T.A. 3 of 2003. Case: Punjab National Bank Vs Subhadra Trading Company and Ors.. Kolkatta Debt Recovery Tribunals
| Case Number | T.A. 3 of 2003 |
| Counsel | For Appellant: Sandip Kumar Datta and Kalyan Bhaumik, Advs. and For Respondents: Ratnanko Banerjee, Bar-at-Law and Aditya Garodia and J. Basu Roy, Advs. |
| Judges | D.C. Thakur, Presiding Officer |
| Issue | Indian Partnership Act, 1932 - Section 19(2); Code of Civil Procedure (CPC) (Amendment) Act, 1976; The Mysore Usurious Loans Act, 1923; Banking Regulation Act, 1949 - Sections 6, 21, 21A, 35A, 46(4); Banker's Books Evidence Act, 1891; Interest Act, 1978 - Section 3 and 3(1); Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - ... |
| Citation | I (2006) BC 131 |
| Judgement Date | March 09, 2005 |
| Court | Kolkatta Debt Recovery Tribunals |
Order:
D.C. Thakur, Presiding Officer
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The various types of allegation against the applicant Bank which has preferred its application for the recovery of an amount of Rs. 3,26,13,135.35p. before the learned Debts Recovery Tribunal, Kolkata against the eight defendants shall appear true or false only after this Tribunal shall minutely and carefully approciate all the materials on record maintained in connection with the claim case of the applicant Bank. Factually speaking, the above claim application was preferred before the above judicial forum for the recovery of the above huge amount by the (sic)applicant Bank against those defendants, of a huge amount, after the cash credit account (sic) account No. C/C 48 of the defendant No. 1, a family partnership firm consisting of the defendant Nos. 2,3 and 4 had been claimed to be transferred on March 31, 1994 to the protested advance account and the defendants had not paid back in full or the portion of the Bank's claim amount to the Bank, in spite of having confirmed and admitted their legal liabilities.
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True to say, on the basis of the 'request' being equivalent to an application for sanction made behalf of the defendant No. 1 claimed and admitted to be engaged in the typical business, that is, the manufacturing business of C.I. scraps, pig iron scraps, C.I. pig iron shall and iron and steel materials, the appellant Bank previously the New Bank of India had been pleased to grant and sanction the credit facilities in favour of the said defendant. The facilities disclosed to be granted in the letter of sanction were in the nature of cash credit hypothecation to the extent of Rs. 6.00 lakh; and in addition, (228) the letter of credit for Rs. 10.00 lakh against the hypothecation of all the products of the said defendant firm. The said letter of sanction had been accepted on behalf of the defendant No. 1, the actual beneficiary, because one 'DPN' for a sum of Rs. 6.00 lakh had on August 18, 1983 been jointly executed by the defendant Nos. 2, 3 and 4 as the constituent partners of the defendant No. 1 at Howrah. Those executants jointly and severally promised in that DPN to pay on demand to New Bank of India, which had been later merged with the present applicant Bank, along with an interest at the rate of 61/2 per cent above RBI subject to 161/2 per cent per annum from the date of execution till the date of payment in full with quarterly rests. The defendant Nos. 2,3 and 4 according to the Bank, enabled the defendant No. 1 to enjoy the above facility by way of executing the five different DPNs on the subsequent diverse dates and at the same place. Those DPNs had the essential features like the following:
(i) the rate of interest as existent at the time of such execution;
(ii) the executed DPNs had been for the different amounts.
Out of such five DPNs the DPN for a sum of Rs. 70.00 lakh executed on September 15, 1988 and the DPN for the equal amount and executed on December 10, 1990 had been in fact executed by the defendant Nos. 2, 3 and 4 at Calcutta. In those DPNs those executants held them liable to pay back the above amount along with 6.5% above RBI subject to a minimum rate of 16.5% per annum from the date of execution till the date of payment in full in quarterly rests. The above enjoyment had also not been admittedly without any other security and collateral security. So far as the defendant No. 2 is concerned, the said defendant has executed a deed of guarantee for the first time, that is, October 8, 1987 as the execution has been made in the available form No. L-6 while residing at 84-A, Raj Ballabh Street, Calcutta-3. Again, the same defendant executed another deed of guarantee while residing at 57-G, Ballygunge Circular Road, Calcutta-19. The said deed of guarantee was also executed in the Bank form being 'L-6' (the date of such execution being September 15, 1988) from the same place. The third deed of guarantee was executed by the same defendant in the Bank form No. 'L-6' on December 10, 1990.
