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Mansukhbhai Manjibhai Patel Andd anr. Vs. Saurashtra Cooperative Bank Ltd. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtGujarat High Court
Decided On
Case NumberSPECIAL CIVIL APPLICATION No. 28 of 2007.
Judge
ActsConstitution of India - Articles 226, 227; Banks and Financial Institutions Act; Indian Contract Act - Sections 138, 142; Gujarat Co-operative Societies Rules - Rule 41(4), 48(4
AppellantMansukhbhai Manjibhai Patel Andd anr.
RespondentSaurashtra Cooperative Bank Ltd.
Advocates:MR BM MANGUKIYA, Adv.
Excerpt:
[mr. justice n.k.patil; mr. justice h.g. ramesh, jj.] this m.f.a. is filed under section 54(1) of la act, against the judgment and award dated 22/02/2003 passed in l.a.c.no. 140/1995 on the file of the ii additional city civil judge. bangalore (cch-17). partly allowing the reference for enhanced compensation. [mr. justice n.k.patil; mr. justice h.g. ramesh, jj.] this m.f.a. is filed under section 54(1) of la act, against the judgment and award dated 11/06/2003 passed in l.a.c.no. 189/2001 on the file of the ii additional city civil judge. bangalore (cch 17), partly allowing the reference petition for enhanced compensation and seeking further enhancement of compensation......of nominees vide order dated 11.08.2005. the guarantor and the purchaser, therefore, preferred the impugned appeal no.477 of 2005 accompanied by application exh.5 seeking stay of operation of the award and decree as well as application exh.24 by which the jurisdiction of respondent-bank to institute the suit before the board of nominees was challenged. the tribunal vide impugned order dated 06.12.2006, has partially granted both the applications, subject to the guarantor and the purchaser each depositing a sum of rs.2,50,000/- within a period of one month from the date of the order, and upon such amount being deposited with the respondent-bank, the award and decree have been ordered to be stayed till disposal of the appeal. it is this order which is under challenge in the present.....
Judgment:
1. This petition has been filed challenging order dated 06.12.2006 made by the Gujarat State Co-operative Tribunal, Ahmedabad (the Tribunal) in Appeal No.477 of 2005. The following prayers have been made in the petition.

21. On the premise mentioned as above, the petitioners pray to Your Lordship that :

a. Be pleased to admit this petition,

b. Be pleased to quash and set aside the condition imposed by the learned Gujarat State Co-operative Tribunal to pay Rs.2,50,000/- each by both the petitioners while granting stay against execution of the decree in Appeal No.477 of 2005 preferred by the petitioners;

c. Pending admission and final disposal of the present petition, be pleased to stay the implementation, execution and operation of the condition imposed by the learned Gujarat State Co-operative Tribunal to pay Rs.2,50,00/- each by both the petitioners while granting stay against execution of the decree in Appeal No.477 of 2005 preferred by the petitioners;

d. Be pleased to pass such other and further orders as may be deemed fit and proper.

2. One Bharat Textiles obtained loan from respondent-Bank, initially for a sum of Rs.2,50,000/-, which came to be raised to Rs.4 Lacs subsequently with further enlargement of the financial facility. It is also an accepted fact that certain stock was placed in hypothecation for availing of the financial facility. Petitioner No.1 herein is the guarantor of the loan obtained by Bharat Textile, but according to the petitioner No.1, he is guarantor only to the tune of Rs.5 Lacs, if at all, he has to be treated as a guarantor. In so far as petitioner No.2 is concerned, he is stated to be a bona-fide purchaser of immovable property, which according to the said petitioner, was never mortgaged or secured or charged towards financial facility availed of by Bharat Textiles. Hereinafter, for the sake of convenience, Bharat Textiles shall be referred to as the borrower, petitioner No.1 as guarantor and petitioner No.2 as purchaser. The petition, though styled as a petition under Article 226 of the Constitution, is in effect a petition under Article 227 of the Constitution.

3. It appears that some time in 2003 Lavad Case No.2336 of 2003 came to be instituted under Section 48(4) of the Gujarat Co-operative Societies Act, 1961 (the Act) by the respondent-Bank and the borrower, guarantor and the purchaser were respectively imp leaded as respondent Nos. 1, 3 and 4 respectively in the said suit. The said suit came to be decreed ex-parte vide order dated 06.01.2004. On 20.08.2004, the guarantor and the purchaser moved an application for restoration being Restoration Application No.175 of 2004 before the Board of Nominees. The said application for restoration was accompanied by an application seeking condo nation of delay which came to be rejected by the Board of Nominees vide order dated 11.08.2005. The guarantor and the purchaser, therefore, preferred the impugned appeal No.477 of 2005 accompanied by application Exh.5 seeking stay of operation of the award and decree as well as application Exh.24 by which the jurisdiction of respondent-Bank to institute the suit before the Board of Nominees was challenged. The Tribunal vide impugned order dated 06.12.2006, has partially granted both the applications, subject to the guarantor and the purchaser each depositing a sum of Rs.2,50,000/- within a period of one month from the date of the order, and upon such amount being deposited with the respondent-Bank, the award and decree have been ordered to be stayed till disposal of the appeal. It is this order which is under challenge in the present petition.

