IMPORTANT POINT
Reflection of a liability in a company’s balance-sheet amounts to admission.

Justice M. C. Jain, Chairperson.

This appeal is directed against final order dated 8.7.2004 passed by D.R.T. Jaipur in O.A. No. 1/2003. The appeal has been preferred by borrowers/ guarantors who figured as defendant Nos. 1 to 5 in the O.A. which had been filed by the respondent bank for the recovery of Rs. 87 lacs and odd with pendente lite and future interest as also costs. The bank’s case was that appellant No. 1/ defendant No.1 was a private limited company incorporated under the Companies Act, with respondent Nos. 2,4 and 5/ appellant Nos. 2,4 and 5 as directors who also gave their personal guarantee for the repayment of the loan. Appellant No. 3/defendant No.3 had also given his personal guarantee. As such, they were said to be jointly and severally liable. Having availed of the loan and credit facilities, the borrowers failed to maintain fiscal discipline as to the repayment and the bank was, therefore, obliged to file the O.A. in question. The appellants/ defendants resisted the O.A. contending that the O.A. was not maintainable. According to them, the loan of Rs. 1 crore was not sanctioned as proposed, due to which the factory could not function smoothly. It was also alleged that the bank has obtained signatures of defendants on blank papers at the time of the sanction of the loan. Later on, the blank papers were filled up according to the fancies of the bank officers suiting their purpose. The factory suffered huge losses due to non-availability of the full amount of the loan owing to the mala fide of the bank. The O.A. was also assailed to be barred by limitation. Another plea was that R.B.I. guidelines had not been followed.

2. The Tribunal below passed the final order for the recovery of Rs. 87,58,104/ - along with pendente lite and future interest @ 10% per annum from the date of institution of the O.A. (19.12.2002) with costs till recovery. It caused grievance to the defendants, who preferred this appeal.

3. The appeal was, in the first instance, heard by my predecessor and decided on 13.7.2006 on merits after hearing the learned counsel for the parties. The appeal was dismissed. The appellants challenged the order dated 13.7.2006 passed by this Tribunal before the Hon’ble Rajasthan High Court, Jodhpur through Writ Petition No. 4745/2006. By order dated 14.9.2006 the Hon’ble High Court has set aside the order passed by this Tribunal and has remanded the appeal to be heard afresh. It is under these circumstances that the appeal has come to be reheard.

4. I have heard the learned counsel for the parties and the record has carefully been waded through.

5. It is pertinent to state that after the remand of the case under the orders of the Hon’ble High Court, the only contention pressed from the side of the appellants is about the interest charged by the respondent bank. It has been contended the excessive interest has been charged by the bank beyond the contractual rate. Thus, the appellants/defendants are said to be unnecessarily burdened with liability exaggeratedly.

6. On the other hand, the argument of the learned counsel for the respondent-bank is that the interest has all along been charged as per the agreed rate without any inaccuracy in the calculation of the same.

7. Written submissions have also been filed by the parties for the consideration of the Tribunal. I have carefully gone through the material on record while considering the arguments of the two sides. It is significant to point out that the respondent-bank has filed a comparative chart showing the balance due as reflected in the balance-sheets of relevant years of the borrower company and as per the record of the bank forming the basis of the claim preferred before the Tribunal below by means of O.A. The same is reproduced below:

8. It was filed earlier on 15.5.2006 and has again been submitted on 1.6.2009. It is clear from the analysis to the above chart that in the year ending on 31.3.1996, the borrower company has shown the liability as R