TMI Blog1985 (11) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 approached the plaintiff for executing a deferred payment guarantee in the sum of Rs. 6,18,390 in favour of Messrs. Techno Exports of Sofia (Bulgaria) from whom the necessary plant and equipment was being imported by the said defendant for the setting up of a dehydration factory at Rai. The plaintiff agreed to execute a deferred payment guarantee in favour of Messrs Techno Exports in the aforesaid sum. Defendants Nos. 2 to 6 became guarantors for payment of the said amount to the plaintiff. Defendants Nos. 5, 6 and 8 created equitable mortgages of the properties as follows: SI. No. Person who mortgaged the properties Properties mortgaged 1. Defendant No. 5 Plot situated in Mohalla Shahdana, Madhovan, Bareilly. 2. Defendant No. 6 Plot No. 10, Block G, situated in 35, Civil Lines, Ahara, Kothi Nawaleranpur, Bareilly. 3. Defendant No. 8 A plot of land measuring 711 sq. yards out of Khasra No. 504 situated in Mauza Pathanpura, Court Road, Saharanpur. Defendant No. 1 executed two mortgage deeds dated October 6, 1972, and December 12, 1972, for Rs. 6,18,319 and Rs. 71, respectively), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otested bill account of defendant No. 1. In addition to that, an amount of Rs. 237.53 on account of incidental charges was debited to the said account of the defendant. According to the banking practice, the plaintiff does not charge interest in that account but recovers the same at a penal rate on the balances due. The plaintiff gave cash credit (hypothecation) limit of Rs. 6,00,000 on February 26, 1972, to defendant No. 1. Defendants Nos. 2 and 3 stood guarantors for payment of the said amount. With effect from March 14, 1973, the limit of Rs. 6,00,000 was enhanced to Rs. 6,50,000. Defendants Nos. 2 and 3 further became guarantors for the enhanced amount. The plaintiff, at the request of defendant No. 1, granted to it a clean term loan of Rs. 5,00,000 on April 2, 1973. Defendant No. 1 executed a mortgage deed dated April 2, 1973, in favour of the plaintiff regarding the properties mentioned at page 3 of the judgment. Defendant No. 1 again approached the plaintiff and requested for the enhancement in the limit of the cash credit (hypothecation) limit of Rs. 6,50,000 to Rs. 7,50,000. However, the plaintiff, instead of enhancing the aforesaid limit, granted to defendant No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m loan) to protested bills account. On January 7, 1978, defendant No. 1 signed balance confirmation slip of Rs. 55,04,645.72 due as on December 31, 1977. Thereafter, recoveries to the tune of Rs. 79,225.85 were made from defendant No. 1. An amount of Rs. 55,233.03 was debited to the account of defendant No. 1 on September 12, 1978, on account of the seventh installment of deferred payment guarantee. Thus, after giving credit of the amounts received from defendant No. 1 and debiting the amount of Rs. 55,233.03, an amount of Rs. 54,80,652.90 became due from defendant No. 1. An amount of Rs. 15,45,989.33 became due by way of interest from November 1, 1977, to July 8, 1979, a day prior to the date of institution of the suit. Thus, the total amount which was due on that day came to Rs. 70,26,642.23., Consequently, the plaintiff filed a suit for recovery of Rs. 70,26,642.23 with future interest at the rate of 15 per cent. per annum till the date of payment against defendants Nos. 1 to 7 jointly and severally and for recovery of Rs. 2,32,203.35 with future interest at the rate of 2 per cent. per annum till the date of recovery against defendant No. 8 by sale of the mortgaged/hypothecat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on behalf of defendant No. 5, on January 12, 1984, that the said defendant did not want to file any written statement and adopted the written statement of defendant No. 6. Defendant No. 1 pleaded that none of the charges had been registered under section 125 of the Companies Act with the Registrar of Companies, Delhi and Haryana. Defendants Nos. 2 and 4 took the pleas in the written statement that their signatures were obtained on blank forms. Consequently, they were not liable to pay the amount claimed. They also pleaded that Mr. S.K. Kalia was not authorised to file the suit and that the plaintiff had not complied with the provisions of section 125 of the Companies Act with regard to registration of charges. Some other pleas were also taken which are reflected in the issues. Defendants Nos. 3, 6 and 8 have in their written statements taken similar pleas as have been taken by defendants Nos. 2 and 4. Defendant No. 8 took another plea that the amounts of the instalments relating to deferred payment guarantee account were transferred to the cash credit account of the company and, consequently, he stood discharged from payment of the amount. Both the suits were consolidated, vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26, 1972, was issued under regulation 76 authorising the agents of the bank to sign the documents. Subsequently, by notification dated August 26, 1972, the designation of agents has been changed to branch managers. Therefore, the branch managers are