Vimal Jagdishprasad Agarwal & Ors vs Central Bank of India

Ashok Menon, Chairperson

This is an appeal filed under Sec. 20 of Recovery of Debts Due to Banks and Financial Institution, 1993 ( ‘RDDB &FI Act’ for short) challenging the final order passed by the Debts Recovery Tribunal No.1, Ahmedabad (D.R.T.) in Transfer Application No. 159 of 1996 (originally filed as Summary Suit No. 2099 of 1985, City Civil Court, Ahmedabad). The Appellants are aggrieved by the judgment of the Ld. Presiding Officer dated 29.04.2009 directing Defendants Nos. 1 & 2 to jointly and severally pay to the Applicant, the Central Bank of India a sum of ₹4,23,31,409.32 together with simple interest at the rate of 4% p.a. with effect from 29.04.1987 till realisation. The liability of additional Defendants Nos. 1.1 to 1.3, the legal representatives of the deceased Defendant No.1 is restricted to the extent of the estate they inherited. A Recovery Certificate was also issued following the judgment. The Defendants Nos. 1.1 to 1.3 are aggrieved and hence, in the appeal.

The Respondent Bank had initially filed the Summary Suit referred to above before the City Civil Court, Ahmedabad and the same was transferred to the D.R.T. under the provisions of Sec. 31 of the RDDB & FI Act and re-filed.

The facts, in brief, are thus:

The Original Applicant Bank had sanctioned multiple credit facilities to the third Defendant company of which Defendants Nos. 1 & 2 were directors. The Hon’ble High Court of Gujarat ordered the company to be wound up. There were documents of hypothecation of movables, machinery and pledge of goods belonging to the company. Defendants Nos. 1 & 2 had executed personal guarantees on 13.06.1984. The company was involved in the manufacture of textiles. It became a sick industry and vested in the State of Gujarat under the provisions of the Gujarat Closed Textiles Undertaking (Nationalisation) Act, 1986. Defendants Nos. 1 and 2 were called upon to pay the dues as personal guarantors vide notice dated 01.09.1985. They sent a reply denying their liabilities and hence, the Bank filed the Civil Suit.

Before the Civil Court, Defendants Nos. 1 and 2 filed a written statement denying the execution of any personal guarantee. They contended that given the company's nationalisation, it was for the State Government to pay compensation to the Bank. According to the Defendants, the Bank had already received compensation from the Government. It was also contended that the suit was barred by limitation.

The Appellants as the legal representatives of deceased Defendant No. 1 filed another written statement contending that consequent to the nationalisation, the administration and management of the third Defendant company vested with the Gujarat State Textile Corporation Ltd. which was under obligation to pay the dues to the Bank. Though properties belonging to the Corporation could have been sold, no steps were taken by the Bank.

After considering the contentions raised by both sides, the Ld. Presiding Officer allowed the application as stated earlier.

It is contended that D.R.T. has overlooked the crucial fact that the Respondent Bank had on oath filed an affidavit stating that on account of recovery of ₹2,63,56,750/-, the balance amount recoverable is only ₹1,59,73,909.32. The statement of account has not been produced and proved by the Bank. The D.R.T. has also not noticed the crucial fact that the Appellants had not received any property as legal representatives of deceased Defendant No. 1. It is, therefore, prayed that the impugned judgment against the Appellants may be set aside.

The contention of the Appellants throughout is that being the legal representatives of the deceased first Defendant they are not liable to pay the debt. It is also contended that the O.A. against the first Defendant has abated. The knowledge of the date of death is when the time begins to run against the Applicant to bring the legal representatives on record. In the instance case, the fact regarding the death of the first Defendant was informed only in 2005 and consequent to that the application for bringing legal representatives on record was filed. Consequent to the appearance of the legal representatives they did not raise any plea regarding abatement. Hence, the objection on that ground is not sustainable.

The O.A. was allowed against the Appellants only to the extent of the estate of the deceased first Defendant inherited by them. The D.R.T. is not obliged to conduct an enquiry as to whether the legal representatives have inherited any estate of the deceased Defendant. The Appellants contend that they have not inherited any estate of the deceased Defendant. If that be so, they may not be under any obligation to pay the decree debt. It is only at the time of execution that the Certificate Holder Bank is under obligation to find out the details regarding the estate inherited by the Appellants. No interference to the impugned judgment is, therefore, called for in this appeal.

In the result, the appeal is dismissed.