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State Bank of India Stressed Assets Resolution Center (Sarc) and Another Vs. M/S. M.S.P. Spices Limited and Others - Court Judgment

LegalCrystal Citation
CourtDRAT Madras
Decided On
Case NumberRA-53 of 2007
Judge
AppellantState Bank of India Stressed Assets Resolution Center (Sarc) and Another
RespondentM/S. M.S.P. Spices Limited and Others
Advocates:M/s. V.R. Gopalrathnam and S. Sethuraman, M/s. S. Natarajan, M/s. N.S. Manoharan and I. Lakshmana Shankar, M/s. C.T. Selvam, Kavitha Ashok and Vijayakumar Subramaniam, M/s. P.R. Balasubramaniam and V.
Excerpt:
1. this appeal is preferred by the appellant banks challenging the impugned order passed by the drt, bangalore, in oa-939/1997 dated 31.1.2007, with regard to the personal liability of the respondents 2, and 7 to 9 herein. 2. the facts leading to the filing of this appeal are as follows :- the 1st respondent is a company registered under the indian companies act, 1956, and the respondents 2, and 7 to 9 are its directors. the appellants sanctioned credit facilities on consortium basis to the 1st respondent company (hereinafter called as the company) and towards export packing credit, the 1st appellant sanctioned rs.325 lakhs and the 2nd appellant sanctioned rs.200 lakhs. in respect of foreign bill discounting limit, the 1st appellant sanctioned rs.150 lakhs and the limit sanctioned by the.....
Judgment:

1. This Appeal is preferred by the Appellant Banks challenging the impugned Order passed by the DRT, Bangalore, in OA-939/1997 dated 31.1.2007, with regard to the personal liability of the Respondents 2, and 7 to 9 herein.

2. The facts leading to the filing of this Appeal are as follows :-

The 1st Respondent is a Company registered under the Indian Companies Act, 1956, and the Respondents 2, and 7 to 9 are its Directors. The Appellants sanctioned credit facilities on Consortium basis to the 1st Respondent Company (hereinafter called as the Company) and towards Export Packing Credit, the 1st Appellant sanctioned Rs.325 lakhs and the 2nd Appellant sanctioned Rs.200 lakhs. In respect of Foreign Bill Discounting Limit, the 1st Appellant sanctioned Rs.150 lakhs and the limit sanctioned by the 2nd Appellant was Rs.125 lakhs. Regarding the Bank Guarantee, the limit sanctioned by the 1st Appellant was Rs.30 lakhs, and the limit sanctioned by the 2nd Appellant was Rs.20 lakhs. The Respondents 2, and 7 to 9 have given their personal guarantee and the 10th Respondent, holding Company, gave Corporate guarantee. Besides that, the properties belonging to the 1st Respondent Company and 10th Respondent Company were also mortgaged in favour of the Appellants to secure the said credit facilities sanctioned by them.

Though the Company operated the account properly for a short while, it became a Non-Performing Asset (NPA) subsequently and therefore, the Appellants issued a Demand Notice dated 11.4.1996, calling upon the Respondents 1, 2 and 7 to 10, to repay the outstanding amount in the loan account. As they failed to repay the same, the Appellants filed the OA No.939/1997 for recovery of Rs.7,27,98,918.46p with further interest at 21% p.a. compounded at quarterly rests and cost. The 2nd defendant in the OA died leaving behind the Respondents 3 to 6 herein as his legal heirs. In the interregnum, Respondents 3 to 6 paid a sum of Rs.1,45,00,000/- as full and final settlement of the liability of the deceased 2nd Respondent. Other Respondents contested the claim in the OA and the 9th Respondent alleged that his signatures had been forged by the Banks in the Sanction letter and the Guarantee Agreement. Hence the signatures of the 9th Respondent were subjected to comparison by the handwriting expert and he gave the opinion that there were differences between the admitted signatures and the disputed ones in the documents.

