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IN THE HIGH COURT OF BOMBAY
SICOM Limited
Versus
Balkrishna Himmatramka
Decided on : MARCH 14, 2005
State Financial Corporations Act (63 of 1951) - Section 31 - Financial Institution - Petition filed by it - Against guarantors of debtor company - Jurisdiction of High Court - Deed of guarantees executed in Mumbai - Amount thereunder also payable at Mumbai - Respondents residing in Bombay - High Court has jurisdiction to entertain and try petition. - The present petition is not filed either against the principle debtor or in respect of the mortgaged property but filed against the respondents in their capacity as guarantors. The deed of guarantees are admittedly executed in Mumbai and the amount thereunder is also payable at Mumbai. Admittedly the petition is filed only for receiving the claims arising under the deed of guarantee. There are no securities in respect of the said claim and thus in my opinion this Court shall have jurisdiction because all the respondents are residing at Bombay. Thus looking from either of the angle i.e. where the respondents are residing or where material part of cause of action has arisen this Court alone shall have jurisdiction to entertain and try the jurisdiction.
State Financial Corporations Act (63 of 1951) - Section 31 - Petition by Financial Institution - Claiming amount of debt - Limitation for - Principal debtor Company continuously defaulted in making payment thereafter - Liabilities of guarantors - Arises only after guarantees invoked - Not prior thereto - Petition within time. - The principal debtor which is the company has continuously defaulted in making the payment thereafter. The liabilities of the guarantors arises only after the guarantees are invoked and not prior thereto and therefore Court find that the present petition is within time. In any event under the deed of guarantee the liabilities of the guarantors continue to subsist and co-exist as long as the amount is not repaid by the principal debtor and therefore also Court do not find any substance in the contention of limitation advanced by the counsel for the respondent herein.
State Financial Corporations Act (63 of 1951) - Section 31 - Petition under Section 31 of Act by SFC. - Petition under Section 31 of Act for recovery of dues filed by State Financial Corporation after giving necessary credit is maintainable.
State Financial Corporations Act (63 of 1951) - Section 31 - Jurisdiction of Court to try petition under Section 31 of Act. - Where deed of guarantee was executed in Mumbai and amount thereunder was also payable at Mumbai, therefore Bombay High Court has jurisdiction to try petition filed by SFC under Section 31 of Act. - The petition was filed by financial institution under Section 31 of the State Financial Corporation Act. It was contended by the respondents that the Bombay High Court has no jurisdiction because the factory of the principal debtors i.e. the company is situated at Thane and the assets which were mortgaged were also situated in Thane and thus Bombay High Court cannot invoke the jurisdiction. The said contention is plainly required to be rejected for the simple reason that all the eight respondents are residing at Bombay. The petition is not filed either against the principal debtor or in respect of the mortgaged property but filed against the respondents in their capacity as guarantors. The deed of guarantees are admittedly executed in Mumbai and the amount thereunder is also payable at Mumbai. Admittedly the petition is filed only for receiving the claim arising under the deed of guarantee. There are no securities in respect of the said claim and thus this Court shall have jurisdiction because all the respondents are residing at Bomba y. Thus looking from either of the angle i.e. where the respondents are residing or where material part of cause of action has arisen this Court alone shall have jurisdiction to entertain and try the petition.
State Financial Corporations Act (63 of 1951) - Section 31 - Civil Procedure Code, Order I, Rule 9 - Proceedings under Section 31 of Act against guarantors. - In proceedings under Section 31 of Act against guarantors, principal debtor is neither necessary nor proper party. - The petition was filed by financial institution against the respondents in their capacity as the guarantors and that the amount received is also one single amount which is advanced to the principal Debtor. Merely because two sets of guarantees are executed by two different sets of respondents it is not necessary to file two different proceedings when cause of action is one and the same. The principal debtor is neither necessary nor proper party to the proceedings initiated against the guarantor. It is well-settled that liability of the guarantor and principal debtor is joint and several and thus independent suit and proceedings can be filed against them without impleading each other parties to the respective proceedings.
State Financial Corporations Act (63 of 1951) - Section 31 - Petition under Section 31 of Act claiming amount of debt. - Where principal debtor, a company had continuously defaulted in making payment therefore petition claiming amount of debt filed long after first default, not barred by limitation.