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Each of such guarantees has been found as a continuing guarantee for all moneys which may become due and owing by the executant to the Bank. In each of such guarantees, the executant defendant (hereinafter referred to as the guarantor) declared that the above guarantee would extend to all accounts of the particular party being none other than the defendant No. 1. Like the defendant No. 2, the defendant No. 3 has also executed another three guarantees in the same manner after holding him liable and standing as the guarantor in relation to the above facility. The same may be said here that both the above defendant Nos. 3 and 4 are the sons of defendant No. 2. The defendant No. 5 (the deceased defendant) who has recently expired and has been on the basis of the consent given by the defendants substituted by the Bank has also executed one deed of guarantee in the form No. L-6, for an amount of Rs. 20.00 lakh (cash credit) and Rs. 50.00 lakh (LC) the same guarantee was executed by the said defendant whence she resided at 84-A, Raj Ballabh Street, Calcutta. That the said defendant's guarantee has held her liable can be depicted as a continuing limited guarantee to the extent of the sum mentioned above. The same defendant executed on September, 15, 1988 another deed of guarantee in the Bank form 'L-6' while residing at 57G, Ballygunge Circular Road, Calcutta-700019. The said guarantee is by its nature:
(a) a guarantee, continuing; and
(b) for an unlimited, extensive liability. It is the feature of the second guarantee which has contrasted it with the first one. The said deceased defendant executed further one deed of guarantee on December 10, 1990 from 57G, Ballygunge Circular Road. Like the second one it has also not been bound by the fixed agreed limit.
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The footprints of the defendant No. 5 were followed by the defendant Nos. 6 and 7. Be it further noted that all the above guarantors/defendants are related to each other.
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Apart from the above guarantee aspect, the Bank had in its armoury the several agreements of hypothecation of goods executed on the different days and dates by those defendants, some of which had been relating to the mortgage of the movable property and had also been executed in the Bank form No. L-17B, whereas the other had been in the Bank form No. L-17. For example, the hypothecation agreement executed by the defendant Nos. 2, 3 and 4 as the constituent partners of the defendant No. 1 on April 30, 1987 at 84-A, Raj Ballabh Street, Calcutta-3 should be necessarily taken up for its due consideration. According to the stipulation No. 24 of the said agreement, it was mutually agreed in between the parties that the amount due to the extent of Rs. 6.00 lakh has to be always payable by all the borrowers at Howrah office of the said Bank, where the said account was usually maintained. The said agreement also contains in itself one Schedule of goods wherein have been enumerated in precise terms the following specific goods:
C.I. scraps, Pig iron scraps, C.I. and Pig iron skull and other Iron and Steel materials or any other goods that may be acceptable to the Bank from time-to-time.
This Tribunal is relevantly referring to the agreement for hypothecation of goods, to subserve the following objects, viz.-
(a) to secure the demand cash credit 'L-6' dated October 8, 1987;
(b) the agreement for an amount of Rs. 70.00 lakh executed by the said defendants on September, 1988;
(c) the hypothecation agreement of goods to secure the demand cash credit for an amount of Rs. 70.00 lakh executed in Bank form No. L-17B by the defendants as above on December 10, 1990.
The hypothecation agreement to secure a demand cash credit for a sum of Rs. 70.00 lakh and Rs. 70.00 lakh in DA/LC of M/s. Subhadra Trading Company was jointly executed by those defendants on December 10, 1990 at Calcutta, i.e., form No. 17-B.
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In order to strengthen its security aspects the applicant Bank also obtained for the first time, that is, on April 30, 1987 one letter of continuity from the defendant Nos. 2, 3 and 4 described further here as the constituent partners of the defendant No. 1. The letter of continuity was in fact executed by those defendants in the Bank form No. L-27 where with those declarants/expectants intended to enclose a 'DPN' for Rs. 6.00 lakh and agreed to that the said promissory note for Rs. 6.00 lakh would for all times be regarded as the continuing enforceable security and would remain enforceable for all moneys etc. Like the above, the defendant Nos. 2 to 4 executed on October 8, 1987 at Calcutta another 'DPN' for a sum of Rs. 20.00 lakh in the same manner and in the same fashion. Such execution was also like the previous one executed at Howrah in the capacity of the partners of the defendant No. 1, a partnership firm. The third letter of continuity had been executed by those defendants on September 15, 1988 at Calcutta in the available form No. L-27 for a sum of Rs. 70.00 lakh in favour of the said Bank. The said letter was treated necessarily by the contracting parties as a continuing security letter coming from the end of those defendants wherein the promissory note for Rs. 70.00 lakh was declared to stand as a continuing security and would remain enforceable for all the moneys to be owed by those declarants. The fourth letter of continuity was received by the applicant Bank on December 10, 1990 from the said defendants who executed the same at Calcutta in favour of the said Bank for a sum of another Rs. 70 lakh. The applicant Bank has also received at the relevant time as many as eight balance confirmations from the said executants/defendants borrower Nos. 2, 3 and 4. Out of such eight balance confirmations, the five balance confirmations have been given by the confirming defendants from Howrah after confirming and admitting the claimed amount as standing on the date of such confirmation. The rest have been executed at Calcutta. Such eight...
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