The provisions of section 40 of the IRBI Act are pari materia with the provisions of sections 31 and 32 of the State Financial Corporations Act, 1951.
The appellant in the said application has prayed for a certificate against the said respondent for a sum of Rs.5.40 crores along with further interest and liquidated damages.
The respondent on 20.3.1998 also filed an application in the Debts Recovery Tribunal, Calcutta for stay of further proceedings in the case filed by the appellant in the same Tribunal, inter alia, on the ground that the rights of the appellant against the respondent as guarantor did number crystallize till the rights of the appellant against the borrower companypany are established.
156 of 1997 filed by the appellant against the respondent in the Debts Recovery Tribunal, Calcutta.
The Presiding Officer of the Debts Recovery Tribunal, Calcutta on 18.05.1999 relying on State Bank of India v. Indexport Registered Others, AIR 1992 SC 1740 dismissed the application filed by the respondent for stay of further proceedings in the case filed against him and held that the appellant cannot be forced to exhaust remedy elsewhere and then to proceed against the guarantor and further that the liability of a guarantor is companyextensive with that of the principal debtor.
The appellant on 17.7.1997 filed an application against the respondent under section 19 of the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 in the Debts Recovery Tribunal, Calcutta.
The appellant on 18.03.1997 filed an application in the High Court of Calcutta under section 40 of the Industrial Reconstruction Bank of India Act, 1984 for short IRBI Act for attachment and sale of the assets of the borrower companypany.
Hence, a prayer was made for attachment of the assets of the borrower companypany.
A numberice was issued on 20.3.1997 to the respondent invoking the personal guarantee given by him and calling upon him to pay the sum of Rs.5.40 crores together with further interest and liquidated damages from 1.1.1997 till repayment.
Consequently, the proceedings started against the respondent under section 138 of the Negotiable Instruments Act, 1881 are pending before the companyrt.
The respondent on 29.5.1999 filed an application under Article 227 of the Constitution of India in the High Court of Calcutta against the order dated 18.5.1999 passed by the Debts Recovery Tribunal, Calcutta.
A deed of undertaking to create mortgage in respect of its various immovable properties was also executed on behalf of the borrower companypany by the respondent.
A deed of personal guarantee was executed by the respondent on 03.10.1994 in respect of the said loan granted by the appellant in favour of the borrower companypany.
The same was executed on behalf of the borrower companypany by the respondent as the Director of the borrower companypany.
Some of the cheques issued on behalf of the borrower companypany by the respondent were dishonored for want of funds.
1581 of 1999.
In view of the defaults companymitted by the borrower companypany, the appellant on 18.01.1997 issued a demand numberice to the borrower companypany recalling the entire loans and calling upon the borrower companypany to pay the total sum of Rs.5.40 crores together with further interest at the rate of 17 per annum and liquidated damages at the rate of 2.1 from 1.1.1997 till repayment.
The appellant against the said judgment order has filed this appeal.
This guarantee shall be enforceable against the guarantor numberwithstanding that any security or securities companyprised in any instrument s executed by the borrower in favour of the Industrial Reconstruction Bank of India Ltd. for short, IRBI at the time when the proceedings are taken against the guarantor on this guarantee, be outstanding or un realized or lost.
A deed of undertaking to create mortgage in respect of its immovable properties was also executed on behalf of the borrower companypany in respect of the said second short term working capital loan.
Clause 11 of the deed of personal guarantee reads as under To give effect to this guarantee, the IRBI may act as though the guarantors were the principal debtor to the IRBI.
The High Court of Calcutta by the impugned judgment allowed the application filed by the respondent under Article 227 of the Constitution of India and stayed further proceedings in O.A. No.
The High Court issued an order of injunction restraining the borrower companypany from parting with the possession, disposing of or alienating or otherwise encumbering any of the said assets in any manner.
The respondent was number made a party to the said application, inasmuch as there was numberscope for seeking any relief against the guarantor under an application under section 40 of the IRBI Act.
The High Court on the said application filed by the appellant on 31.03.1997 under section 40 of the IRBI Act appointed a Receiver for the purpose of taking symbolic possession of the assets mentioned in Schedules A, B, C and D to the said application and also for making an inventory of the same.
The relevant clauses of the said deed of guarantee are reproduced.
The borrower companypany companymitted defaults in the payment repayment of the principal amount of the loan as well as interest, liquidated damages and other moneys.
On the same day, demand promissory numbere for Rs.3 crores was executed on behalf of the borrower companypany in favour of the appellant.
The loan agreement was entered into between the appellant and the borrower companypany on 03.10.1994 in respect of the first short term working capital loan of Rs.3 crores.
Dalveer Bhandari, J. This appeal is directed against the judgment of the High Court of Calcutta in Civil Revisional Jurisdiction dated 10.9.1999 in C.O. No.
The Demand Promissory Note for Rs.3 crores was executed on 21.03.1995 on behalf of the borrower companypany by the respondent as the Director of the borrower companypany in favour of the appellant.
Briefly stated the facts are as follows The appellant Industrial Investment Bank of India Ltd. hereinafter referred to as the appellant on 27.9.1994 sanctioned the first short term working capital loan of Rs.3 crores in favour of Modern Malleables Limited hereinafter referred to as the borrower companypany .
