filed against
them without impleading each other parties to the
respective proceedings.
10. The last contention which is advanced by the
learned counsel for the respondent was that the claim
is barred by the law of limitation. According to the
him the first default has been committed by the
principal debtor long back and therefore the amount
should have been claimed by the petitioner
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:10: :10: :10:
immediately thereafter. The legal notice given is of
9.1.1998 and in the said notice the amount was
required to be repaid immediately. The principle
debtor which is the company has continuously
defaulted in making the payment thereafter. The
liabilities of the guarantors arises only after the
guarantees are invoked and not prior thereto and
therefore I find that the present petition is within
time. In any event under the deed of guarantee the
liabilities of the guarantors continue to subsist and
coexist as long as the amount is not repaid by the
principle debtor and therefore also I do not find any
substance in the contention of limitation advanced by
the learned counsel for the respondent herein. There
is no merits in the any of the contentions advanced
by the learned counsel for the respondents. In view
thereof I pass the following order.
. The respondent no.1 to 8 are ordered
and directed to pay jointly and severally to
the petitioner a sum of Rs.4,37,69,240/- with
interest thereon from the date of 1.2.2005 as
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:11: :11: :11:
per the loan agreement. The respondent no.1
to 8 are also ordered and directed to pay the
petitioner cost of the present petition.
. Learned counsel appearing for the respondent
seeks stay of the order and judgement. Learned
counsel appearing for the petitioner opposes for the
said stay. Stay granted upto 15.4.2005.
sd/-
*
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