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TMI Blog2009 (10) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreement with M/s Karnataka Patrika (P) Ltd. (hereinafter referred to as "KPP") for the transfer of publication and printing rights and machineries as also to create a lease in the buildings owned by the Trust. 3. Some interested persons filed a suit being OS No. 4 of 1997 before the Principal District Judge, Dharwad praying for the removal of trustees, scheme for management of the Trust, etc. While this suit was pending, KPP entered into an agreement with M/s Jaya Karnataka News and Printers (P) Ltd., Appellant 2 (hereinafter referred to as "JKNP") for transfer of all its rights, interest and liabilities. 4. There was a loan transaction between JKNP and the respondent Bank whereby a loan of Rs. 15 lakhs was sanctioned to the former at an interest of 15% p.a by open cash credit compounded quarterly. Appellant 1 along with other office-bearers of the said company allegedly executed a demand note. On the same day, JKNP through its Executive Director requested for an overdraft facility of Rs. 5 lakhs which was granted on an on-demand promissory note with an interest of 15% p.a compounded quarterly. This loan was secured by book-debts and Appellant 1, Basavaraj (since deceased) al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary. 8. The suits in the High Court were related to three different loan transactions that had taken place between the respondent Banks and the appellants between 1977 and 1981. The first out of these have been taken by KPP in 1977, the second by JKNP in 1978 and the third loan was taken by the Administrator appointed by the Government under the LST Act. The subject-matter of these appeals has been to decide as to who should be liable to pay the loan amounts. OS No. 4 of 1977 was dismissed by the District Court, Dharwad. The first set of appeals in the High Court had been against the decree of the trial court, which was passed against KPP and JKNP regarding a loan of Rs. 90,000 from Syndicate Bank where three different appeals were filed by KPP, JKNP and the Bank separately. The issues gone into by the High Court were multifarious and are not required to be delved into at this point of time. 9. We have heard the learned counsel appearing on behalf of the parties and examined the materials on record. The issues which we have framed to deal with while disposing of this appeal are listed as follows: (i) Whether the deceased surety and his legal representatives are liable to repay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressing it. It is highly unimaginable that when parties are entering into contracts for the purpose of seriously conducting some businesses, that there would not be multiple copies of the executed agreement or at least one copy with either of the appellants. Thus, this contention of the appellants does not inspire any confidence. We, therefore, find no difficulty in rejecting the same. 12. As the respondent has rightly contended that in view of the waiver of rights by the guarantor, there can be no waiver of liability in exercise of such rights. The observations of this Court in Provash Chandra Dalui v. Biswanath Banerjee AIR 1989 SC 1834 at AIR para 21 might be useful to recollect at this point of time. It runs as follows: (SCC pp. 498, para 24) "24. The essential element of waiver is that there must be a voluntary and intentional relinquishment of a known right or such conduct as warrants the inference of the relinquishment of such right. It means the forsaking the assertion of a right to the proper opportunity." 13. An examination of the agreement executed between the appellant Basavaraj (since deceased) and the Bank would clearly show it to be one of a continuing guarantee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound by the terms and conditions of the agreement executed at the time of entering into the guarantee. In the present facts and circumstances, we, therefore, do not find any difficulty in affirming the concurrent findings of the High Court and of the trial court on the point that the agreement executed for the purpose of a continuing liability despite the variation of terms of the contract and in the absence of a specific written document by Basavaraj (since deceased) revoking the guarantee, the guarantee stands and the legal representatives of the deceased are liable to repay the loan. 17. With regard to the second issue, the learned counsel for the appellants contended that the contract between JKNP, the Bank and the guarantor Basavaraj had been substituted by a fresh contract by which LST was required to liquidate the amount outstanding. The learned counsel based this on two facts mainly. One was the transfer of the loan accounts from JKNP to LST and the other factor was the deposit of amounts by the Receivers appointed by the court in OS No. 4 of 1977 for liquidation of outstanding amounts of money indeed gives rise to substitution by a new contract. The respondents on the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hypothecated property. In fact, the Bank had also given another loan against the very same property which had been hypothecated also for the first loan. Alteration or variation in the terms of a contract under Section 62 of the Act implies that both parties have voluntarily agreed to the change in the terms of the agreement. In this case however, as can be gathered from the facts and circumstances of the present case, the Bank never had a say in the matter at all. In fact, it was due to a decree of the courts that the property in question had been entrusted in the hands of a Receiver. The Bank never had, in any of the dealings of its own volition, expressly accepted the change of the hands of the property ownership and thereby accepted a change in the liability. It might also be useful to recognise at this point of time, that the Receiver being a public appointed servant cannot bring about a change in the said contract so as to affect the legal consequences for the borrower or the guarantor. The Administrator appointed by the Government had indeed secured a loan towards the facilitation of running of the publications but had not created any new charge on the property. 22. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bilities incurred in the intervening period of time including actions by the State would also be unenforceable against it. However, the High Court failed to consider that LST was liable to repay the loan on the principle of Section 70 of the Contract Act inasmuch as it was LST who had been benefited from the loan, which JKNP had secured. 26. Section 70 of the Act reads as follows: "70. Obligation of person enjoying benefit of non-gratuitous act.-Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered." 27. We, therefore, agree with the views expressed by the trial court and disapprove the finding of the High Court on this count. The Board of Trustees was competent to take any loan, which would be considered to be loan taken by the Trust. In such a case, any loan taken by the Administrator appointed by the State shall also be deemed as loan taken by the Trust and, hence, the Trust would be liable to repay the loan. 28. At this juncture, it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence, as indeed it may be so described. But the whole concept is more correctly viewed as a substantive rule of law. Estoppel is different from contract both in its nature and consequences. But the relationship between the parties must also be such that the imputed truth of the statement is a necessary step in the constitution of the cause of action. But the whole case of estoppel fails if the statement is not sufficiently clear and unqualified.* 32. In the present case, the Bank has granted the loan for proper functioning of the Trust and on hypothecation of the properties of the Trust itself. From the very beginning, all the transactions which had been entered into had clearly been for the sake of the running of the publications of Samyukta Karnataka and other periodicals like Kasturi. In fact, first KPP and then JKNP, both private limited companies were formed for the sole purpose of the management of the running of the business of LST. These companies had been formed because LST was running losses and was unable to properly manage its affairs. Even the appointment of Receivers and the subsequent transactions entered into by the Administrators appointed under the LST Act h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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