1.0 By way of present petitions, the petitioners have challenged the order dated 15.04.2012 passed by the Gujarat State Co-operative Tribunal, Ahmedabad in Review Application No. 6 of 2009 and order dated 13.01.2009 passed by the Gujarat State Co-operative Tribunal, Ahmedabad in Appeal No. 761 of 2002.
2.0 The petitioner of Special Civil Application No.14150/2011 is a sole proprietorship firm and the sole proprietor is Smt. Bharti D. Vakil who availed of bank loan from the respondent bank. The petitioner of Special Civil Application No.14148/2011 viz. Shri Daksh Chimanlal Vakil, is the husband of Smt. Bharti D. Vakil and also guarantor of the aforesaid bank loan.
3.0 According to the petitioner firm, it applied for cash credit facility of Rs.50000/- for business purpose and they have never requested for any further amount or further facility. It is further alleged that the Chairman of the Bank is known to the husband of Smt. Bharti D. Vakil and he misused the funds for the purpose of speculating in stock market.
3.1 However, the respondent bank filed Lavad Suit No.320 of 2002 against both the petitioners claiming a sum of Rs.60,64,925.66. It was the case of respondent bank before the Board of Nominees that the petitioner proprietorship firm applied for cash credit facility of Rs.50,000/- as per its application dated 01.06.1993, that the Board of Directors sanctioned cash credit facility of Rs.50,000/- on 07.06.1993 and that the petitioners requested for renewal of said facility as per their applications dated 04.08.1994, 10.10.1995 and 25.10.1996. It was further alleged that though the sanctioned limit was Rs.50,000/-, lakhs of rupees were transacted in the said account as per orders of Managing Director Shri Devendra Pandya and the Chairman of the Bank Shri Ramesh Parikh and that as on 31.12.2001, a sum of Rs.60,64,925.66 was outstanding in the said account. The learned Board of Nominees, after hearing the parties, passed an order on 19.7.2002 directing the petitioners to make payment in the sum of Rs.60,64,924/- along with interest at the rate of 18% per annum and also awarded costs in the sum of Rs.6000/-.
3.2 The aforesaid order was challenged by way of Appeal No. 761 of 2002 before the Gujarat State Co-operative Tribunal, Ahmedabad wherein the Tribunal partly allowed the appeal reducing the rate of interest from 18% to 15% on 13.01.2009. The petitioners filed an application for review which was rejected by the Tribunal vide order dated 15.04.2010. Hence, these petitions.
3.3 In Special Civil Application No. 14148 of 2011, learned advocate appearing for the petitioners contended that petitioner is the guarantor of a sole proprietorship of Smt. Bharti D. Vakil. A loan was taken by the respondent No. 2 in the name of B.D. Vakil & Company sole proprietor owner of B. D. Vakil & Company.
4.0 Learned advocate appearing for the petitioners contended that Board of Nominees has passed the stereotype order without giving any reasons and the Appellate Court has also not considered the evidence on record.
5.0 Learned advocate appearing for the petitioners further contended that guarantee deed was only for Rs. 50000/-. Therefore, although the limit of the cash credit facility was not increased, the respondent bank cannot make a claim of an amount higher than what was sanctioned limit. She submitted that since the guarantor is in respect of the cash credit facility upto sanctioned limit of Rs.50000/- he cannot be held liable to pay more than Rs.50000/-. According to learned Advocate, both the courts below erred in not considering the fact that the sanctioned amount is only Rs.50,000/- and suit is based on the withdrawal of over sanction without the consent of the petitioners. She therefore submitted that the impugned orders deserve to be quashed.
6.0 Learned Advocate for the petitioner has relied upon a decision in the case of Chandukutty Nambiar V. Raman Nair, reported in AIR 1959 Kerala 176 wherein it is held that a guarantee will only extend to a liability precisely answering the description contained in the guarantee and the principle is that the surety like any other contracting party cannot be held bound to something for which he has not contracted. She has also relied upon a decision in the case of Yarlagadda Bapanna V. Devata China Yerakayya, reported in AIR 1966 Andhra Pradesh 151 wherein it is held that where the liability of the judgement-debtor as undertaken under a security bond is limited to a specific sum,the liability is not co-extensive with the amount that may ultimately be decreed and the undertaking that the judgement-debtor would render himself liable to any amount that might be finally decreed means that the liability would not exceed the specified sum.
7.0 Learned advocate appearing for the respondent Bank submitted that the defendants-present petitioner in the suit had not filed any reply or written statement though they were served by the notice of the Court and time and again adjournment was sought by them and granted by the Court. Ultimately, the recovery suit filed by the Bank came to be decreed by the Board of Nominees on 19.07.2002. He further submitted that the loan is taken in the name of wife of the petitioner and petitioner husband is the guarantor. Therefore, the contention which has been raised by the learned advocate for the petitioner is not proper in view of the fact that joint appeal was preferred by the petitioners before the Tribunal. Therefore, contention of the learned advocate for petitioner that guarantor was liable only to the extent of Rs. 50000/- is not permissible. The defendants have filed the joint appeal and for the first time they filed separate petition before this Court.
8.0 As a result of hearing and perusal of the record, certain aspects are not in dispute. The petitioners have not filed any reply or written statement in the suit though they were served by the notice of the Court and they deliberately tried to delay the proceedings before the Board of Nominee. The respondent No. 1 bank has gone into liquidation only because of such leniency.
