Back
IN THE HIGH COURT OF BOMBAY
S.P. Bharucha T.D. Sugla, JJ.
Kanchanlal Chandulal Parikh others .... Appellants.
Versus
Bank of India others .... Respondents.
Appeal No. 274 of 1982 (in Suit No. 1058 of 1975) and Appeal No. 458 of 1982 (in Short Cause No. 1058 of 1975), decided on 7-10-1987.
Advocates appeared :
J.I. Mehta, Anand Desai i/b A.M.R. Shroff Co., for appellants in appeal No. 274/82.
C.J. Shah, S.M. Shah for Appellents in Appeal No. 458/82 and for respondent No. 3 in appeal 274/ 87.
A.N. Mody, D.D. Madon i/b Mulla Mulla, for respondent No. 1 in both Appeals.
Section 3.
See Sick Textile Undertakings (Nationalisation) Act, 1974, Section 5.
SICK TEXTILE UNDERTAKINGS (NATIONALISATION ACT, 1974
Section 5- Limitation Act, 1963-Section 3- Protections of interest of creditors-Extent of-To the extent of amount payable to cover-Neither discharge of liability of owner nor guarantor-Suit for recovery of bank loan filed within 3 years of demand-No time barred.
The Nationalisation Act, read over all, does not therefore limit the liability of the owner to the amount of compensation under the Nationalisation Act. In providing a machinery for the adjudication of claims against an owner, the Nationalisation Act only protects the interests of creditors of the owner to the extent of the amount payable to the owner under it.
Court is accordingly, unable to accept the submission made on behalf of the appellant that by reason of the Nationalisation Act, the liability of the owner stands discharged or curtailed that, consequently, the liability of the guarantors stands discharged.
2. The facts that gave rise to the file the suit shortly stated are these.
3. The Ahmedabad Jupiter Spinning, Weaving Manufacturing Co. Ltd. ( the 1st defendant) applied for a loan of Rs. 25,000,00/- to the Bank of India Ltd. in April 1968. An advance was made in this sum on 26th April, 1968 in what was called Account No. 1 repayable on demand with interest as stated. On the same day the following documents were executed. A demand promissory note was executed by the 1st defendant in favour of its directors---the 2nd, 3rd and 4th defendants in the sum of Rs. 25,000,00/- with interest as stated and the 2nd, 3rd and 4th defendants endorsed the promissory note in favour of the Bank of India Ltd. Letters of continuing security and of lien and set off were executed. The 2nd, 3rd and 4th defendants executed a deed of guarantee in favour of the said Bank. The 5th defendant, the State of Maharashtra, also executed a deed of guarantee in favour of the said Bank. The said Account No.1 was operated upon from to time.
4. In November 1968 the 1st defendant applied to the said Bank for another loan of Rs. 25,000,00/-. This advance was made in Account No. 2 on 21st November, 1968 and it was repayable on demand with interest as stated. On the same date the 1st defendant executed a demand promissory note in the sum of Rs. 25,000,00/- with interest as stated in favour of the 2nd, 3rd and 4th defendants and the 2nd, 3rd and 4th defendants endorsed it in favour of the said Bank. Letters of continuing security and of lien and set off were executed. A deed of guarantee in respect of the said advance was executed by the 2nd, 3rd and 4th defendants in favour of the said Bank. In respect of this advance the 5th defendant executed a deed of guarantee in favour of the set Bank on 19th November, 1968. The said Account No. 2 was operated from time to time
5. On 9th July, 1969 the undertaking of the said Bank and all its assets stood transferred to the plaintiffs by virtue of provision of the Banking Companies (Acquisition and Transfer of undertaking) Act, 1970.
6. On 2nd September, 1969 and 2nd June, 1970 the 5th defendant executed two deeds of guaranteeing repayment to the plaintiffs of the amounts due under the said Accounts Nos. 1 and 2.
7. On 16th July, 1970 letters of acknowledge in respect of both the said accounts were given by the 1st defendant and the 2nd, 3rd and 4th defendants confirmed that their guarantees were in full force and effect.
8. On 8th October, 1971 the Central Government took over the management of the 1st defendant under other provisions of section 16-A of the Industries Development and Regulation Act, 1951 and appointed the National Textile Corporation as the Authorised Controller thereof.
9. On 6th February, 1973 the plaintiffs called upon the Authorised Controller to repay the amounts due under the said Accounts Nos. 1 and 2. By two letters dated 22nd June, 1973 the Authorised Controller acknowledged that the sums of Rs. 29,19,805.62 and Rs. 29,19,805.43 were due in the said Accounts Nos. 1 and 2 with interest as therein stated.
10. On 27 March, 1974 the 5th defendant executed two deeds of guarantee in respect of the said Accounts Nos. 1 and 2.
11. On 21st December, 1974 the Sick Textile Undertakings (Nationalisation) Act, 1974 came into force.
12. On 20th March, 1975 and 25th/27th March, 1975 respectively the plaintiffs' Advocates called upon the 1st defendant and the 2nd, 3rd and 4th defendants and the 5th dependent to pay the amounts due in respect of the said Accounts Nos. 1 and 12. Further correspondence ensued. On 22nd July, 1975 a notice under section 80 of the Code of Civil Procedure was given and on 26th September, 1975 the suit was filed to recover the amounts due under the said Accounts Nos. 1 and 2.
13. Pending the disposal of the suit, the 2nd defendant died. His h
SupremeToday
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
