They also stated that without prejudice to their rights and companytentions, they were willing to discuss the matter with the Bank, to arrive at an amicable solution.
The credit facilities were renewed and enhanced from time to time.
Ltd., companypany for short .
They also alleged that the bank ought to have given a moratorium on interest to rehabilitate the companypany.
They further alleged that in view of the failure to advance further funds, the companypany sustained heavy loss and the companypany was reserving liberty to file a suit for damages for an amount which would be more than the amount claimed by the Bank.
10.50 lakhs.
The Bank examined its manager and respondents 1, 2 and 3 gave evidence on behalf of the defence.
The guarantee bonds were executed in the years 1983, 1984 and 1985.
Thus the limit of total liability undertaken exclusive of interest was Rs.22.20 lakhs in the case of Respondents 1, 4 5, Rs.
The Bank companytended that the respondents were jointly and severally liable to pay the amounts due by the companypany, as aforesaid.
Their liability was joint and several with the companypany.
The Bank restricted the claim to Rs.10.50 lakhs with interest at 18.5 P.A. from 17.12.87 to the date of suit against Respondents 2 and 3 and to Rs.11.70 lakhs with interest at 18.5 P.A. from 17.12.1987 to date of suit against respondents 6 and 7.
The trial companyrt framed as many as 16 issues.
Respondent No.
The appellant Bank filed Original Suit No.
The statements of account showing the particulars of amount due as on 31.12.1989 were annexed to the plaint.
A formal numberice through companynsel was sent by the Bank on 17.12.1987 demanding payment which elicited a reply dated 30.12.1987 denying the demand.
In view of the failure on the part of the companypany principal debtor in paying the amounts due, the Bank sent a letter dated 12.10.1987 to the companypany and its 7 Directors Respondents 1 to 7 informing that the following amounts were outstanding in the accounts of the companypany as on 30.9.1987 and calling upon the companypany 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.
3 filed a separate written statement.
D 1 to D5 were marked.
10.50 lakhs a single deed executed by Respondents 1, 2 and 3 on different dates .
It was alleged that the cause of action for the suit against the guarantors respondents 1 to 7 arose on 17.12.1987 when the demand was made and on 30.12.1987 when they denied the liability by numberice.
P 1 to P 35 and Ex.
iii Guarantee bond dated 10.9.1985 executed by Respondents 1, 4, 5, 6 7, the limit of liability being Rs.11.70 lakhs.
The trial companyrt by an exhaustive judgment answered all the issues, except the issue regarding limitation in favour of the Bank.
It held that the Bank had established the companyrectness of the amounts claimed and the rate of interest.
The plaint averments in brief are as under.
The said dismissal is challenged in this appeal by special leave.
2.4 The Bank initiated proceedings for winding up against the companypany on account of its inability to pay its dues, on 11.10.1988 and the High Court ordered winding up of the companypany on 17.3.1989.
10.50 lakhs in the case of Respondents 2 3 and Rs.11.70 lakhs in the case of Resondents 6 7.
The Bank cannot proceed against the guarantors without first exhausting of remedies against the principal debtor.
2.2 On account of the companypany allegedly incurring losses and stopping its activities, operations in the accounts of the companypany with the Bank stopped in the middle of 1986.
They resisted the suit inter alia on the following grounds The suit was number maintainable only against the Guarantors and was liable to be rejected for number joinder of the principal debtor.
2.1 The Bank had extended credit facilities by way of overdraft, goods loan, and demand loan against supply Bills to a companypany known as Gadag Forge Fits India Pvt.
ii Guarantee bond dated 4.4.1984 executed by respondents 4 5, the limit of liability being Rs.
Therefore, the suit was filed by the Bank on 16.3.1990 only against the Guarantors Respondents 1 to 7 for recovery of Rs.19,77,478.60 that is, the amount demanded in the numberice dated 12.10.1987 with interest up to date of suit .
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 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 44,819.30 444.05 26,274.85 18.424.20 11,685.45 13,518.25 47,534.00 26,750.10 8,412.60 TOTAL 13,48,264.79 2.3 The companypany and its Directors Respondents 1 to 7 sent a reply dated 31.10.1987 through companynsel stating that the companypany was passing though a financial crisis and the Bank had failed to assist the companypany by making further advances by way of working capital.
107 of 1993 filed by it against the judgment and decree dated 29.10.1992 of the Civil Judge, Gadag in O.S. No.
As the suit was number filed within three years from the respective dates of the guarantee bonds, in the absence of renewals or acknowledgement by them, the suit was barred by limitation.
Respondents 4 and 7 remained ex parte.
Respondent 1 was its Managing Director and Respondents 2 to 7 were its Directors.
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 F.A. No.
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 companypany subject to the limits mentioned therein 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.
Respondents 1, 5 and 6 filed a companymon written statement which was adopted by 2nd respondent.
29 of 1990, dismissing its suit on the ground of limitation.
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 companypounded quarterly from the date of suit till the date of realization.
