Full Judgment Text
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 22.08.2007
+ WP(C) No.1508/2007
SHRI RAJAN GUPTA ...Petitioner
- versus -
BANK OF INDIA AND ANOTHER ...Respondents
With
WP(C) No.1592/2007
ASHA SINGLA ...Petitioner
- versus -
BANK OF INDIA AND ANOTHER ...Respondents
And
WP(C) No.23014/2005
KAMAL GUPTA ...Petitioner
- versus -
BANK OF INDIA ...Respondent
Advocates who appeared in this case:
For the Petitioners : Mr A.K. Singla, Sr Advocate with Mr Pankaj
Gupta and Ms Promila Dhar
For the Respondents : Ms Manjula Gandhi with Ms Neeru Sharma
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
WP(C)1508/07, 1592/07 & 23014/05 Page No.1 of 25
1. Whether Reporters of local papers may be allowed
to see the judgment ? Yes
2. To be referred to the Reporter or not ? Yes
3. Whether the judgment should be reported in Digest ? Yes
BADAR DURREZ AHMED, J
1. These three petitions raise common issues and were,
therefore, heard together and are being disposed of by this common
judgment. The issue is with regard to the meaning of the word
“borrower” as appearing in Section 13 (2) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (hereinafter referred to as 'the said Act').
2. According to the petitioners, the word “borrower” as
appearing in the said Section 13 (2) and as defined in Section 2 (f) of the
said Act cannot extend and does not extend to include legal
representatives of the original borrower. According to them, the
expression relates only to the persons who took the loan or who were
guarantors for the loan. It does not extend to their heirs or successors or
legal representatives.
WP(C)1508/07, 1592/07 & 23014/05 Page No.2 of 25
3. On the other hand, the learned counsel for the respondents
contends that the expression “borrower” not only includes the persons
who originally took the loan or the persons who originally stood
guarantee, but also their legal representatives and heirs.
4. The present controversy is in connection with financial
assistance to the extent of Rs 650 lacs taken by ROM Industries Limited
from the respondent [Bank of India] for opening import letters of credit.
One Smt. Parvati Devi, amongst others, stood guarantee for the said
financial assistance. She also allegedly created an equitable mortgage in
respect of her immovable property situated at 16/73, Punjabi Bagh, New
Delhi. In October, 1996, the account of M/s ROM Industries Ltd was
declared as a Non-Performing Asset (NPA) by the Bank of India. On
19.08.2000, the said Smt. Parvati Devi passed away. In November,
2003, the Bank of India filed a recovery application [OA 91/2003] in
respect of the said loan before the Debts Recovery Tribunal. Although,
Smt. Parvati Devi had already expired on the date on which the said
application was filed, she was named as a party. Subsequently, on
04.12.2003, an amendment was sought to implead her legal
representatives which include her son [Girdhari Lal Gupta] and daughter
WP(C)1508/07, 1592/07 & 23014/05 Page No.3 of 25
[Asha Singla] amongst others. The said Girdhari Lal Gupta also passed
away on 02.05.2004 and his legal representatives which include Kamal
Gupta and Rajan Gupta were substituted. The said Kamal Gupta and
Rajan Gupta are the sons of Late Shri Girdhari Lal Gupta. The present
writ petitions have been filed by the said Asha Singla, Kamal Gupta and
Rajan Gupta who are all legal representatives, directly or indirectly, of
Late Smt. Parvati Devi. On 05.10.2005, the respondent [Bank of India]
also issued notices under Section 13 (2) of the said Act against, inter
alia , the petitioners in their capacity as legal heirs of Smt. Parvati Devi.
Since these petitions are essentially directed against the issuance of the
said notice dated 05.10.2005 and the invocation of provisions of Section
13 (2) of the said Act, it would be appropriate if the relevant portions of
the said notice are set out:-
“NOTICE U/S 13(2) OF THE SECUTITISATION
AND RECONSTRUCTION OF FINANCIAL
ASSETS AND ENFORCEMENT OF SECURITY
INTEREST ACT, 2002
You are aware that the Bank had granted various
credit facilities to the following firms / company for
which Late Smt. Parvati Devi stood as guarantor. The
details of the various credit facilities granted by the
Bank and the amounts outstanding dues thereunder as
on the date of notice are as under:-
1. M/s Rom Industries Ltd
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Nature of Facility Sanctioned Limit
Outstanding Dues
(Rs.)
