http://JUDIS.NIC.IN

SUPREME COURT OF INDIA

Page 1 of 13

CASE NO.:

Appeal (civil) 6894 of 1997

PETITIONER:

Syndicate Bank

RESPONDENT:

Channaveerappa Beleri & Ors.

DATE OF JUDGMENT: 10/04/2006

BENCH:

Arun Kumar & R V Raveendran

JUDGMENT:

J U D G M E N T

RAVEENDRAN, J.

This appeal by special leave, is by the plaintiff Bank against the

judgment dated 6.3.1997 of the High Court of Karnataka dismissing

R.F.A. No. 107 of 1993 filed by it against the judgment and decree

dated 29.10.1992 of the Civil Judge, Gadag in O.S. No. 29 of 1990,

dismissing its suit on the ground of limitation.

2. The appellant Bank filed Original Suit No. 29 of 1990 against

Respondents 1 to 7 herein for recovery of Rs.19,77,478/60 (the

liability of Respondents 2 & 3 being restricted to Rs.15,75,960 and

liability of Respondents 6 & 7 being restricted to 17,56,070.60)

together with interest @18.5% per annum compounded quarterly

from the date of suit till the date of realization. The plaint averments

in brief are as under.

2.1) The Bank had extended credit facilities by way of overdraft,

goods loan, and demand loan against supply Bills to a company

known as Gadag Forge Fits (India) Pvt. Ltd., (’company’ for short).

Respondent 1 was its Managing Director and Respondents 2 to 7

were its Directors. The credit facilities were renewed and enhanced

from time to time. Respondents 1 to 7 executed the following

guarantee bonds in favour of the Bank, personally agreeing and

undertaking to pay and satisfy the Bank on demand all sums which

may be due on account of the credit facilities granted to the company

subject to the limits mentioned therein :

i) Guarantee Bond dated 17.9.1983/20.8.1983/29.8.1983

executed by Respondents 1, 2 and 3, the limit of liability

being Rs. 10.50 lakhs (a single deed executed by

Respondents 1, 2 and 3 on different dates).

ii) Guarantee bond dated 4.4.1984 executed by respondents

4 & 5, the limit of liability being Rs. 10.50 lakhs.

iii) Guarantee bond dated 10.9.1985 executed by

Respondents 1, 4, 5, 6 & 7, the limit of liability being

Rs.11.70 lakhs.

Thus the limit of total liability undertaken exclusive of interest was

Rs.22.20 lakhs in the case of Respondents 1, 4 & 5, Rs. 10.50 lakhs

in the case of Respondents 2 & 3 and Rs.11.70 lakhs in the case of

Resondents 6 & 7. Their liability was joint and several with the

company.

2.2) On account of the company allegedly incurring losses and

stopping its activities, operations in the accounts of the company with

the Bank stopped in the middle of 1986. In view of the failure on the

http://JUDIS.NIC.IN

SUPREME COURT OF INDIA

Page 2 of 13

part of the company (principal debtor) in paying the amounts due,

the Bank sent a letter dated 12.10.1987 to the company and its 7

Directors (Respondents 1 to 7) informing that the following amounts

were outstanding in the accounts of the company as on 30.9.1987

and calling upon the company as principal debtor and respondents 1

to 7 as guarantors to pay the said amounts aggregating to

Rs.13,48,264.79 with interest @ 18.5% per annum from 1.10.87

within 15 days :-

Account No.

Date of

Advance

Limit/Amount

Advanced

Balance as on

30.9.1987

Over Draft

27/85

1/86

14/86

10.9.85

7.1.86

29.4.86

2,50,000/-

2,50,000/-

1,50,000/-

3,32,116.04

3,39,719.54

1,99,105.35

Goods Loan

49/84

48/85

23.7.84

12.10.85

1,61,000/-

27,450/-

1,91,654.00

35,894.85

Demand Loan

against Supply

Bills

229/85

232/85

233/85

234/85

235/85

237/85

2/86

3/86

5/86

8/86

10/86

12/86

14/86

http://JUDIS.NIC.IN

SUPREME COURT OF INDIA

Page 3 of 13

15/86

16/86

18/86

20/86

2.12.85

6.12.85

6.12.85

11.12.85

20.12.85

26.12.85

1.1.86

1.1.86

13.1.86

3.2.86

10.2.86

13.2.86

11.3.86

20.3.86

21.3.86

25.3.86

26.4.86

5,000/-

5,000/-

2,500/-

16,900/-

1,500/-

6,100/-

2,900/-

5,100/-

32,970/-

3,700/-

31,600/-

13,700/-

8,800/-

10,230/-

36,000/-

20,300/-

6,400/-

318.60

6,936.65

3,469.40

23,356.15

2,071.85

8,366.90

3,966.95

3,425.75

44,819