Despite the evidence adduced by the Appellants, Ld. PO came to the conclusion that the 9th Respondent’s signatures were forged and hence he could not be made liable as a guarantor. DRT passed the impugned Order allowing the said OA with cost as against Respondents 1 and 10 herein (D1 and D6 in the OA) jointly and severally, as well as against Respondents 2, and 7 to 9 (D2 to D5 in the OA) as Directors of the 1st Respondent Company, but not in their personal capacity and the amount of Rs.1.45 Crores already paid by the Legal Representatives (LRs) of the deceased 2nd Respondent, who are Respondents 3 to 6 herein, was ordered to be deducted from the Certificate amount Thus the Recovery Certificate was ordered to be issued accordingly. Hence the Appeal.

3. Heard Mr. S. Sethuraman, Ld. Counsel appearing for the Appellant Banks, Mr. S. Natarajan, Ld. Counsel appearing for Respondents 1, 3, 5, 6 and 10, Mr. N.S. Manoharan, Ld. Counsel appearing for Respondent No.4, Mr. C.T. Selvam, Ld. Counsel appearing for Respondent No.7, Mr. R. Gandhi, Ld. Senior Counsel appearing for Respondent No.8, and Mr. R. Thyagarajan, Ld. Counsel appearing for Respondent No.9.

4. The contentions of the Ld. Counsel for the Appellants are briefly as follows :-

The DRT failed to appreciate the facts and law while passing the award and Ld. PO erred in not awarding personal decree against the Respondents 3 to 9 as the deceased 2nd Respondent as well as Respondents 7 to 9 executed Guarantee Agreement as the same was subsequently acknowledged by them. Even assuming that the signatures of the 9th Respondent, who was 5th defendant in the OA were forged, the other Respondents cannot escape from their personal liability. Further Ld. PO ought to have compared the signatures of the 9th Respondent instead of relying on the evidence of the handwriting expert alone especially in view of his evidence that a person can bring about the change in the pattern of signature intentionally. Moreover, the DRT failed to appreciate the direct evidence of the Bank’s witness to the effect that the 9th Respondent also came to the Bank and signed the documents and such evidence remained uncontroverted by the Respondents. Hence it was not proper on the part of Ld. PO to rely on the opinion of the handwriting expert especially when there is direct evidence with regard to execution of the documents.

Similarly, Ld. PO failed to appreciate that the 9th Respondent did not raise any issue about the Guarantee agreement earlier or receipt of the legal notice dated 11.4.1996, and only in his Reply Statement for the first time he denied the signatures in the Guarantee agreement. Therefore, the plea of forgery alleged by him is only an after thought. Further Ld. PO failed to hold that even if the signatures of the 9th Respondent were alleged to be forged, the Guarantee agreement as against the other Respondents is valid under law as they have admitted the execution of the Guarantee agreement and their liability under the same. In the circumstances, Ld. PO ought to have compared the disputed signatures with the admitted signatures of the 9th Respondent and come to an independent conclusion and such failure resulted in miscarriage of justice. Therefore, the impugned Order has to be set aside making Respondents 2, and 7 to 9 personally liable for the claim made by the Appellants.

5. In the above circumstances, the following points arise for consideration :-

1) Whether the Appellants have proved the execution of the Guarantee Agreement by the 9th Respondent herein in accordance with law ?

2) Whether the impugned Order based on the evidence of the handwriting expert with reference to the execution of the Guarantee Agreement by the 9th Respondent has to be reversed as prayed for ?

3) Whether the Respondents 3 to 6 as Legal Representatives of the deceased 2nd Respondent and Respondents 7 to 9 are personally liable for the claim for the outstanding due to the Appellants ?

4) To what relief the Appellants are entitled to ?