Import L/C 650 lacs 22,54,05,668.20
(Rs.)
2. You are further aware that Late Smt.
Parbati Devi had executed various Letters of
Guarantee guaranteeing the due repayment of the
amounts mentioned therein by the Principal Debtor
and all interest, costs, charges and expenses due and
accruing thereon.
3. You are further aware that Late Smt.
Parbati Devi had undertaken liability under the
various Letters of Guarantee for repayment of the
aforesaid limits granted by the Bank to the aforesaid
firm / company i.e. Principal Debtor and that she had
secured the repayment of the aforesaid limits by
creating in favour of the Bank an equitable mortgage
of the property belonging to her situate at 16/73
Punjabi Bagh, New Delhi-110026.
4. As the aforesaid Principal Debtor had
defaulted in repayment of their liabilities the bank
has classified their dues in above said account as
Non-Performing Asset in October 1996 in accordance
with the directions / guidelines issued by the Reserve
Bank of India.
5. We may inform you that in spite of
repeated demands / requests for repayment of the
amount due to the Bank, the aforesaid Principal
Debtor have so far not paid the same. You, therefore,
as the legal heirs of Late Smt. Parbati Devi have
become liable to pay the aforesaid dues.
6. For the reasons stated above, we hereby
give you notice U/S 13 (2) of the above noted Act
and call upon you to discharge in full your liabilities
to the Bank by paying to the Bank Rs.225405668.20
(contractual dues upon the date of notice) with
interest @ 17.50% on C/D account No.10085 with
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quarterly rests within a period of 60 days from the
date of notice, failing which we will entirely at your
risks as to costs and consequences exercise all or any
of the powers under Section 13 of the Securitisation
and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002, against
the secured assets mentioned above.
xxxx xxxx xxxx xxxx xxxx”
The notice speaks of letters of guarantee executed by Late Smt. Parvati
Devi as also the equitable mortgage created by her in respect of her
property at 16/73, Punjabi Bagh, New Delhi as a security for repayment
of the limits extended by the respondent. Significantly, the notice calls
upon the petitioners, amongst others, in their capacity as legal heirs of
Late Smt. Parvati Devi.
5. Before the relevant provisions of the said Act are examined, it
would be necessary to also refer to two other documents. The first is the
guarantee document in respect of the letters of credit. The said guarantee
document was executed on 22.09.1995, jointly and severally, by, inter
alia , Late Smt. Parvati Devi. Clauses (3) and (7) of the said guarantee
are relevant and read as under:-
“(3) This guarantee shall be a continuing
security to you, and shall not be determined except at
the expiration of three calendar months' written
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notice given to you of intention so to do by each of us
or his legal representatives and in the event of the
death of any one or more of us or any one or more of
us coming under a disability, the liability of the
survivor or survivors and the legal representatives of
the person or persons so dying or coming under any
disability and of the estate of any of us so dying or
coming under disability shall continue under the
expiration of three calendar months' notice in writing
given to you of the intention of such survivors or
survivor and legal representatives to determine the
guarantee.
xxxx xxxx xxxx xxxx xxxx
(7) In the event of this guarantee being
determined either by notice by us or the survivors or
survivor of us and the legal representatives of any of
us who shall have died or be under a disability or by
demand in writing by the Bank, it shall be lawful for
the Bank to continue the account with the Opener,
notwithstanding such determination, and the liability
of us or of our respective estates for the amount due
from the Opener at the date when the guarantee is so
determined shall remain, notwithstanding any
subsequent payment into the account by or on behalf
of the Opener. PROVIDED ALWAYS that the total
amount which we shall be liable to pay under this
guarantee shall not exceed Rs.6,50,00,000/-.”
