Syndicate Bank Vs. B.C. Kotrappa and ors. - Court Judgment

Excerpt:
1. this substantive appeal is filed by the appellant/applicant bank being aggrieved by the judgment and order dated 17.3.2004, passed by the learned pq of drt, bangalore, in oa-369/1996. by the impugned order the learned po allowed with cost the claim of the bank directing defendant no. 1 mr. b.c. kotrappa, to pay to the applicant bank amount of rs. 14,14,052.28 p with subsequent interest at the rate of 21% per annum with quarterly rests from the date of filing of the application till the date of realisation. the learned po, however, dismissed the claim of the bank as against defendant no. 2 smt. b.h. seshamma, and defendant no. 3 dr. v. venkatesh. the appellant bank is aggrieved because of the dismissal of claim against defendant nos. 2 and 3 and hence, appeal is limited to that.....

Judgment:
1. This substantive appeal is filed by the appellant/applicant Bank being aggrieved by the judgment and Order dated 17.3.2004, passed by the learned PQ of DRT, Bangalore, in OA-369/1996. By the impugned Order the learned PO allowed with cost the claim of the Bank directing defendant No. 1 Mr. B.C. Kotrappa, to pay to the applicant Bank amount of Rs. 14,14,052.28 p with subsequent interest at the rate of 21% per annum with quarterly rests from the date of filing of the application till the date of realisation. The learned PO, however, dismissed the claim of the Bank as against defendant No. 2 Smt. B.H. Seshamma, and defendant No. 3 Dr. V. Venkatesh. The appellant Bank is aggrieved because of the dismissal of claim against defendant Nos. 2 and 3 and hence, appeal is limited to that extent.

2. I have heard Mr. P. Sreenivasulu, Advocate for the appellant Bank.

Respondent did not appear though they were duly served. I have also gone through the proceedings and in my view, the learned PO has correctly passed the order.

4. Defendant No. 1 Mr. B .G. Kotrappa approached the appellant Bank at its Gandhinagar Branch for various credit facilities which were granted to him in the years 1980 and 1981. Defendant Nos. 2 and 3 joined him as co-obligants and they executed various loans and guarantee agreements.

Subsequently, on the request of defendants all the three accounts relating to the three credit facilities were transferred from Gandhinagar Branch to the Jayamahal Branch of plaintiff Bank. The accounts were duly renumbered as PSL 4/82, SOD 319 and OSL TL 1/82, by the present branch. The accounts, however, became irregular in the matter of repayment and in spile of repeated requests the defendants failed to keep up their promise. The business was also stopped, Defendants became thus defaulters. The Bank was, therefore, constrained to file OA. The Bank's claim was comprising the dues under these three accounts which turned out to be outstanding dues to the applicant Bank.

It was the Bank's case that the defendants executed acknowledgement of debts from time-to-time right from 10.8.1983 to 20.1.1990.

5. Defendant Nos. 1 and 2 filed separate written statement. Defendant No. 3 did not file written statement. Various defences were taken by the defendants in their written statements. The learned Presiding Officer after hearing both the sides and after going through the material placed before him, allowed the Bank's claim as stated above and dismissed the claim of the Bank against defendant Nos. 2 and 3.

6. The defence of defendant Nos. 2 and 3 was that defendant No. 2 was not a signatory to the acknowledgements in respect of all the three loans. It was their contention that defendant No. 2 was not a guarantor for the final two facilities and it was only for the third facility OSL/TL-1/82 that defendant No. 2 figured as a guarantor. The letter of guarantee which was marked as Exhibit A-36, was contended to be dated 30.4; 1981. It was contended that there was absolutely no Clause in Ex.

A-36 authorising defendant No. 1 to acknowledge the debt on her behalf also to the applicant Bank.

7. The Bank's case was that the said letter of guarantee Ex. A-36, was a Continuing Guarantee and, therefore, it has to be treated as perennially alive to fasten defendant No. 2 with her guarantee liability.

The learned Presiding Officer, however, rejected this pica of the Bank observing that there was a difference between a Continuing guarantee and a guarantee within the period of limitation. He observed that the said guarantee was not at all a Continuing Guarantee as it was specifically in respect of only one facility of Rs. 1.50 lakhs. He further observed that continuing guarantee could not be mistaken as perennial guarantee or perpetual guarantee and that Continuing Guarantee comes into play when the guarantee is marked to cover the loans advanced from time-to-time and it should be remembered in the present case at hand that the only loan that was granted to defendant No. 1 under the cover of the said guarantee was the last facility OSL-TL-1782. The learned Presiding Officer observed that it was wrong to call this guarantee as a guarantee which was not amenable to limitation period and that it could not be characterized as a continuing guarantee within the meaning of Section 129 of the Indian Contract Act, 1872.

8. I find myself in agreement with the observations made by the learned PO and finding reached by him. Therefore, it has to be stated that the applicant Bank has miserably failed to prove the liability of defendant No. 2 in respect of any of these three claims, The case of defendant No. 3 also is same and the applicant Bank has failed to prove the liability of defendant No. 3 also, because the case of defendant Nos. 2 and 3 is identical and, therefore, what is observed with respect of defendant No. 2 has to be observed with respect to defendant No. 3 also and the benefit of that has to be given to defendant No. 3, even though he has remained ex pane.

9. In view of the aforesaid discussion, I find no substance in this appeal, which has to be dismissed. Hence, following Order is passed.