The Points

6. It is not in controversy that the Appellant Banks sanctioned various credit facilities to the 1st Respondent Company (hereinafter called as the Company) represented by the 2nd Respondent, since deceased, as its Chairman and Managing Director and since the Company could not operate the account as per terms and conditions of the various loan agreements, the Banks treated the account as a Non-Performing Asset (NPA) and thereafter instituted the said proceedings for recovery of the amount. It is not in dispute that the 10th Respondent is the holding Company of the 1st Respondent Company, which stood as corporate guarantor for the due repayment of the outstanding. The Appellant Banks in whose favour Joint Deed of Hypothecation was executed by the 1st Respondent Company holding pari passu charge without any inter se priority among themselves have produced Ex.A3, loan sanction letter and Ex.A7, deed of guarantee signed by the Respondents 2, and 7 to 9, who were arrayed as Defendants 2 to 5 in the said OA. In view of the Reply Statement filed by the 9th Respondent herein as 5th defendant denying his signatures in both the documents, the same had been sent to the handwriting expert and after examination of the disputed signatures and the admitted signatures, the experts filed their reports. Hence on the basis of the opinion of the handwriting experts, Ld. PO held that the signature of the 9th Respondent in the said documents had been forged and that therefore, the Appellant Banks are not entitled to any relief against the Respondents 7 to 9 in their personal capacity, but they are liable as Directors of the 1st Respondent Company. Hence the foremost question that arises for consideration is whether the documents Exs.A3 and A7 are true and genuine and whether the said documents had been executed as contended by the Appellant Banks in the said OA proceedings ?

7. Ld. Counsel for the Appellants has argued at the outset that in view of the categorical evidence adduced on the side of the Banks with reference to the execution of the said documents and other relevant circumstances, the opinion and the evidence of the experts cannot be relied upon. In this context, he has cited the decisions AIR 1977 SC 1091 (Magan Biharilal Vs. The State of Punjab), AIR 1977 Patna 241 (Girja Prasad Vs. Sardarlabh Singh), 2008 (3) CTC 31 (Chandran Udayar Vs. Kasivel), in support of his further contention that even if the opinion of handwriting expert is relevant, it is not conclusive and that such opinion has to be corroborated by other evidence. Hence he has strenuously contended on the basis of the principles of law laid down in the said decisions that the Court has to come to independent conclusion on the basis of the evidence adduced in a given case. There is no dispute with reference to the principles of law enunciated in the decisions cited above and therefore, it has become necessary to find out whether the Appellants have adduced satisfactory evidence so as to establish that the handwriting experts’ opinion and the evidence cannot be relied upon in this case.

8. According to the Ld. Counsel for the Appellants Ex.A3, loan sanction letter dated 16.9.1994, was signed by the 2nd Respondent, since deceased, and Respondents 7 to 9 in token of acceptance of the terms and conditions of the sanction of credit facilities by the 1st Appellant Consortium Bank. Similarly he has contended that Ex.A7, Deed of Guarantee dated 10.10.1994, was executed by the 2nd Respondent since deceased and Respondents 7 to 9 in their personal capacity and on behalf of the 10th Respondent Company in favour of the Consortium of the Appellant Banks. In this context, he has pointed out that in the Reply Statements filed by the Respondents 1, 4 and 10, they have admitted the loan transactions and admitted the execution of documents in favour of the Banks and that they have made allegations therein against each other relating to their problems with reference to the administration and management of the 1st Respondent Company so as to escape from the liability.

9. The next contention of the Ld. Counsel for the Appellants is that in the Reply Statement filed by the 8th Respondent herein as 4th defendant, he has categorically admitted that the documents Exs.A3 and A7 were signed by the Respondents 2, and 7 to 9, who were arrayed as Defendants 2 to 5 in the OA and therefore, he has strenuously contended that in view of such categorical admission by the 8th Respondent, the evidence of AW1, the then Chief Manager of the 1st Appellant Bank that the said documents were signed in his presence by Respondents 2, and 7 to 9 deserves acceptance. Further, he has pointed out that on this aspect of the matter, there was no circumstance elicited during the course of examination of AW1 to show the contrary.

