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2001 Supreme(HP) 82
High Court Of Himachal Pradesh
R.L.KHURANA
H.P.STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. - Appellant
Versus
KRAFT PAPER MILLS (P) LTD. - Respondent
Civil Suit No. 175 of 1993
Decided On : 05/10/2001
Mr. K.C. :Rana, Advocate, for the Plaintiff; Mr. Kuldip Singh, Sr. Advocate with Mr. Bimal Gupta and Ms. Jyotika Ratal, Advocate, for the Defendant No. 6; Mr. R.L. Sood, Advocate, for the Defendant No. 7.
The liability of the guarantors was joint and several, and the plaintiff had the option to proceed against any one of the guarantors to enforce their joint and several liability. The court also applied the principle of payment application in discharge of debts in order of time.
Headnote:
State Financial Corporations Act - Recovery of Loans - Section 29 - [LOANS] - [State Financial Corporations Act, 1951, Section 29] - The court discussed the loans granted by the plaintiff to the defendant, the guarantees furnished by the defendants, and the repayment schedule attached to each agreement. The court also considered the liability of the guarantors and the application of payments towards the outstanding amounts of the loans. The court found that the plaintiff was entitled to recover a sum of Rs. 83,15,570 from the defendants No. 1 to 5 jointly and severally.
Fact of the Case:
The plaintiff filed a suit against the defendants for the recovery of loans granted to defendant No. 1, along with interest. The defendants failed to repay the loans, and the plaintiff took over the hypothecated assets of defendant No. 1. The assets were sold, and the plaintiff sought to recover the outstanding amount from the defendants.
Finding of the Court:
The court found that the plaintiff was entitled to recover a sum of Rs. 83,15,570 from the defendants No. 1 to 5 jointly and severally. The suit against defendants No. 6 and 7 was dismissed.
Issues: The issues included the cause of action against defendants No. 6 and 7, non-joinder of parties, limitation, and the amount the plaintiff was entitled to recover.
Ratio Decidendi: The court held that the liability of the guarantors was joint and several, and the plaintiff had the option to proceed against any one of the guarantors to enforce their joint and several liability. The court also applied the principle of payment application in discharge of debts in order of time.
Final Decision: A decree for a sum of Rs. 83,15,570 with proportionate costs was passed in favor of the plaintiff and against the defendants No. 1 to 5 jointly and severally. The plaintiff was also entitled to interest on the decretal amount at the rate of 12% per annum from the date of the suit. The suit against defendants No. 6 and 7 was dismissed.
R.L. Khurana, J.—The present suit has been filed by the plaintiff, H.P. State Industrial Development Corporation Limited, against the seven defendants for the recovery of Rs. 1,35,20,682.55 paise, with future interest at the rate of 15.5% per annum.
2. Defendant No. 1, Messrs. Kraft Paper Mills (P) Ltd., is a private limited company duly incorporated under the Companies Act, 1956. Defendants No. 2 to 7 are/were the Directors thereof. In the present case, they have been impleaded and are being sued in their capacity of being the guarantors in respect of the loans granted by the plaintiff to the defendant No. 1 company.
3. The following six loans were granted by the plaintiff to defendant No. 1 : (i) First loan of Rs, 27,45,000 on 19.5.1984 vide agreement Ex. PW1/A; (ii) Second loan of Rs. 42,17,000 on 16.11.1985 vide agreement Ex. PW 1/B; (iii) Third loan of Rs. 3,00,000 on 15.2.1986 vide agreement Ex. PW1/C; (iv) Fourth loan of Rs. 1,55,000 on 3.4.1986 in the form of equity assistance; (v) Fifth loan of Rs. 18,38,000 on 21.9.1989 vide agreement Ex. PW 1/D; and (vi) Sixth loan of Rs. 2,00,000 on 6.3.1990 vide agreement Ex. DW 1/E.
4. The above said loans alongwith interest were repayable according to the "schedule of repayment" attached to each agreement of loan by way of half yearly instalments.
5. The defendants 2 to 7 furnished their personal guarantees for the repayment of the above loans as under: First loan of Rs. 27,45,000. (i) Defendants No. 2, 6, 7 and one Anil Kakkar vide guarantee deed Ex. PW 1/L; and (ii) Defendants No. 2 to 5 vide guarantee deed Ex. PW 1/M. Second loan of Rs. 42,17,000. Defendants No. 2 to 5 vide guarantee deed Ex. PW 1/N. Third loan of Rs. 3,00,000. Defendants No. 2 to 5 vide guarantee deed Ex. PW I/O. Fourth loan of Rs. 1,55,000. No guarantee furnished by any of the seven defendants. Fifth loan of Rs. 18,38,000. (i) Defendants No. 2 and 3 vide guarantee deed Ex. PW 1/ P; and (ii) Defendants No. 4 and 5 vide guarantee deed Ex. PW 1/Q. Sixth loan of Rs. 2,00,000. (i) Defendants No. 2 and 3 vide guarantee deed Ex. PW 1/ R; and (ii) Defendants No. 4 and-5 vide guarantee deed Ex. PW 1/S.
6. Since the defendants failed to repay the loan amounts and the interest thereon in terms of the "payment schedule" inspite of demands and registered notices, the plaintiff on 30.11.1991 acting under Section 29 of the State Financial Corporations Act, 1951, took over the hypothecated assets of the defendant No. 1 in pursuance of the notice dated 17,10.1991.
7. The assets of the defendant No. 1, taken over by the plaintiff, were then sold by the plaintiff to one Shri R.K. Nahta of Messrs. SJM Paper Mills (P) Ltd., for a consideration of Rs. 1,00,00,000. The defendant No. 1 had also taken financial assistance in the form of loan(s) from the H.P. Financial Corporation. Therefore, the sale proceeds of Rs. 1,00,00,000 were shared by the plaintiff and H.P. Financial Corporation to the extent of Rs. 69,71,988 and Rs. 30,38,012 respectively.
8. According to the plaintiffs after adjusting the amount of Rs. 69,61,988 towards the amount due from the defendants under the above said loans, a sum of Rs. 1,33,65,682.55 paise towards principal and interest is till due from the defendants, which they have failed to pay inspite of registered notice dated 20.4.1993. Hence, the present suit was instituted on 17.8.1993.
9. Since no appearance was put in on behalf of defendants No. 1 to 5 inspite of service, they were ordered to be proceeded against ex parte. The suit is thus being resisted and contested only by defendants No. 6 and 7.
10. Defendant No. 6 in his written statement has denied the loans as well as the execution of the various loan agreements. He has, however, admitted that the guarantee deed dated 19.5.1984 Ex. PW 1/L was executed by him besides defendants No. 2 and 7, and one Anil Kakkar. He also admitted that he was a Director of the defendant No. 1 company. It was pleaded that he had ceased to be a Director of the defenda
