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IN THE HIGH COURT OF BOMBAY AT NAGPUR BENCH
R.B. DEO, J.
Shikshak Sahakari Bank Ltd. – Appellant
Versus
Divisional Joint Registrar, Co-operative Societies, Nagpur and Others – Respondents
Writ Petition No. 271 of 2009
Decided On : 15-03-2019
Contract Act - Section 144 - Bank - Loan - Mortgage by depositing tide deeds of property - Defaulted in payment of installments - Application for cash credit limit - Bank avers that borrower, who is a member of bank, application applied for cash credit limit and term loan - Bank vide sanction letter sanctioned cash credit limit and term loan - Credit facilities extended were secured, inter-alia, by guarantees extended by respondents 3 and 4 - Bank then contends that respondent 5 executed an equitable mortgage by depositing tide deeds of the property to secure credit facilities extended to the borrower - Bank then avers that me borrower defaulted in payment of the installments and by application requested that cash credit limit and the term loan be restructured and repayment rescheduled - Request was favorably considered by bank and by communication credit facilities were restructured and rescheduled - Bank avers that necessary documents were executed for reschedulement of credit facilities – Held, Respondent 5-borrower is vehemently disputing that he intended to secure repayment of the credit facilities extended to the borrower and is emphasizing that relevant and important parts of the document are not signed by respondent 5. In such a situation, although, not for reasons recorded by Deputy Registrar, this Court is satisfied that ultimate conclusion reached ought not to be interfered with in exercise of writ jurisdiction - It may be noted that case of respondent 5 appears to be, although, not spelt out in so many words, that since the bank permitted the borrower to alienate the properties which were offered as security when the loan was initially sanctioned, respondent 5, even if he is assumed argued to have acted as a guarantor, is discharged in view of provisions of Section 133 read with Section 144 of Contract Act - This question and further question whether the restructuring and reschedulement is a novation of contract or a fresh contract as would impair rights of the surety are questions which in the facts of the case ought to be looked into in an elaborate inquiry and not in a summary manner - Petition is rejected.
ORDER :
1. The petitioner Shikshak Sahakari Bank Limited is a co-operative society duly registered under the Maharashtra Co-operative Societies Act, 1960 (“Act” for short) and shall be hereinafter referred to as “the bank.” The bank is assailing the order dated 31.10.2008 rendered by the Divisional Joint Registrar, Co-operative Societies, Nagpur in Revision 576 of 2007. By the order impugned dated 31.10.2008, the said authority dismissed Revision 576 of 2007 which was directed against two orders passed by the Deputy Registrar, Co-operative Society, City, Nagpur. By the first order dated 18.10.2006, the Deputy Registrar discharged respondents 3 and 4 from the proceedings under Section 101 of the Act. By the second order dated 22.5.2007, the Deputy Registrar restricted the recovery certificate to respondent 2 M/s. Panchasheel Medical Stores Pvt. Ltd. (hereinafter referred to as “the borrower”) and declined to issue recovery certificate against the discharged guarantors respondents 3 and 4 and respondent 5, who according to the bank, had mortgaged property to secure the dues of the borrower.
2. The prayer clause of the petition reads thus:
(ii) hold and declare that the petitioner bank has every right in law to take recourse to the properties of respondent Nos. 3 to 5 for recovery of the amount due under the recovery certificate issued in its favour in the proceedings under Section 101 of the Act.
(iii) allow the writ petition.
(iv) grant any other relief which this Hon'ble Court deems fit and proper under the facts and circumstances of the present case.”
The bank has not incorporated prayer to quash or set aside the orders passed by the Deputy Registrar which were assailed in revision. The obvious defect notwithstanding, I have ventured to consider the petition on merits in view of the declaration sought that the bank is entitled to proceed against respondents 3 to 5.
3. The bank avers that the borrower, who is a member of the bank, vide application dated 11.12.1997 applied for cash credit limit of Rs. 67 lacs and term loan of Rs. 63 lacs. The bank vide sanction letter dated 10.1.1998, sanctioned cash credit limit of Rs. 63 lacs and term loan of Rs. 60 lacs. The credit facilities extended were secured, inter-alia, by guarantees extended by respondents 3 and 4. The bank then contends that on 29.7.2000, the respondent 5 executed an equitable mortgage by depositing tide deeds of the property to secure the credit facilities extended to the borrower.
Bank then avers that me borrower defaulted in payment of the installments and by application dated 19.1.2002 requested that the cash credit limit and the term loan be restructured and the repayment rescheduled. The request was favourably considered by the bank and by communication dated 28.3.2002, the credit facilities were restructured and rescheduled. The bank avers that on 30.3.2002 necessary documents were executed for reschedulement of the credit facilities. It is asserted that while the credit facilities were restructured and rescheduled, the transaction was not a fresh loan and was only a facility extended to the borrower. The borrower, notwithstanding the restructuring and reschedulement defaulted which impelled the bank to issue legal notices dated 30.6.2003 and 30.7.2003 calling upon the borrower and respondent 5 to pay the outstanding amount along with interest. The notices went unheeded and the bank initiated recovery proceedings under Section 101 of the Act which came to be registered as Dispute 10 of 2005.
The bank then states that respondents 3 and 4 moved an application dated 20.6.2006 seeking discharge on the ground that they are not parties to the restructuring or reschedulement of the credit facilities nor did they execute any document nor were they called u
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