entitled to sign the plaints, etc., under regulation 77. It has been held by G.C. Mital J. in State Bank of India v. Kashmir Art Printing Press, Sirsa [1981] PLR 300; [1983] 54 Comp Cas 56 that branch managers had the authority not only to sign the pleadings and verify them but also had the authority to sign vakalatnama to authorise an advocate to file the suit or to file the same themselves. It was further held that the larger authority granted to the branch managers to sign plaints, written statements, etc. should include the power to file suit, written statement, etc. The aforesaid view was followed by me in State Bank of India v. Haryana Rubber Industries ( P. ) Ltd. [1985] 2 PLR 8; [1986] 60 Comp Cas 472. It is not disputed that Mr. S.K. Kalia through whom the suit has been filed was working as branch manager. Consequently, I hold that he was authorised to file the suit. Issue No. 2. R.L. Aggarwal, U.D.C, Office of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Registrar, then the former cannot be held responsible for that. The reason is that after the particulars, etc., have been filed by the charge-holder, he is absolved from his duty and the responsibility of registration shifts on to the Registrar. Consequently, I decide the matter in favour of the plaintaiff and hold that all the charges of the plaintiff shall be deemed to have been registered, though they have not in fact been registered. Issues Nos. 3 and 8. Both these issues are inter-connected and I propose to deal with them together. The bank gave to the company various loan facilities as mentioned in annexure "A" and got five types of documents executed from it and the guarantors. Those were agreements in Forms K L, guarantee deeds in Form I (Spl), pronotes and mortgage deeds. Agreements in Form K were got executed from the company for hypothecation of its goods in favour of the bank and agreements in Form I for hypothecation of its debts and assets in favour of the bank. Agreements in Form I (Spl) were got executed from the guarantors for payment of the loans taken by the company. The pronotes were got executed from the company in favour of the guarantors. Thereafter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force. Later, the company, on October 6, 1972, executed a mortgage deed (exhibit P.-8) in favour of the bank for a consideration of Rs. 6,18,390. In the mortgage deed, through oversight, the amount of Rs. 6,18,319 was mentioned instead of Rs. 6,18,390. Consequently, an additional mortgage deed was subsequently executed for Rs. 71 on December 12, 1972, but that document has not been exhibited and cannot be taken into consideration. In view of the aforesaid letters and the mortgage deed, it is not disputed by the defendants that the company is liable to pay the remaining instalments, i.e. , Nos. 3 to 11. It is to be seen now who are the guarantors for payment of the said amount and what are their liabilities. Defendants Nos. 2, 3, 4, 5 and 6 executed a guarantee deed dated nil (exhibit P-3) in favour of the bank and undertook to pay the amount of guarantee jointly and severally in case the company failed to do so. The following terms and conditions in the deed are relevant: "( i )This guarantee and/or undertaking shall remain in full force and virtue until repayment of all dues under the said import agreement dated September 4, 1967, entered into by and between the company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecember 31, 1977, from the company to the plaintiff bank. The said facts are admitted by the company. . Thus, it is evident that an amount of Rs. 55,04,645.72 was due to the bank from the company on December 31, 1977. The company is, therefore, liable to pay this amount with future interest to the bank. The liability of defendants Nos. 2 and 4 for payment of the said amount is established from the agreement dated January 8, 1977, in Form I (Spl), exhibit P-60 and the promissory note dated January 8, 1977, exhibit P-61. Therefore, I am of the opinion that defendants Nos. 2 and 4 are liable to pay the said amount with future interest to the bank as guarantors. Now, the liabilities of defendants Nos. 3 and 5 to 8 have to be determined. Their liabilities shall have to be determined taking into consideration the guarantees given by them. As already stated, the accounts for which they gave guarantees are mentioned in annexure "A" against each item in column 5. First, I shall take the case of defendant No. 8. It is argued by Mr. Suri that an amount of Rs. 62,000 was deposited by the company with the bank, according to the agreement between the bank and the company, for deferred paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 does not stand discharged for this reason. Regarding the seventh installment, the amount has been debited to the account of the company and is included in the amount of Rs. 55,04,645.72 as claimed by the bank. The said installment became due to Techno Exports on June 30, 1978. All the relevant facts have been pleaded in para 24 of the plaint. The contention of Mr. Chhibbar is that, through oversight, the amount of the seventh installment was not included in the prayer clause along with the