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2025 Supreme(Online)(Ker) 67741
HIGH COURT OF KERALA
HARISANKAR V. MENON, J
MADHUSUDHANAN PILLAI – Appellant
Versus
STATE OF KERALA – Respondent
WP(C) 23571/2023
JACOB P.ALEX, JOSEPH P.ALEX, MANU SANKAR P., AMAL AMIR ALI, GILBERT GEORGE CORREYA, RAJESH T.R
A guarantor is entitled to retained amounts after settling the principal borrower's liability, reinforcing the obligation to honor financial commitments post-settlement.
Headnote:(A) Banking Regulation Act, 1949 - Guarantor's rights - The petitioner, as a guarantor, faced coercive proceedings due to the default of the principal borrower, impacting his terminal benefits upon retirement. The petitioner cleared the liability under an OTS Scheme, establishing entitlement to retained amounts. (Paras 1-7)
(B) Writ Jurisdiction - The court emphasized the necessity of disbursing amounts due to the petitioner following the settlement of arrears, reinforcing the principle that legal obligations must be honored post-settlement. (Paras 5-7)
Facts of the case:
The petitioner was a guarantor for a credit facility and faced coercive actions from the bank due to the principal borrower's default, affecting his retirement benefits. The petitioner settled the liability under an OTS Scheme.
Findings of Court:
The court directed the employer to disburse all amounts due to the petitioner, including retained amounts, within six weeks.
Issues: The main issue was whether the petitioner was entitled to the retained amounts after settling the liability of the principal borrower.
Ratio Decidendi: The court ruled that upon settlement of the borrower's liability, the petitioner is entitled to the retained amounts, emphasizing the obligation to honor financial commitments post-settlement.
Result: Writ petition disposed of, directing disbursement of amounts due.
JUDGMENT
The petitioner was a guarantor to a credit facility availed by the 5th respondent herein from the 4th respondent Bank. Since, the repayment by the 5th respondent was defaulted, the bank initiated coercive proceedings against the petitioner and at the time of his retirement, the petitioner was not extended his terminal benefits on account of the coercive steps taken by the 4th respondent Bank.
2. It is in such circumstances that the captioned writ petition is filed by the petitioner.
3. I have heard Sri.Joseph P.Alex, the learned counsel for the petitioner as well as Sri.Gilbert George Correya, the learned counsel for the 4th respondent herein.
4. During the pendency of the writ petition, the petitioner has cleared the entire liability payable by the 5th respondent (principal borrower) under an OTS Scheme as evidenced by Ext.P5 communication dated 05.03.2025 produced by the petitioner along with I.A.No.1/2025.
5. On 16.08.2023, this Court had directed the amounts payable to the petitioner to be disbursed, after retaining the amount payable pursuant to Ext.P1.
6. The petitioner admits that the payments as ordered on 16.08.2023 has been received by him and what remains is only the amount retained pursuant to the afore order.
7. I am of the opinion that, in the light of the settlement of the entire arrears payable by the 5th respondent, as evidenced by Ext.P5, the petitioner is entitled for the amount so retained pursuant to the order dated 16.08.2023.
Resultantly, this writ petition would stand disposed of, directing the employer – respondents 1 to 3 – to disburse all amounts due to the petitioner, including the amount retained as per order dated 16.08.2023, as expeditiously as possible, at any rate, within a period of six weeks from today.
