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2008 Supreme(Ori) 749
IN THE HIGH COURT OF ORISSA
B.S. Chauhan, B.N. Mahapatra, JJ.
SRI JENAMANI SHAILENDRA KR. RAY - APPELLANT
Versus
ORISSA STATE FINANCIAL CORPORATION AND OTHERS - RESPONDENT
OJC No. 5218 of 2005
Decided On : 25-09-2008
Santanu Ku. Sarangi, R. Mohanty, B.K. Behera and S. Das, for the Appellant; Sankarsan Rath and Sandeep Rath, for the Respondent
The deliberate suppression of material facts and abuse of the court process amount to contempt of court and can lead to the dismissal of the petition.
Headnote:
Writ Petition - Recovery of Loan Dues - Contract Act, Section 133 - Tri-partite Agreement - Guarantor's Liability - Estoppel and Acquiescence - Contempt of Court
Fact of the Case:
The petitioner had taken a term loan and mortgaged property as collateral. After defaulting on the loan, a tri-partite agreement was executed, making the petitioner a guarantor for another party. The petitioner later denied executing any documents with the Corporation and sought relief from recovery. The court found that the petitioner had taken incomplete and inaccurate pleadings, suppressed material facts, and obtained interim relief misleading the court.
Finding of the Court:
The court found the petitioner's actions to be an abuse of the court process and dismissed the petition, vacating the interim order.
Issues: Recovery of loan dues, validity of tri-partite agreement, petitioner's liability as a guarantor, abuse of court process
Ratio Decidendi: The court held that the petitioner's estoppel and acquiescence, as well as the deliberate suppression of material facts, amounted to an abuse of the court process and contempt of court.
Final Decision: The petition was dismissed, and the interim order was vacated.
JUDGMENT :
B.S. Chauhan, C.J. - This writ petition has been filed seeking the following reliefs:
(a) issue rule nisi directing the opposite parties to show cause as to why the Corporation shall not proceed against the opposite party No. 3, his property and the guarantor instead of against the Petitioner to realize its dues;
(b) as to why the Petitioner's land as per the Schedule given below shall not be released by the Corporation; and
(c) as to why the notice advertising sale of the schedule property vides Annexure-9 shall not be quashed.
2. The facts and circumstances giving rise to the case are that on 28/30.12.1991 a term loan for a sum of Rs. 2,00,000 was sanctioned in favor of the Petitioner for purchasing a mini truck and the amount was released. The Petitioner had mortgaged landed property as collateral security to secure the aforesaid loan and in addition thereof, he has also given additional security of Rs. 10,000 in the shape of Kissan Vikash Patra. The Petitioner could not make repayment as per the agreement between the parties. He made a proposal to transfer the vehicle in favor of opposite party No. 3. While taking note of his letter, opposite parties 1 and 2 sent a proposal on 3.10.1996 for acceptance of the Petitioner on the stipulated terms and conditions. (Annex-2). Petitioner claimed to have agreed for the said terms and in pursuance thereto, a Tri-partite agreement was executed between the parties, where Petitioner stood as guarantor for the opposite party No. 3. Opposite party No. 3 also mortgaged certain immovable property with opposite party Nos. 1 and 2. However, the opposite party No. 3 also failed to make deposit of the installment. Therefore, a demand notice dated 20.8.2002 (Annex-4) was sent to the Petitioner as well to opposite party No. 3 to make the payment of outstanding dues to the tune of Rs. 3,88,710.04.
3. A similar demand had been sent to the Petitioner as well as opposite party No. 3 vides letter dated 31.10.2002 (Annex-5). In response to the said letter the Petitioner vide his letter dated 6.11.2002 denied of having executed any documents with the Corporation altogether and thus asked the opposite parties 1 and 2 not to make any recovery from him. Opposite parties 1 and 2 advertised the property for auction sale in newspaper 'Samaj' on 6.4.2005. Hence this petition.
4. Sri Santanu Kr. Sarangi, Learned Counsel for the Petitioner has vehemently argued that once fresh agreement had been reached, the vehicle as well as the liability stood transferred to opposite party No. 3 and he also mortgaged the immovable property, No. recovery can be made from the Petitioner. The Petitioner had entered into the agreement as a guarantor and opposite party No. 3 had to make entire dues within twelve monthly instalments, liability of the Petitioner would come to an end automatically on expiry of one year. More so, Clause-25 of the proposal (Annex-1) being harsh and unreasonable, as well as the letter dated 3.10.1996 are liable to be quashed. It is further submitted that as after reaching tri-partite agreement in 1996, there has been variance in the contract as the opposite party No. 3 had been advanced another loan by virtue of the provisions of Section 133 of the Contract Act, the liability of the guarantor vanishes. More so, unless the recovery is made from the borrower, No. proceeding for recovery can be initiated against the guarantor. Thus, the petition should be allowed and the reliefs sought for by the Petitioner be granted.
5. On the contrary, Sri Sankarsan Rath, Learned Counsel appearing for opposite parties 1 and 2 has vehemently opposed the petition contending that a proposal cannot be quashed as it was for the consideration of the Petitioner to accept the said condition or not. The copy of the agreement had not been filed. If such a condition has been incorporated in the contract, that cannot be quashed for the reason that copy of the agreement is not before the Court. Petitioner cannot be permitted to
