9911796707
TMI Blog2011 (11) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant had offered its guarantee vide its letter dated 2nd March, 2005 for credit limits sanctioned to M/s. Naturex Oils (P) Ltd. by Union Bank of India and Indian Overseas Bank. The amount under the said guarantee was not to exceed Rs. 5,48,00,000/-. Clauses 1, 7, 8, 9 & 13 of the Letter of Guarantee dated 2nd March, 2005 executed by the appellant are reproduced hereinbelow:- "1. The guarantee shall be continuing security binding me/us and my/our personal representative until the expiration of three calendar months from the receipt by the bank of a notice in writing to discontinue it and notwithstanding the discontinuance by or any release of granting of the time or indulgence to any one or more of us this Guarantee shall remain in contin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not expressly appropriated to the old account without prejudice to my/our estates liability to the extent aforesaid. ** ** ** 7. Though as between the principal and me/ us I am /we are sureties only, I/We agree that as between the Bank and me/ us I am/ we are principal debtor(s) and I/We shall not be entitled to any of the right conferred on sureties by sections 133, 134, 135, 139, 141 and 145 of the Indian Contract Act, 1872. 8. I/We waive in the Bank's favour all or any of my/our rights against the bank or the Principal as far as maybe necessary to give effect to any of the provisions of this Guarantee. 9. I/We declare that I/We have not received any security from the Principal for the giving of this Guarantee and I/We agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he guarantors. Guarantors viz. Tyagi Pipes Craft Pvt. Ltd. have accordingly in its Board Meeting on 13th November, 2005 decided to withdraw the Bank Guarantee forthwith. It is requested that the Bank may take notice that the said Bank Guarantee stands withdrawn from the date and time the notice is delivered to the Bank." 4. Vide letter dated 17th November, 2005, Union Bank of India rejected appellant's unilateral revocation/withdrawal of guarantee/security as it was neither acceptable to the Bank nor in consonance with the agreement executed between the parties. As charge was not registered by the appellant, Union Bank of India in September, 2006 filed a petition under Section 141 of the Act before CLB praying for condonation of delay and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Asset Care Enterprises Ltd. Accordingly, M/s. Asset Care Enterprises Ltd. was substituted in place of respondent-Union Bank of India as respondent no. 1. 7. Mr. Kaanan Kapur, learned counsel for the appellant submitted that the impugned order had been passed in a cursory manner inasmuch as the appellant's request for interrogatories had been rejected on respondent's mere statement before the CLB that it was not a consortium. 8. Mr. Kapur further submitted that the issue of consortium was fundamental to the present proceedings as the United Bank of India had no right to institute a petition under Section 141 of the Act. According to him, when two banks enter into a consortium to lend money, it results in an unregistered partnership and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferring to the terms of the Guarantee submitted that the appellant could not have unilaterally withdrawn the guarantee after the loan had been advanced by the respondent in terms of the agreement and the Letter of Guarantee. According to him, even if the same had been withdrawn by the appellant, the amount would still be due and payable by the appellant as a guarantor and the respondent-bank herein would be entitled to get the charge registered. 14. Having heard the parties at length this Court is of the view that the factum that loan had been advanced by the respondent to the borrower on the strength of a Letter of Guarantee executed by the respondent are admitted facts. A perusal of the Letter of Guarantee executed by the appellant, in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreeing to jointly undertake advancing of loan to M/s. Naturex Oil Pvt. Ltd." 18. Upon a perusal of the aforesaid interrogatories, this Court has no doubt that same were totally irrelevant to the controversy at hand and same had been filed only to protract the proceedings. 19. This Court is also of the opinion that in view of the Clause 7 of the Letter of Guarantee, appellant cannot rely upon Section 134(2) of the Indian Contract Act, 1872. 20. The judgment of Mangalore Chemicals & Fertilizers Ltd. (supra) does not help the respondent inasmuch as the Karnataka High Court in that case held that in an application seeking condonation of delay in filing a charge, the question of merits or validity of a charge cannot be gone into. It was f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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