Clause (3) makes it clear that the guarantee was a continuing one and
that it could not be determined by the guarantors except by giving a
notice in writing by each of them, three calendar months prior to the date
of termination. If a guarantor died, his / her legal representative would
continue to be under a liability for the duration of the three-months
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notice period, if such a notice had been given by the guarantor during his
lifetime. Clause (7) indicates that the guarantee could only be
determined either by notice by the guarantors or the survivors and the
legal representatives of any of the guarantors who may have died or may
be under a disability or by a demand being made by the bank in writing.
Even where the guarantee is determined either by the guarantors or by
the bank, the liability of the guarantors or of their respective estates for
the amount due from the principal debtor at the date when the guarantee
was determined, would remain. So, in terms of the guarantee itself, the
death of Smt. Parvati Devi would not absolve her estate or her legal
representatives who come upon her estate of the liability under the
guarantee.
6. The second document of importance is the indemnity bond
executed on 23.10.1996 by Smt. Parvati Devi. The said document carries
the following recital:-
“WHEREAS Smt. Parvati Devi has created equitable
mortgage of her absolute property bearing No.16/73,
Punjabi Bagh, ND with Bank of India, Industrial
Finance Branch, New Delhi.”
The indemnity bond was given by Smt. Parvati Devi as the sale deed
dated 31.07.1968 in favour of the person from whom she had purchased
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the property was not available with her. The sale deed dated 28.06.1971
in her favour was deposited with the bank for creating an equitable
mortgage. This is apparent from the following extract from the said
indemnity bond:-
“Mrs Parbati Devi has deposited original sale deed
th
dated 28 June, 1971 in favour of herself, a site plan
of the property in question and latest Municipal Tax
Receipts in favour of herself with the bank for the
purpose of creating equitable mortgage with Bank of
India for securing advance granted to M/s ROM
Industries Limited by Bank of India.”
7. Consequently, it could be safe to infer that Smt. Parvati Devi
had a dual relationship with the Bank of India. She was one of the
guarantors under the Letter of Guarantee and she was also a mortgagor
under the equitable mortgage. With this background, the relevant
provisions of the said Act may now be examined.
8. Section 13 (2) of the said Act reads as under:-
“ 13. Enforcement of security interest. —
(1) xxxx xxxx xxxx xxxx
(2) Where any borrower, who is under a
liability to a secured creditor under a security
agreement, makes any default in repayment of
secured debt or any instalment thereof, and his
account in respect of such debt is classified by the
secured creditor as non-performing asset, then, the
secured creditor may require the borrower by
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notice in writing to discharge in full his liabilities
to the secured creditor within sixty days from the
date of notice failing which the secured creditor
shall be entitled to exercise all or any of the rights
under sub-section (4).
xxxx xxxx xxxx xxxx”
By virtue of the above provision, a secured creditor has been empowered
to require a “borrower”, by a notice in writing, to discharge in full his
liabilities to the secured creditor within 60 days from the date of notice,
failing which the secured creditor shall be entitled to exercise all or any
of the rights under sub-section (4) of Section 13 of the said Act. The
question that arises is what is meant by the word “borrower” appearing in
the above provision. Section 2 (f) defines “borrower” in the following
manner:-
“ 2. Definitions.— (1) In this Act, unless the
context otherwise requires,—
xxxx xxxx xxxx xxxx xxxx
(f) “borrower” means any person who has
been granted financial assistance by any bank or
financial institution or who has given any
guarantee or created any mortgage or pledge as
security for the financial assistance granted by any
bank or financial institution and includes a person
who becomes borrower of a securitisation
company or reconstruction company consequent
upon acquisition by it of any rights or interest of
any bank or financial institution in relation to such
financial assistance;
WP(C)1508/07, 1592/07 & 23014/05 Page No.10 of 25
xxxx xxxx xxxx xxxx xxxx”
9. It is apparent that the definition comprises of two parts. The
first part follows the word “means” and the second part follows the
words “and includes”. Insofar as the first part is concerned, the word
“borrower” has reference to:-
(1) any person who has been granted financial assistance by
any bank or financial institution; or
(2) any person who has given any guarantee; or
(3) any person who has created any mortgage or pledge as
security for the financial assistance granted by any bank
or financial institution.