Similarly as has been argued by the Appellants’ Counsel, despite the categorical admission made in the Reply Statement by the 8th Respondent herein as defendant No.4, that he alongwith Respondents 2, and 7 to 9 signed in Exs.A3 and A7 in the Bank, he would contend as an after thought in his Proof Affidavit Ex.D28 that on the date of signing of the said documents, he and Respondents 2 and 7 were only present and that the 9th Respondent was not present at that time in the Bank. Hence his evidence running against the earlier admission in the Reply Statement cannot be relied on for any purpose and therefore, I have no hesitation to accept the contention putforth by the Ld. Counsel for the Appellants in this respect.

10. Further, the Ld. Counsel for the Appellants has also adverted the attention of this Tribunal to the categorical denial by AW1 of the suggestion that Exs.A3 and A7 are forged by the Banks in collusion with Respondents 2, and 7 to 9 in the cross-examination. As has been rightly pointed out by the Ld. Counsel for the Appellant Banks, it is seen further that the 9th Respondent, who denied the signatures in Exs.A3 and A7, has putforth the contention in his Reply Statement that since he was not cordial with the other Respondents inasmuch as he was residing in Virudhunagar and not in Bangalore, the other Respondents colluded with the Banks’ officials and forged his signature with the help of the signature available in the other Bank accounts.

11. In this context, Ld. Counsel for the Appellant Banks has pointed out the minutes of the meeting of Board of Directors of the 1st Respondent Company dated 19.7.1997, to show that the 9th Respondent had not only attended the said Board meeting, but also effectively participated in the affairs of the Company. It is seen from the said minutes of the Board meeting that the 9th Respondent herein had put up the plea of forgery with reference to Exs.A3 and A7 by ingenuously inventing a reason that he was not attending to the affairs of the management of the 1st Respondent Company and that the other Respondents were not cordial towards him. It is in the above circumstances, Ld. Counsel for the Appellants has strenuously contended that in view of the ratio laid down in the said decisions AIR 1977 SC 1091, and 2008 (3) CTC 31, ocular evidence of AW1 with reference to the execution of documents Exs.A3 and A7, and the circumstance that the 9th Respondent was effectively participating in the management of the affairs of the 1st Respondent Company would go a long way to disprove the evidence of the 9th Respondent as DW-1.

12. On the contrary, Ld. Senior Counsel Mr. R. Gandhi, appearing for the 9th Respondent herein has strenuously contended that the opinion evidence of the handwriting expert cannot be brushed aside for the simple reason that two handwriting experts have examined the disputed signatures of 9th Respondent in Exs.A3 and A7 and rendered the opinion that the signatures of 9th Respondent were forged by the process of subscribing the same with trace paper. According to DW5, the finger print expert, the questioned signatures are produced out of guideline tracing process and they do not tally with the admitted signatures of 9th Respondent herein. Ld. Senior Counsel Mr. R. Gandhi, laid stress on the evidence of DW5 and Exs.C1 to C10 in support of his strenuous contention that the disputed signatures were examined by 1) B. Vara Lakshmi, Assistant Director, andhra Pradesh Forensic Science Laboratories, and 2) C. Ashwathappa, Assistant Director, Forensic Science Laboratory, Bangalore, finger print experts, who concurrently rendered their opinion that the disputed signatures were forged and that such reports are further corroborated by the evidence of DW5.

13. On this aspect, Ld. Counsel for the Appellant Banks relied on the admission of DW5 in the cross-examination that the disputed signatures could have been subscribed by the same person intentionally also and therefore, he has argued that the 9th Respondent with malafide intention to cheat the creditor Banks could have in all probability put the disputed signatures with a sketch pen. Further, he has also referred me to the sworn statement made by 9th Respondent in his Affidavit Ex.D1, which reads as follows :-

“I notice that the said signatures have been made probably with a sketch pen fraudulently with an attempt to make me liable for the liabilities said to have been incurred by the 1st defendant Company with the Applicant Banks 1 and 2 in collusion and connivance with the Defendants 2, 3 and 4.”