4. The learned advocate appearing on behalf of the petitioners, namely, guarantor and the purchaser, has assailed the impugned order firstly on the ground that no proceedings before the Board of Nominees can be instituted against a person who is not a member of the Co-operative society; that petitioner No.1 was not a member when the loan was availed of by the borrower and became a member subsequently, while the purchaser is never a member. The second ground on which the jurisdiction of Board of Nominees has been challenged is applicability of provisions of The Recovery of Debts due to Banks and Financial Institutions Act, 1993 (RDB Act). In other words, it is submitted that considering the amount which the respondent-Bank is seeking to recover, namely, Rs.31 Lacs and odd, only the provisions of RDB Act can be made applicable and the provisions of the Act cannot be invoked by the respondent-Bank. In support of the aforesaid two propositions, reliance has been placed on a decision of this Court in the case of Rasiklal Patel & Ors. V/s. Kailasgauri Ramanlal Mehta and Ors. (1971) XII GLR 355 and a decision of the Bombay High Court in the case of Narendra Kantilal Shah V/s. Joint Registrar, Co-operative Societies (Appeal), Bombay and others. AIR 2004 Bombay 166.

4.1 Another limb of argument was that the guarantor cannot be made liable for recovery of a sum which was secured by the stock when the guarantee was executed once the respondent-Bank has recovered the amount either by disposal of the said stock or from realization of said security, because the guarantee executed by guarantor was by way of collateral security only. Therefore, according to the learned advocate, the liability of the guarantor had ceased to operate taking into consideration the provisions of Sections 138 to 142 of the Indian Contract Act, 1872. An incidental submission was also to the effect that the guarantor and the purchaser had been impleaded as parties to the suit merely because the Manager of respondent-Bank and the borrower were related to each other.

4.2 One more contention was based on provisions of Rule 41(4) of the Gujarat Co-operative Societies Rules 1965 to submit that the award was never served on either the guarantor or the purchaser and hence could not be made a basis for effecting recovery, and in any event, the delay was required to be condoned by the Board of Nominees.

5. The upshot of all the aforesaid contentions was that the Tribunal while passing the impugned order could not have imposed any condition while granting stay against operation of award and decree considering the fact that these are issues which are at-least required to be considered. He, therefore, urged that the Tribunal ought to have granted stay of operation of award and decree without imposing any condition till pendency of the appeal.

6. As can be seen from the impugned order of the Tribunal, it has been found by the Tribunal that despite having been served with the summons, the guarantor and the purchaser have not put in their appearance before the Board of Nominees nor pleaded any defence in the Lavad Suit. In this context, the following averments have been made by the petitioners in the petition:

8. The petitioners state that in the said proceedings, summons and notices issued by the learned Nominee was accepted by the respondent No.1. The original loanee on behalf of the respondent No.1. The petitioner was informed by the loanee that said suit has been filed and he has taken the loan and therefore, he would see to it that the said proceeding is defended. The original respondent No.1- the loanee, has obtained signature on Vakalatnama of the petitioner No.1 and was assured that the said proceedings would be defended by him and the petitioner shall rest assured in respect of said proceedings. However, the said proceeding remained undefended and ex-parte decree has been filed.

Therefore, whether the borrower had undertaken to plead the defence of the guarantor and the purchaser or not is an issue between the said parties, and the fact remains that no defence was pleaded by the guarantor or the purchaser before the Board of Nominees.

7. It has further been found by the Tribunal that the issue regarding jurisdiction has been raised in the appeal for the first time before the Tribunal. In so far as the other contentions are concerned, the Tribunal has recorded that these are issues which can be gone into only after the Lavad Suit stands restored to file after the delay is condoned.

8. In the aforesaid circumstances, it is not possible to state that the Tribunal has committed any error in law while imposing the condition to deposit an amount for granting interim relief during pendency of the appeal before it. The parameters for deciding the legality and validity of the impugned order are well settled. It cannot be stated that the impugned order is without jurisdiction or in excess of jurisdiction, nor is it possible to state that impugned order suffers from vice of perversity. Suffice it to state that whether the guarantor stands absolved of the guarantee or not is a question of fact which can be gone into only after the evidence in this regard is led before the appropriate forum. Similarly, the other issues raised by the petitioner are yet required to be gone into by the Tribunal in the appeal which is pending before the Tribunal. Therefore, it would not be proper or in the interest of justice to record any opinion as regards the same considering the fact that the appeal is pending before the Tribunal. In the result, the petition does not merit acceptance and is rejected accordingly.

9. At this stage, the learned advocate for the petitioner states that the time to deposit the sum as directed by the Tribunal expires today and the same may be extended by a period of two weeks. Accordingly, it is directed that in the event, the petitioner deposits a sum as directed by the Tribunal with the respondent-Bank on or before 20^th January, 2007 it will tantamount to compliance of the impugned order made by the Tribunal.

10. Subject to the aforesaid extension of time, the petition is summarily rejected.


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