The second part of the definition is an inclusive definition and brings
within the ambit of the word “borrower”, a person who becomes a
borrower of a securitisation company or reconstruction company
consequent upon acquisition by it of any rights or interests of any bank
or financial institution in relation to such financial assistance. This part
of the definition, which is apparently based on the principle of
subrogation, is not attracted in the present case and, therefore, does not
WP(C)1508/07, 1592/07 & 23014/05 Page No.11 of 25
call for any further elaboration. As already mentioned above, the learned
counsel for the petitioner had submitted that the expression “borrower”
can only mean a person who has been granted financial assistance by any
bank or financial institution or a person who has given any guarantee or
created any mortgage or pledge as security for the said financial
assistance. It was contended that it has reference only to the original
person who took the loan or other financial assistance or the original
person who gave a guarantee or created any mortgage or pledge as
security for the said loan or financial assistance.
10. A further submission was made on behalf of the petitioners
that Late Smt. Parvati Devi died on 19.08.2000. On that date, the said
Act was not in force. It was submitted that the Act was preceded by an
Ordinance which came into force on 22.08.2002. The Act itself came
into effect on 17.12.2002. The Act was not retrospective and, therefore,
since no notice could have been issued to Smt. Parvati Devi who
originally stood guarantee and / or mortgaged the property in question,
therefore, no notice could be issued to her legal heirs / legal
representatives. This submission does not call for any separate
treatment. The reason being that if the petitioners are not covered by the
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expression 'borrower' as appearing in Section 13 (2) of the said Act then,
no notice could have been issued to them under that provision. On the
other hand, if they are covered under the expression 'borrower' then, it
matters little whether the said Act had come into force prior or after the
death of Smt. Parvati Devi. So, the real and only question is – are the
petitioners “borrowers” as contemplated under Section 13 (2) of the said
Act ?
11. Mr Singla, the learned counsel appearing on behalf of the
petitioner, placed reliance on a decision of the Supreme Court in the case
of P. Kasilingam and Others v. P.S.G. College of Technology and
Others : 1995 Supp (2) SCC 348 for the purposes of explaining as to
what is meant by a “means and includes” definition. The Supreme Court,
while construing Rule 2 (b) of the Tamil Nadu Private Colleges
(Regulation) Rules, 1976, repelled the argument that the expression
“means and includes” appearing in the said rule, indicated that the
definition was inclusive in nature and also covered categories which are
not expressly mentioned therein. The question which was before the
Supreme Court was whether the expression “private college or colleges”
WP(C)1508/07, 1592/07 & 23014/05 Page No.13 of 25
included professional and technical colleges which are not specifically
mentioned in the definition. The supreme Court observed as under:-
“A particular expression is often defined by the
Legislature by using the word 'means' or the word
'includes'. Sometimes the words 'means and includes'
are used. The use of the word 'means' indicates that
“definition is a hard-and-fast definition, and no other
meaning can be assigned to the expression than is put
down in definition”. (See: Gough v. Gough: 1891 (2)
QB 665: 60 LJ QB 726; Punjab Land Development and
Reclamation Corpn. Ltd. v. Presiding Officer, Labour
Court: 1990 (3) SCC 682, 717: 1991 SCC (L&S) 71. )
The word 'includes' when used, enlarges the meaning of
the expression defined so as to comprehend not only
such things as they signify according to their natural
import but also those things which the clause declares
that they shall include. The words “means and
includes”, on the other hand, indicate “an exhaustive
explanation of the meaning which, for the purposes of
the Act, must invariably be attached to those words or
expressions”. [See: Dilworth v. Commissioner of
Stamps: 1899 AC 99, 105-106: (1895-9) All ER Rep Ext
1576 (Lord Watson); Mahalakshmi Oil Mills v. State of
A.P.: 1989 (1) SCC 164, 169: 1989 SCC (Tax) 56 ] The
use of the words “means and includes” in Rule 2 (b)
would, therefore, suggest that the definition of 'college'
is intended to be exhaustive and not extensive and
would cover only the educational institutions falling in
the categories specified in Rule 2 (b) and other
educational institutions are not comprehended.”