Relying on such an averment in the Affidavit, Ld. Counsel for the Appellant Banks has argued and in my opinion rightly that the 9th Respondent alone could have put those signatures in Exs.A3 and A7 with a sketch pen fraudulently so as to delay and defeat any future claim to be made by the Appellant Banks. As has been rightly argued by him, in view of the said communication with reference to the Board meeting of the 1st Respondent Company revealing that the 9th Respondent herein was in active management of the affairs of the Company, there could not have been any collusion of the other Respondents to forge the signatures of the 9th Respondent herein. Further, I was requested by the Ld. Counsel for the Appellant Banks to examine and compare the disputed signatures and the admitted ones carefully so as to take an independent view with reference to the genuineness of the same. Hence I have carefully examined the disputed signatures in Exs.A3 and A7 through a magnifying glass and was surprised to note the striking similarities of all the signatures.

14. Further, it is relevant to note that the disputed signatures could have been subscribed by 9th Respondent in those documents after 7th Respondent put his signatures in the presence of AW1, the then Chief Manager of the 1st Appellant Bank. A careful scrutiny of the disputed signatures and the signatures of 7th Respondent/4th defendant would reveal unmistakably that the disputed signatures were put over and above the bottom loops of the letters “Y” and “J” of the signatures subscribed by the 7th Respondent. Hence as per the admission of the 7th Respondent in his Reply Statement, 9th Respondent was present and subscribed the disputed signatures after 7th Respondent put his signatures in the disputed documents Exs.A3 and A7. On a careful consideration of the above circumstance, coupled with admission made by the 9th Respondent in his Affidavit Ex.D1, that sketch pen could have been used to subscribe those signatures, I come to the irresistible conclusion that the 9th Respondent subscribed those signatures with a sketch pen intentionally so as to make them different from his other signatures in order to delay and defeat the claim of the Appellant Banks. In the light of the ratio of the decisions referred to above, I come to the irresistible conclusion that the abundance of evidence, circumstances and probabilities demonstrate that the opinion of the experts have no probative value in this case.

15. It is axiomatic that in the normal course of events men may lie, but circumstances may not falter. In this context, as has been rightly argued by the Ld. Counsel for the Appellants, the 1st Respondent Company represented by the 2nd Respondent, since deceased, as Chairman and Managing Director, had not only admitted their liability, but also pleaded before the DRT in the Reply Statement to consider reduction in the rate of interest claimed by the Banks and also to issue direction to all the contesting Respondents to explore the possibility for settlement of the Banks’ claim. As has been rightly pointed out by the Ld. Counsel for the Appellant Banks, if really the 9th Respondent had not signed in Exs.A3 and A7 along with other signatories to the said documents, the 2nd respondent as Chairman and Managing Director of the 1st Respondent Company would not have admitted the liability and also sought direction from the DRT to the other Respondents to consider the proposal for settlement of the Banks’ claim.

16. Moreover, Legal Representatives of the 2nd Respondent, Respondents 3 to 6 impleaded after his demise, settled the claim to the extent of their liability vis-à-vis the liability of the deceased 2nd Respondent by means of a Joint Memo dated 28.11.2002 and accordingly the OA against them was disposed of by the DRT. Hence such subsequent conduct on the part of the Legal Representatives of the deceased 2nd Respondent would also go a long way to show and prove that the plea putforth by the 9th Respondent pleading forgery of Exs.A3 and A7 is only an after-thought defence trotted out by him subsequently. Similarly, the Defendants 3 and 4 /Respondents 7 and 8 herein have categorically admitted in their Reply Statements the loan transactions as also the execution of the documents as guarantors and it is the 3rd defendant /Respondent No.7 herein, who has disputed the rate of interest as excessive. Therefore, the above circumstances and probabilities would compel any one to come to the irresistible conclusion that the disputed signatures in Exs.A3 and A7 were signed only by the 9th Respondent herein. In view of the above conclusion, I find it difficult to subscribe to the argument of the Ld. Senior Counsel Mr. R. Gandhi, appearing for the 9th Respondent in this respect. It follows necessarily that the finding rendered by the DRT on this aspect of the matter has to be necessarily reversed and is accordingly ordered.