amounts of third to sixth instalments, though it was expressly pleaded in the plaint. In the circumstances, he argues, the court should include the amount of the seventh installment in the amount claimed against defendant No. 8. In support of his contention, he made reference to Mehar Chand v. Milkhi Ram, AIR 1932 Lah 401 [FB]. I agree with the submission of Mr. Chhibbar. The following observations of the Full Bench in the above case may be read with advantage (headnote):" . ..the pleadings of the parties should not be too strictly construed. It is, therefore, the duty of the courts to mould the relief to be granted to the plaintiff according to the facts proved which, however, should n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xhibit P-3) dated nil to the bank which also provides that the guarantee shall be independent of any other indemnity/guarantee/security which the bank may have as aforesaid and the bank shall, at its discretion, be entitled to enforce all or any of the securities as the bank may at any time have. Exhibit P-8 is the mortgage deed executed by the company in favour of the bank which also contains a similar clause. The said clause reads as follows: "( iv )The security hereby created shall be in addition to and not in lieu of any other security which the bank may now or in future have from the company or any other person or persons relating to the debt hereby secured and the bank shall be at liberty to call for and take any other security or securities in any form in addition to or in lieu of the security hereby created and the bank shall have full authority to take recourse to enforce the security hereby created or any other security or securities which the bank may at any time have either against one or all simultaneously or at different time or times at its sole discretion, no enforcement of any other security or the failure to enforce any other security or securities shall not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he old sureties were discharged by reason of the acceptance of the new surety in appeal. It was held that the first sureties were so much prejudiced by the aforesaid act that they stood discharged. In Pirthi Singh's case, AIR 1944 Lahore 428, the facts were that a creditor agreed to give time to the debtor and to pay the amount in instalments. This was done without the surety's assent or knowledge which prevented him from requiring the creditor to call upon the principal debtor to pay off the entire debt or from paying the entire debt himself and then recovering it from the principal debtor. In the circumstances, it was held that the surety stood discharged from his liability. In Ishar Singh's case, AIR 1953 Punj 337, in an application under section 20 of the Arbitration Act, the plaintiff asked for attachment before judgment. The court issued warrants of attachment conditional upon the furnishing of a surety in the sum of Rs. 1,000. The surety was furnished by one A and the warrants were withdrawn. A few days later, the plaintiffs applied for the sealing of the workshop of the respondent and for appointment of a receiver. B stood surety to the extent of Rs. 10,000 and the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, 1985 edition, which contains the directives issued by the Reserve Bank of India under sections 21 and 35A of the Banking Regulation Act, 1949, and which reads as follows: Category of advances Rate of interest per cent per annum II.Minimum lending rate for commodities coming within the purview of selective credit control: ( i ) Loans/advances/cash credit/overdrafts against commodities subject to selective credit control. 17.50 ( ii ) Sugar mills in respect of all stocks. 16.50 He urges that the plaintiff is entitled to interest of 2% above 1750% as contained in item II( i ) above. I have given my thoughtful consideration to the argument and gone through the statement of accounts of the company produced by the bank (exhibit P-66), the balance confirmation slips (exhibits P-32, P-31 and P-64) and the statement of interest on the outstandings in the protested bills account from November 1, 1977, to July 8, 1979 (exhibit P-67). The defendants never raised any objection about the statement of accounts (exhibit P-66). On the other hand, the balances in that account were confirmed, vide exh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be realised from mortgaged/hypothecated property or person or both 1 2 3 4 Rs.P. Rs.P. M/s. Depro Foods Ltd. ( i ) 67,10,591.86 69,19,208.76 Both Defendant No. 1 ( ii ) 2,08,616.90 M.P. Mittal ( i ) 62,41,44403 64,50,060.93 Person Defendant No. 2 ( ii ) 2,08,616.90 S.K. Bhargava ( i ) 8,77,46605 10,86,082.95 Person Defendant No. 3 ( ii ) 2,08,616.90 P. Singal ( i ) 62,41,444.03 64,50,060.93 Person Defendant No. 4 ( ii ) 2,08,616.90 J.S. Aggarwal ( i ) 42,71,432.16 44,80,049.05 Both Defendent No. 5 ( ii ) 2,08,616.90 R.A. Gupta ( i ) 45,16,025-31 47,24,624.21 Both Defendant No. 6 ( ii ) 2,08,616.90 B.K. Aggarwal ( i ) 44,04,50463 44,04,504.63 Person Defendant No. 7 B.P. Gupta ( i ) 2,27,466.05 4,30,082.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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