13. In the light of the aforesaid, it was submitted that the
definition of “borrower” has to be construed as being exhaustive and not
extensive. Therefore, the expression “borrower” specifically refers to a
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person who has been granted financial assistance by a bank or financial
institution or to a person who has given a guarantee or created any
mortgage or pledge as security for the said financial assistance granted
by a bank or a financial institution. But, as pointed out earlier, this case
is not concerned with the second part of the definition following the
words “and includes” which, in any event, only extends the definition to
a “borrower” of a securitisation company or reconstruction company
which acquires the rights or interests of any bank or financial institution
in relation to such financial assistance. The Supreme Court decision in
P. Kasilingam (supra) is not of much help to the petitioners. Since we
are only concerned with the first part of the definition following the word
'means', it can be taken that the word 'borrower' has been exhaustively
defined.
14. On behalf of the respondent, it was contended that the
expression “borrower” as employed in Section 13 (2) of the said Act
includes legal heirs / legal representatives of the original “borrower”. A
reference was made to the definitions of “secured debt” and “secured
interest” as given in Section 2 (ze) and Section 2 (zf). The same read as
under:-
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“ 2. Definitions.— (1) In this Act, unless the context
otherwise requires,—
xxxx xxxx xxxx xxxx xxxx
(ze) “secured debt” means a debt which is
secured by any security interest ;
(zf) “security interest” means right, title and
interest of any kind whatsoever upon property,
created in favour of any secured creditor and
includes any mortgage, charge, hypothecation,
assignment other than those specified in section 31 ;
xxxx xxxx xxxx xxxx xxxx ”
15. It was contended that “secured debt” means a debt which is
secured by any security interest. In turn, “security interest” means a
right, title or interest of any kind whatsoever upon property, created in
favour of any secured creditor and includes any mortgage, charge,
hypothecation, assignment other than those specified in Section 31.
Advancing the argument a little further, the learned counsel for the
respondent submitted that security interest has reference to any right, title
or interest upon a property and includes a mortgage. Late Smt. Parvati
Devi had mortgaged her property. The petitioners are her heirs.
Therefore, they have a right, title and interest in the mortgage and
consequently, they would be covered under the expression “borrower”.
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The learned counsel also referred to Section 59A of the Transfer of
Property Act, 1882 which reads as under:-
“ 59A. References to mortgagors and mortgagees
to include persons deriving title from them. —Unless
otherwise expressly provided, references in this Chapter
to mortgagors and mortgagees shall be deemed to
include references to persons deriving title from them
respectively.”
The learned counsel for the respondent referred to the case of
Samarendra Nath Sinha and Another v. Krishna Kumar Nag : AIR
1967 SC 1440 wherein the Supreme Court observed in para 16 thereof
that under Section 59A of the Transfer of Property Act, 1882 also, all
persons who derive title from the mortgagor are included in the term
“mortgagor” and are, therefore, entitled to redeem.
16. It was also contended by the learned counsel for the
respondent that while interpreting a provision of a particular statute, the
purpose of the statute must be kept in mind. The said Act had been
enacted for the purposes of removing all hurdles faced by the banks and
financial institutions for recovering their dues. Therefore, the expression
“borrower” ought to be construed to include even the legal heirs / legal
representatives of the original borrower. She also referred to the
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decision of the Supreme Court in the case of M/s Associated Indem
Mechanical (P) Ltd v. West Bengal S.S.I.D.C. Ltd & Others : AIR 2007
SC 788 , wherein the Supreme Court observed that it is well-settled that
the word “include” is generally used in interpretation clauses in order to
enlarge the meaning of the words or phrases occurring in the body of the
statute and that when it is so used, those words or phrases must be
construed as comprehending, not only such things as they signify
according to their natural import, but also those things which the
interpretation clause declares that they shall include. The learned
counsel for the respondent then referred to the decision of a single Judge
of the Gujarat High Court in the case of Makboolhusen Razakmiya
Maniyar & Another v. Bank of Baroda & Others : AIR 2006 Guj. 244 .
She also referred to the decision of the Supreme Court in the case of
National Insurance Co. Ltd. v. Laxmi Narain Dhut : AIR 2007 SC
1563 where the Supreme Court held that the provisions of a statute must
be given purposive construction.
