1991 Supreme(P&H) 790

PUNJAB & HARYANA HIGH COURT
A.L.Bahri and H.S.Bedi JJ.
B.P.Gupta
Versus
State Bank Of India And Ors.
Company Appeal No. 8 of 1986,
Decided On : SEPTEMBER 4, 1991

A banker has a lien over moneys belonging to the customer in different accounts and in different branches of the bank. It is open to the bank to appropriate money due in one account from money of the customer lying in other account. Likewise the bank has also a right to amalgamate different accounts of the customer and recover the amount due to the bank, by filing a suit.

Headnote:

COMPANY - WINDING UP - SUIT AGAINST COMPANY - LEAVE OF COURT - TRANSFER OF SUIT - APPEAL - MAINTAINABILITY - COMPANY APPEALS - AD VALOREM COURT-FEE - COMPANIES ACT, 1956 - SECTION 446 - LETTERS PATENT APPEAL - COMPANIES ACT, 1956 - SECTION 483 - BANKER'S LIEN - APPROPRIATION OF MONEYS - ADJUSTMENT OF ACCOUNTS - AMALGAMATION OF ACCOUNTS - GUARANTEE - VARIATION OF CONTRACT - DISCHARGE OF SURETY - INTEREST - BANKING REGULATION ACT, 1949 - SECTION 21(2)(e) - USURIOUS LOANS ACT - BANKING REGULATION ACT - RATE OF INTEREST.

Fact of the Case:

The borrower-company entered into an agreement with the State Bank of India, New Delhi branch, which was to stand as guarantor for payment of the money to a foreign company from whom Depro Foods Ltd. was to import machinery. The price of the machinery was payable in instalments and the company was to make payment to the State Bank of India in instalments. This agreement was entered into on June 26, 1970, and this contract is known as "deferred payment guarantee". Defendants Nos. 2 to 6 stood guarantee and property of defendant No. 8 was equitably mortgaged. When two instalments became due, the bank recovered the amount of the same by debiting the amount in the account of the company. Thereafter some more instalments fell due and the company was unable to pay the amount. In the meantime, the company got a cash credit limit to the extent of Rs. 6,00,000 on February 26, 1972, in the State Bank of India branch at Bahalgarh. This limit was increased to Rs. 6,50,000 on March 14, 1973. For the liability of this account only defendants Nos. 2 and 3 were guarantors. This account would be known as the second account. The bank debited this account in respect of four instalments of the amount of deferred payment guarantee. Another account was opened on March 16, 1974, with a cash credit limit of Rs. 1,00,000. In this account only defendant No. 2 was the guarantor. The fifth account with a cash credit limit of Rs. 7,50,000 was opened on March 21, 1975, and the guarantors were defendants Nos. 2, 4, 5 and 6. Subsequently, the cash credit limit was increased to Rs. 15,00,000 on December 13, 1976, known as the sixth account for which defendants Nos. 2, 4, 6 and 7 stood guarantee. It was in this account that the previous accounts Nos. 2, 4 and 5 were amalgamated. Subsequently, the limit was raised to Rs. 45,00,000 on January 8, 1977, and for this account the guarantors were only defendants Nos. 2 and 4. This is to be known as the seventh account. The plaintiff-bank filed a suit for the recovery of Rs. 70,26,642.23 which was pending in the High Court of Delhi. The winding-up proceedings of the borrower company, Depro Foods Ltd., were commenced in this High Court and subsequently, under orders of the company judge, the suit pending in the Delhi High Court was transferred to this High Court and it was registered as C. P. No. 69 of 1982. During the pendency of the aforesaid petition/suit, since more instalments under the "deferred payment guarantee" became due, the plaintiff-bank filed another suit which was registered as C. P. No. 75 of 1982, in this court for the recovery of Rs.2,08,616.29.

Finding of the Court:

1. The company appeals are maintainable under Section 483 of the Companies Act. 2. The liability of defendant No. 8, Shri B. P. Gupta, was fixed at Rs. 2,27,466.05 out of the total amount of instalments Nos. 3 to 7 of the "deferred payment guarantee". Credit was given for Rs. 62,000 which was recovered by the bank in order to arrive at the aforesaid figure. 3. The bank is entitled to interest at the bank rate as agreed upon subject to the minimum provided in the agreements. 4. The other guarantors have also filed appeal against the decrees passed against them in C. P. No. 69 of 1982. 5. The amount of the sale proceeds of the machinery of the company is to be adjusted against the liability of the appellants.

Issues: 1. Whether the company appeals are maintainable? 2. Whether the liability of defendant No. 8, Shri B. P. Gupta, was fixed at Rs. 2,27,466.05 out of the total amount of instalments Nos. 3 to 7 of the "deferred payment guarantee"? 3. Whether the bank is entitled to interest at the bank rate as agreed upon subject to the minimum provided in the agreements? 4. Whether the other guarantors have also filed appeal against the decrees passed against them in C. P. No. 69 of 1982? 5. Whether the amount of the sale proceeds of the machinery of the company is to be adjusted against the liability of the appellants?

Ratio Decidendi: 1. Section 446 of the Companies Act empowers the court where the winding up of the company is proceeding to entertain and dispose of suits against the company. 2. The liability of defendant No. 8 is to the extent of the value of the property mortgaged with respect to the amount due to the bank from the borrower-company in respect of payment of the amounts to the foreign-company for which the plaintiff-bank had stood as a guarantor. 3. The bank has a right of appropriation of amount of one account from the other. The bank could amalgamate such accounts and get it further secured by having additional guarantees. 4. The guarantors are entitled to the benefit of adjustment of the amount of four instalments in the cash credit account as far as "deferred payment guarantee" account is concerned. 5. The amount of the sale proceeds of the machinery of the company is to be adjusted against the liability of the appellants.

Final Decision: 1. The company appeals are allowed. 2. The judgments and decrees of the single judge are modified. 3. In C. P. No. 69 of 1982, the suit shall stand dismissed qua defendant No. 8, B. P. Gupta. 4. Civil Appeal No. 11 of 1986, has been filed by defendants Nos. 2 to 6 in C. P. No. 69 of 1982, The appeal of defendant No. 2 stands dismissed as he is liable for the amount found due from defendant No. 1 to the extent he stood guarantee for the seventh account to the extent of Rs. 45,00,000. 5. The appeal of defendant No. 3 would stand partly allowed. 6. The appeal of defendant No. 6 is to be partly allowed. 7. Civil Appeal No. 11 of the other defendants stands dismissed. 8. Civil Appeal No. 8 of 1986 has been filed in C. P. No. 75 of 1982. 9. Civil Appeal No. 9 of 1986, in C. P. No. 75 of 1982, is dismissed with the observation that the amount of the sale proceeds of the machinery would be adjusted at the time of passing of the final decree.