17. Ld. Counsel for the Respondents have strongly relied on the decisions 1) S.P. Chengalvaraya Naidu (Dead) by LRs. Vs. Jagannath (Dead) By Lrs. and Ors. [(1994) 1 SCC Page-1], and 2) James Graham and Co. (Timber) Ltd. Vs. Southgate Sands and Ors. (O’Connor LJ) - [1985] 2 All ER Page 344, for the position that the Judgement or decree obtained by fraud is a nullity and can be questioned even in collateral proceedings. Hence they have urged that the Appellant Bank is not entitled to any relief on the basis of the forged documents Exs.A3 and A7. In answer to such contentions of the Respondents’ side, Ld. Counsel for the Appellant Banks has rightly contended that since the said documents Exs.A3 and A7 are true and genuine, the ratio laid down in the said decisions are not applicable to the facts of the present case.

18. On the contrary, Ld. Counsel for the Appellant Banks has cited the decision Pan Global Ltd. Vs. Silver Tech International Ltd. and Ors. rendered by the High Court of Hong Kong Special Adminstrative Region Court of Appeal in Civil Appeal No.377/2005 dated 25.7.2006, wherein the above Judgement [1986] 1 QB 80 in James Graham and Co. (Timber) Ltd. Vs. Southgate Sands and Ors., had been referred to while rendering the decision. In the said case, it was pleaded that the guarantor who had entered into the Agreement of guarantee are bound by the terms of the same, even though one guarantor raised a defence that he had not signed the Guarantee Agreement. It is no doubt true that the above Judgements were rendered by foreign Courts and in my opinion, the latter one cited by the Ld. Counsel for the Banks deserve persuasive credibility for the simple reason that the ratio had been laid in that decision on the basis of the Judgement rendered by Scott LJ in Norwich and Peterborough Building Society Vs. Steed [1993] Ch 116 at 125 G-H., which reads as follows :-

“A person who signs a document at the request of another puts into circulation a document on which, depending on its contents, others may rely. Where a fraudster has tricked first, the signer of the document, in order to induce the signature, and then some third party, who is induced to rely on the signed document, which of the two victims, is the law to prefer? The authorities indicate that the answer is, almost invariably, the latter. The signer of the document has, by signing, enabled the fraud to be carried out, enabled the false document to go into circulation.”

19. As has been rightly contended by the Ld. Counsel for the Banks, Respondents 7 to 9 being the Directors of the 1st Respondent Company represented by the Chairman and Managing Director, the 2nd Respondent, since deceased, cannot raise any contention over and above the defence putforth by the 1st Respondent in the pleadings and that the Respondents 7 to 9 being the Directors of the 1st Respondent Company are entitled to no more than a reasonable return for their investment in the Company. Therefore, Ld. Counsel for the Appellant Banks has urged that since the 2nd Respondent representing the 1st Respondent Company in his capacity as Chairman and Managing Director have admitted the liability, but pleaded concession only with reference to the interest charged by the Bank, the argument now putforth by the Respondents’ side has no force. He has relied on the decision National Textiles Workers’ Union etc. Vs. P.R. Ramakrishnan and Ors. [AIR 1983 SC 75] in support of his submission. Moreover, he has also pointed out that the Respondents 7 and 8 have also admitted their liability in their pleading, but they have only made allegations against the other Respondents with reference to the management of the Company, which cannot be the basis for raising any dispute before the DRT. It is further contended that the 10th Respondent being the holding Company of the 1st Respondent Company and Corporate guarantor, had also admitted the liability except making certain allegations against the Respondents 7 and 8 with reference to extraneous matters not relating to the dispute under consideration. Hence he has strenuously contended that settled things cannot be unsettled by the Respondents 7 to 9 by making allegations in their pleadings without any basis and that too with reference to the inter se family dispute regarding the properties owned by the Respondents’ family.