17. Now, the word “borrower” as used in Section 13 (2) of the
said Act is further qualified by the words “who is under a liability to a
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secured creditor under a security agreement”. “Security agreement” has
been defined in Section 2( zb ) of the said Act as under:-
“ 2. Definitions.— (1) In this Act, unless the
context otherwise requires,—
xxxx xxxx xxxx xxxx xxxx
( zb ) “security agreement” means an agreement,
instrument or any other document or arrangement
under which security interest is created in favour of
the secured creditor including the creation of
mortgage by deposit of title deeds with the secured
creditor.
xxxx xxxx xxxx xxxx xxxx”
Clearly, security agreement includes the creation of mortgage by deposit
of title deeds with the secured creditor. Therefore, there is no difficulty
in holding that had Smt. Parvati Devi been alive, she would fall within
the expression “borrower, who is under a liability to a secured creditor
under the security agreement”. The question that has been posed in this
petition is whether upon her death, her legal heirs would also be covered
by the same expression ?
18. Section 2 (2) of the said Act reads as under:-
“(2) Words and expressions used and not defined in
this Act but defined in the Indian Contract Act, 1872
(9 of 1872) or the Transfer of Property Act, 1882 (4 of
1882) or the Companies Act, 1956 (1 of 1956) or the
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Securities and Exchange Board of India Act, 1992 (15
of 1992) shall have the same meanings respectively
assigned to them in those Acts.”
Section 2( f ) speaks of mortgages. The expressions “mortgage”,
“mortgagor” and “mortgagee” etc. have been defined in Section 58 of the
Transfer of Property Act, 1882. Accordingly, by virtue of Section 2(2)
of the said Act, these words would have the same meanings under the
said Act. Furthermore, Section 59A of the Transfer of Property Act,
1882, as pointed out by the learned counsel for the respondent, clearly
stipulates that unless otherwise expressly provided, references to
“mortgagors” and “mortgagees” shall be deemed to include references to
persons deriving title from them respectively. Therefore, the meaning
assigned to the word “mortgagor” under the Transfer of Property Act,
1882 refers to not only the “mortgagor”, but includes references to
persons deriving title from them. The same meaning has to be given
under the said Act in view of the clear provisions of Section 2(2) thereof.
The position, therefore, with regard to the equitable mortgage created by
Smt. Parvati Devi is that her heirs / legal representatives would also be
deemed to be mortgagors. That being the position, the petitioners would
fall within the meaning of the word “borrower” as defined in Section 2
( f ) of the said Act.
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19. It has been pointed out earlier that Smt. Parvati Devi had a
dual relationship with the Bank of India. She was a mortgagor under the
said equitable mortgage and she was also one of the guarantors under the
Letter of Guarantee. It has already been pointed out above that the Letter
of Guarantee was a continuing guarantee and it contained specific
clauses which extended liability to the original guarantors' legal heirs /
representatives. The guarantee was terminable by the guarantors giving
a notice in writing. Even the legal representatives of any of the
guarantors who may have died would continue to be under the liability
unless they also determined the guarantee by a notice in writing. In the
facts and circumstances of the present case, no such notice in writing
terminating the guarantee has been issued either by Late Smt. Parvati
Devi or by any of the petitioners.
20. It is also important to note that the expressions “contract of
guarantee”, “surety”, “principal debtor” and “creditor” have been defined
in Section 126 of the Indian Contract Act, 1872 and to the extent such
words are not defined in the said Act, the definition under the Indian
Contract Act, 1872 shall be applicable in view of the provisions of
Section 2 (2) of the said Act. The guarantee given by, inter alia , Late
Smt. Parvati Devi was a continuing guarantee. In terms of Section 130
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of the Indian Contract Act, 1872, a continuing guarantee may, at any
time, be revoked by the surety as to future transactions by notice to the
creditor. It has already been indicated above that no such revocation has
been placed on record either at the instance of Late Smt. Paravati Devi or
any of the petitioners. It is noticeable that the revocation mentioned in
Section 130 of the Indian Contract Act, 1872 operates only
prospectively, i.e., with regard to the future transactions and does not
absolve the guarantor (surety) from any liability in respect of past
transactions. Section 131 of the Indian Contract Act, 1872 is of material
significance inasmuch as it deals with the revocation of a continuing
guarantee by virtue of the surety's death. The said section provides that
the death of the surety operates, in the absence of any contract to the
contrary, as revocation of a continuing guarantee, so far as regards future
transactions. Under the normal conditions, the death of the surety would
by itself operate as a revocation of a continuing guarantee but, if there is
any contract to the contrary, then it would not so operate. In the present
case, there is a contract to the contrary inasmuch as clauses (3) and (7) of
the Letter of Guarantee specifically stipulate that the guarantee shall not
be determined unless and until the same is revoked by a notice in writing
either by the original guarantor or his / her legal representative.