9.0 From the record it appears that the petitioners are very close to the then Chairman and the then Managing Director of the respondent Bank and in collusion with them and under their instructions borrower firm used to withdraw and utilize excess amount from the cash credit account. It cannot be said that all the transactions were done without the knowledge of the petitioners.
10.0 Affidavit in reply has been filed wherein in paras 8, 9 and 10 of Special Civil Application No. 14148 of 2011 it is stated as under:
"8.
It is submitted that the petitioner had stood as guarantor of a sole proprietorship Firm of Smt. Bhartiben D. Vakil (respondent No.2) as its proprietor. The petitioner also happens to be the husband of the Proprietor of the borrower firm. The said firm had applied for loan/credit facility from the respondent bank on 01.06.1993 for the purpose of development of its business. Accordingly, after accepting the usual and requisite documents from the borrower and the petitioner-guarantor, the bank had granted cash credit facility to the borrower firm to the extent of Rs. 50000/- on 07.06.1993. The credit facility entailed interest @ 17.5% cumulatively. The borrower had offered guarantee of the sole proprietor as well as of the present petitioner. Such facility came to be renewed thereafter from time to time after execution of requisite documents. The petitioner and respondent No.2 had offered, as security, properties being (I) flat No. 13-B, Kirtisagar Flats, Jodhpur, Ahmedabad and (ii) flat No .F/9 Bankim Co-op. Housing Society, Azad Society, Ambawadi, Ahmedabad and created First Charge of the respondent bank over the said properties. The petitioner and/or the proprietor of the petitioner firm have not denied execution of the above referred documents by them. The present petitioner had signed all the documents including Guarantee Deed as well as other ancillary documents guaranteeing the repayment of outstanding dues by the borrower firm and/or by him on behalf of the firm.
9. It is submitted that since the borrower firm was given cash credit facility upto Rs. 50000/-, it could not have utilized and/or withdraw any amount exceeding the said limit. However, it was found that as the petitioner herein, was having close relations with the then Chairman Mr. Ramesh Parikh (since deceased) and the then Managing Director of the bank in collusion with him and under his instructions, the borrower firm used to withdraw and utilize excess amount from the cash credit account. At times, the amount exceeded upto almost Rs. 40 lakhs to Rs. 50 lakhs. It was also found that the borrower firm was never regular in either repayment of such withdrawl amount or in maintaining the credit limits. On 31.12.2001, there was a debit balance of Rs. 60,64,925.66 in the C.C. Account of the borrower firm.
10. In the above circumstances, the respondent bank was constrained to file a recovery suit being Lavad Case No. 320 of 2002 against the petitioner and respondent No.2. Later on, it was also found that the amounts withdrawn and utilized by the respondent No.2 from the C.C account were used for dealing in stock market through the Stock Broking Firm, which was administered by then Chairman, Mr. Ramesh Parikh, there were inter-linked transactions between the petitioner firm and the firm of Mr. Ramesh Parikh. It was therefore, found that it was calculated and well designed conspiracy and fraud hatched by the then Chairman, the then Managing Director of the bank and the petitioner and the proprietor of the respondent no. 2 firm to cause huge monetary-loss to the bank. Therefore, the bank had also filed a Criminal Complaint against the concerned persons including the proprietor of the petitioner firm and the petitioner, which was numbered as M.Case No. 11 of 2002. In the said proceedings, the petitioner as well as the proprietor of the respondent No.2 firm were arrested and later on released on bail, whereby Smt. Bhartiben Vakil was directed to deposit Rs. 7. 50 lakhs as one of the conditions for grant of bail."
11.0 It is therefore clear that the petitioners, in collusion with Chairman and Managing Director used to withdraw and utilize excess amount from the cash credit account. It was also found that at times the amount exceeded upto almost Rs.40 lakhs to 50 lakhs. It is also pointed out that the amounts withdrawn and utilized by the petitioner from the C.C. Account were used for dealing in stock market through the Stock Broking firm which was administered by the then Chairman Mr. Ramesh Parikh, there were inter-linked transactions between the petitioner firm and the firm of Mr. Ramesh Parikh. This is nothing but sheer dishonesty and misuse of public money. If the blank cheques were used, it is nothing but negligence on the part of the petitioners by signing blank cheques and without keeping in proper custody. However, it is required to be noted that no reply was filed by the petitioners before the learned Board of Nominees and therefore the contentions remained uncontroverted.
12.0 There is clear misuse of the public money which led to collapse of a bank resulting into monetary loss to the general public. Such defaults will seriously affect the economy of the country and in such cases no leniency can be taken. The learned Board of Nominees and Appellate Tribunal have considered the matter in depth and found that the dues are to the tune of Rs.60,64,925/-. Further it is required to be noted that the petitioners filed joint appeal before the Tribunal and only before this Court separate petitions were filed. Therefore, the contention that the guarantor was not liable cannot be accepted.
13.0 I have also considered the decisions relied upon by the learned Advocate for the petitioners. However, on the facts of the case they are not applicable to the facts of the present case.
14.0 In the premises aforesaid I do not find any merits in the petitions. The same are therefore dismissed with costs quantified at Rs.25000/- each in both the petitions. Notice is discharged.
(K.S.JHAVERI, J.) niru* Top