20. Further, Ld. Counsel for the Respondents has made a feeble attempt to show that various payments made by the 1st Respondent Company have not been reflected in the Statement of Accounts produced in the case. In this context, Ld. Senior Counsel Mr. R. Gandhi appearing for the 9th Respondent has placed strong reliance on the decision in Central Bank of India Vs. Ravindra and Ors. [AIR 2001 SC 3095] rendered by the Hon’ble Supreme Court wherein the ratio laid down in Para-56 is referred to support his contention that proper accounts had not been filed by the Appellants. The principle of law enunciated in the said decision reads as under :-

“A statement of account shall be filed in Court showing details and giving particulars of debit entries, and if debit entry relates to interest then setting out also the rate of, and the period for which, the interest has been charged. On the Court being prima facie satisfied, if a dispute is raised in that regard, of the permissibility of debits, the onus would be on the borrower to show why the amount of debit balance appearing at the foot of the account and claimed as principal sum cannot be so accepted and adjudged. This practice would narrow down the scope of controversy in suits filed by banking institutions and enable an expeditious disposal of the suits, the issues wherein are by and large capable of being determined by documentary evidence.”

21. On the contrary, the Appellants’ Counsel has relied on extracts of accounts Exs.A14 and A15 coupled with the objections filed by the Banks in IA-16, marked as Ex.A18, in support of his contention that the Banks had not only filed proper accounts before the DRT, but also such accounts had been subsequently acknowledged by the Respondents 1 and 2. Similarly he has referred to Ex.A17, the Statement of Accounts showing details of credits given by the Banks received out of the sale proceeds realised from the Company. He has also submitted that the 1st Respondent Company in its Reply Statement admitted the liability, but in the Affidavit Ex.D13 filed by DW2 on behalf of the Company, it is alleged that the payment made by the Company to the Banks have not been reflected in the Statement of Accounts produced by the Banks. However, in view of the evidence of AW1 and AW2 adduced on behalf of the Banks, he has argued further that the accounts relating to the loan transactions had been proved beyond any doubt as there was no cross-examination of the said witnesses on that aspect by the 1st Respondent.

Hence this Tribunal is of the considered opinion that the contention of the Ld. Counsel for the Respondents in relation to the accounts produced by the Appellant Banks cannot be countenanced for the reason that such plea was not raised by the Company in the Reply Statement, but was only projected in the course of evidence of DW2 and therefore, this Tribunal is of the view that it is only an after thought. It follows necessarily that the Statement of Accounts produced by the Appellant Banks vide, Exs.A14 and A15 is held as proved in view of the evidence, facts and circumstances of the case.

22. In view of the above circumstances of the case and the finding that the said documents Exs.A3 and A7 are true and genuine and have not been forged, this Tribunal is inclined to accept the submission made by the Ld. Counsel for the Banks. In any view of the matter, Respondent No. 2, and Respondents 7 to 9 are bound by the Guarantee Agreements referred supra and therefore, the claim of the Appellant Banks has to be upheld on this aspect of the matter.

23. Having regard to the above facts and circumstances of the case, the points are answered accordingly in favour of the Appellant Banks as under :-

1) The Appellants have proved the execution of the Sanction Letter, Guarantee Agreement, Exs.A3 and A7 by the 9th Respondent herein in accordance with law;

2) The impugned Order passed by the DRT with reference to the execution of the Guarantee Agreement by the 9th Respondent has to be reversed as prayed for;

3) The Respondents 3 to 6 as Legal Representatives of the deceased 2nd Respondent have discharged their liability to the Appellant Banks and the Respondents 7 to 9 are personally liable for the outstanding amount due to the Appellant Banks.

24. For the aforesaid reasons, the Appeal is ordered as prayed for with cost of Rs.5000/- throughout by modifying the impugned Order passed by the DRT, Bangalore, in OA-939/1997 dated 31.1.2007, and consequently the OA is allowed as prayed for against Respondents 1, 7 to 9 (Defendants 1, 3 to 5). In other respects, the impugned Order is confirmed. The contesting Respondents are directed to pay the said sum of Rs.5000/- to the Indian Red Cross Society (K), No.26, Red Cross Bhawan, 1st Floor, Race Course Road, Bangalore-560 001. Cost Memo to be filed within two weeks.


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