WP(C)1508/07, 1592/07 & 23014/05 Page No.22 of 25
Therefore, the death of Smt. Parvati Devi by itself would not amount to a
revocation of the guarantee in question. In any event, Section 131 makes
it clear that the death of a surety would operate as a revocation only as
regards future transactions. The liability in respect of past transactions
would remain. In view of the foregoing discussion, it is absolutely clear
that the petitioners would be covered under the expression “borrower” as
appearing in Section 13 (2) of the said Act.
21. Before parting with this case, I would also like to point out
that the definition section begins with the expression “in this Act, unless
the context otherwise requires ”. So, the word “borrower” as defined in
Section 2( f ) of the said Act is not an absolute definition and if the context
otherwise requires, then the said word would have to take colour
accordingly. In Youaraj Rai & Others v. Chander Bahadur Karki :
2007 (1) SCC 770 , the Supreme Court held as under:-
“Moreover the opening words of Section 2 are
“unless the context otherwise requires”. Hence,
while construing, interpreting and applying the
definition clause, the court has to keep in view the
legislative mandate and intent and to consider
whether the context requires otherwise.”
In Ramesh Mehta v. Sanwal Chand Singhvi and Others : 2004 (5) SCC
409 , S.B. Sinha, J, in his concurring opinion observed as under:-
WP(C)1508/07, 1592/07 & 23014/05 Page No.23 of 25
“26. The interpretation clause in the said Act is
prefaced with the expression "unless otherwise
requires by the context".
27. A definition is not to be read in isolation.
It must be read in the context of the phrase which
would define it. It should not be vague or ambiguous.
The definition of words must be given a meaningful
application; where the context makes the definition
given in the interpretation clause inapplicable, the
same meaning cannot be assigned.”
In Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and
Others: 1998 (8) SCC 1 , the Supreme Court held as under:-
“28. Now the principle is that all statutory
definitions have to be read subject to the qualification
variously expressed in the definition clauses which
created them and it may be that even where the
definition is exhaustive inasmuch as the word defined
is said to mean a certain thing, it is possible for the
word to have a somewhat different meaning in
different sections of the Act depending upon the
subject or context. That is why all definitions in
statutes generally begin with the qualifying words,
similar to the words used in the present case, namely
'unless there is anything repugnant in the subject or
context'. Thus there may be sections in the Act where
the meaning may have to be departed from on
account of the subject or context in which the word
had been used and that will be giving effect to the
opening sentence in the definition section, namely
'unless there is anything repugnant in the subject or
context'. In view of this qualification, the Court has
not only to look at the words but also to look at the
context, the collocation and the object of such words
relating to such matter and interpret the meaning
intended to be conveyed by the use of the words
under those circumstance". (See : Vanguard Fire and
WP(C)1508/07, 1592/07 & 23014/05 Page No.24 of 25
General Insurance Co. Ltd. Madras v. Fraser & Ross:
AIR 1960 SC 971: 1960 (3) SCR 857).”
These decisions make it clear that since the definitions contained in
Section 2 of the said Act are prefaced by the expression “unless the
context otherwise requires”, the definitions are not absolute definitions,
but can have a different meaning depending on the context. Although in
the present case, the petitioners, as indicated above, fall within the
definition of “borrower” under Section 2( f ) of the said Act itself, even if
they strictly did not, they would be covered in the contextual and
purposive sense.
22. For the foregoing reasons, it cannot be said that the action
initiated under the said Act in respect of the petitioners is without
jurisdiction.
The writ petitions are dismissed. No costs.
BADAR DURREZ AHMED
(JUDGE)
August 22, 2007
δυττ
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