State Financial Corporations Act (63 of 1951) - Section 31(1)(aa) - Petition under Section 31(1)(aa). - Petition under Section 31(1)(aa) of Act, 1951 filed by Financial Institution against guarantor, is maintainable. - It has been contended by the counsel for the respondent that the present petition is not maintainable in view of the judgment of the Division Bench of this Court in the case of Maharashtra State Financial Corporation v. M/s. Jaycee Drugs and Pharmaceuticals Pvt. Ltd. and others, 1990 (2) Mh LJ 732 : 1991 (2) SCC 637 : 1991 (1) SCR 1780 : AIR 1991 Bom 96 : 1990 (3) Bom CR 1. It was contended that insofar as the provisions of the SFC Act is concerned the same does not cover the cases of guarantor and it only applies in respect of mortgaged property. Thus the present petition cannot lie under the provisions of the said Act.
State Financial Corporations Act (63 of 1951) - Section 31(1)(aa). - Petition filed under Section 31(1)(aa) of the Act by financial institution - Maintainability - Plea that the provisions of the Act do not cover the cases of guarantor and it only applies in respect of the mortgaged property not sustainable. 1991 (2) SCC 637 - Followed.
KAMDAR S. U. , J.
( 1 ) THE present petition is filed under the provisions of section 3 l (l) (aa) of the STATE FINANCIAL CORPORATIONS ACT, 1951. The petitioner is a financial institution. Some time in or about February, 1993 the company known as Sanjivani Agro Industries approached the petitioner with a request to grant a loan of more than Rs. 110. 00 lacs for setting up a plant for solvent extraction and oil refinery at Plot No. A/1 in the Palus Industrial Area of midc within the village limits of Palus, Taluka Tasgaon, District Sangli.
( 2 ) THE said application for grant of term -loan was sanctioned by the company and the said loan amount was advanced by the petitioner to the said company. The company executed an indenture of mortgage dated 16-8-1993 securing the said loan amount and mortgaged the plant, machinery and building of the company with the said financial institution. The respondent herein being respondent Nos. 1 to 4 have executed the deed of guarantee dated 16-8-1993 and the respondent Nos. 2 and 5 has executed the deed of guarantee dated 20-9-1993 in favour of the petitioner herein guaranting the repayment of the aforesaid amount by the respondent company which is a principal debtor.
( 3 ) THE said guarantee is unequivocal and inter alia recites that on the default being committed by the company to make payment of any instalment amount the guarantors would be liable to repay the said amount to the petitioner herein. Pursuant to the aforesaid arrangement the loan amount was disbursed to the company and the company has utilised the same. The company made defaults in repayments of the aforesaid amount from time to time and thus committed breach of the terms and conditions of the said loan agreement. In the circumstances a legal notice was issued on 9-1 -1998 by the petitioner recalling the said loan amount from the company.
( 4 ) IT is the case of the petitioner that inspite of various demand notices and reminders the repayment of the loan amount was not effected by the company and therefore, the petitioner invoked the guarantees by notice dated 21-1-2000 and called upon the respondents to repay the aggregate dues of rs. 1,14,15,000/ -. The company was declared sick by the board for industrial and financial reconstruction under the provisions of the Sick Industrial Company (Special Provisions) Act, 1985 and ultimately the board rejected the reference and recommended that the company should be wound-up. By order dated 17-1-2000 the said company has been wound up. In the circumstances the petitioners seek to recover the said amount against the respondent guarantors. The claim of the petitioner as on the date of the filing up of the petition is Rs. 1,94,25,180,00/ -. In pursuance of the directions of the Apex Court in the case of (Central Bank of India v. Ravindra and others), reported in 2002 (2) bom. C. R. (S. C. 1616 : 2002 (1) S. C. C. 367. The petitioner has filed an affidavit in rejoinder setting out the up to date claim. The claim amount as on the said dated is of sum of Rs. 4,37,69,240/ -.
( 5 ) THE affidavit filed by the petitioner inter alia states that the aforesaid amount of Rs. 4,37,69,240/- was arrived at after giving due credit of Rs. 1,30,00,000/- received towards the sale proceeds of the mortgaged properties, the said mortgaged properties were sold by the petitioner in exercise of power conferred under section 29 of STATE FINANCIAL CORPORATIONS ACT, 1951.
( 6 ) THE learned Counsel appearing for the respondents have inter alia contended before me that the present petition should be dismissed in the light of legal position narrated hereunder. It has been contended by the learned Counsel for the respondent that the present petition is not maintainable in view of the judgment of the Division Bench of this Court in the case of (Maharashtra State Financial Corporation v. M/s. Jaycee Drugs and pharmaceuticals Pvt. Ltd. and others), reported in 1991 (3) Bom. C. R. (S. C.) 481 : 1991 (2) S. C. C. 637
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