1. This petition is directed against the common order dated 22.12.2011 passed by Gujarat Cooperative Tribunal in Revision Application Nos. 438 of 2006 and 439 of 2006 and against order dated 30.10.2006 passed by Board of Nominees, Rajkot in Lavad Suit No.150 of 2005.
1.1. By the impugned order dated 22.12.2011 the learned Tribunal has confirmed the order dated 30.10.2006 passed by the Board of Nominees and rejected the Revision Application with direction to the Board of Nominees to hear and decide the Lavad Suit as early as possible since the suit has already become six years old.
2. The petitioner i.e. the original defendant No.3 in the Summary Lavad Suit No.150 of 2005 is aggrieved by the said order.
3. So far as the order dated 30.10.2006 passed by the Board of Nominees is concerned, the said order is an order passed below Exh.19, Exh.37, Exh.39, Exh. 4, Exh.26, Exh.40, Exh.48 and Exh.61 whereby the learned Tribunal has allowed Mr. D.R.Kiyada, M.R.Kiyada, B.R.Kiyada as opponent in the Lavad Suit and also allowed Mr. M.M.Patel to be impleaded as party respondent on the condition to place on record the registered agreement to sale related to land bearing 60/2. Certain other direction is also attached so far as Exh.48 is concerned whereby the parties are directed to disclose respective shares in the properties mentioned in the order. So far as the original opponent Nos. 2 and 3 in the suit (which includes present petitioner being the opponent No.3 in the suit) the learned Tribunal has granted leave to defend on condition to deposit, within 15 days, 10% of Rs.1.10 crore with the plaintiff Bank and further proceedings of the suit are ordered to be continued.
3.1. From the petition and submissions made by learned Senior Counsel for the petitioner it has emerged that so far as petitioner is concerned, in present petition, he is aggrieved by the direction passed below Exh.4 and Exh.26 by the Board of Nominees and confirmed by the Tribunal.
3.2. Mr. D.C.Dave, learned Senior Counsel has appeared with Mr. Satyam Chhaya, learned Advocate for the petitioner.
3.3. So far as the relevant facts involved in and giving rise to present petition are concerned, it emerges from the record that present respondent No.3 Bank has instituted Lavad Suit (Summary Case) No.150 of 2005 for recovery of Rs.1,55,27,946.61 due and payable to it in respect of the loan facility granted in the name of a company viz. Shri Manibhadra Ispat Ltd. / its Directors.
3.4. In view of defaults in repayment of the loans the plaintiff Bank appears to have invoked provisions under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitization Act, for short) claiming, inter alia, that it has already issued notice under Section 13(2) of the said Act, against the company and the Directors. The Bank also clarified in the plaint that though, in view of the settled legal position, upon initiation of action under the Securitization Act the proceedings before BIFR would abate, out of abundant caution and with a view to avoiding any objections or complication in the suit proceedings the Bank had, while reserving its right to institute appropriate proceedings against the company, not impleaded the company and preferred the suit against the Directors / coapplicants and the Guarantors.
3.5. In the said Summary Lavad Case filed by present respondent Bank the petitioner herein i.e. original defendant No.3 requested for leave to defend and the learned Board of Nominee granted conditional leave to defend to the original defendant Nos. 2 and 3 (original defendant No.3 is present petitioner) as per and on the condition mentioned in the order dated 30.10.2006. The order also deals with Exhs. 19, 4, 37, 39, 26 & 40, 48 & 61.
3.6. The petitioneroriginal defendant No.3 felt aggrieved by the said order therefore the defendant No.3 i.e. present petitioner carried the said order to the learned Tribunal by way of Revision Application No.438 of 2006.
3.7. The learned Tribunal declined to interfere with the said order passed at interlocutory stage and confirmed the said order and disposed of the Revision Application directing the Board of Nominees to hear and decide the suit at early date since though the suit being summary suit, it has already become six years old.
4. The learned Senior Counsel assailed the order and submitted that the directions against the defendant No.3 – present petitioner are unjustified, erroneous and arbitrary. He submitted that the petitioner – defendant No.3 has not availed any loan from the plaintiff Bank (present respondent No.3) and it is the company who availed the loan facility and the petitioner is only a Director in the company. He also submitted that petitioner is not a Guarantor in respect of the said loan and the two Guarantors are party to the suit proceedings and that therefore the direction qua the petitioner to deposit any amount is unjust and unreasonable. The learned Senior Counsel also submitted that when the petitioner – defendant No.3 has not availed any loan from the plaintiff Bank and when he is not a Guarantor, the directions against him are not sustainable. The learned Senior Counsel submitted that he (i.e. the petitioner – defendant No.3) had signed the documents including the loan agreement only as Director of the company and not in his individual – personal capacity and/or as the applicant for the loan and that therefore Director of the company ought not be held personally liable for the dues of the company. Any other contention has not been raised.
5. The petitioner has approached this Court by way of present petition against two concurrent orders.
5.1. Furthermore, the first order dated 30.10.2006 is passed at interlocutory stage of the proceedings of the Lavad Suit and against the said order present petitioner preferred Revision Application which has not been entertained by the learned Tribunal and the order passed by the Board of Nominees is confirmed with direction to the Board of Nominees to hear and decide the Lavad (Summary Suit) as early as possible.
Thus, present petition is preferred at the interlocutory stage of the Lavad (Summary) Suit.
5.2. Besides this, the orders in question are passed in exercise of the discretion.
The defendant No.3 i.e. present petitioner could not demonstrate any illegality or arbitrariness in exercise of discretion by the Board of Nominees in directing the defendant No.3 – present petitioner to deposit the specified amount.
5.3. In the facts and circumstances of the present case, the challenge raised by the petitioner against the impugned orders and the contentions raised on behalf of the defendant No.3 – petitioner are required to be examined in light of the aforesaid aspects.
6. As mentioned above, the learned Senior Counsel for the petitioner contended that the defendant No.3 – present petitioner signed the loan agreement and other documents as a Director of the company and not as the applicant.
6.1. The few facts which emerge from the record and are not in dispute are:
(a) the defendant No.3 – present petitioner has signed the loan agreement and other documents,
(b) the defendant No.3 – present petitioner is a Director in the company,
(c) the loan availed from the plaintiff Bank has not been repaid as per the time schedule and the amounts in question have become overdue,
(d) the plaintiff Bank has invoked provisions under Securitization Act and issued notices under Section 13(2) of the Act to all including the defendant No.3 – petitioner and yet the amounts have not been paid and
(e) the petitioner herein is impleaded as defendant No.3 in the Lavad Suit.
6.2. If the plaint is examined in light of the petitioner’s contention then it emerges that the plaintiff Bank has, in para 3 of the suit, asserted that the defendant Nos. 1 to 3 (which includes the petitioner) have, under the agreement, undertaken and agreed to repay the loan in their individual and personal capacity as well. The averments (free translation) made in para 3 of the plaint reads thus:
“3. The defendant nos. 1 to 3 are directors of M/s. Manibhadra Ispat Ltd., Rajkot and loan borrower from the plaintiff bank. They have also accepted the security of the said loan in the personal capacity. This suit has been filed against the defendant nos. 1 to 3 in the personal capacity. The defendant nos. 4 and 5 have remained as guarantors. Cash credit loan of Rs.50,00,000/ (Rupees fifty lacs only), C.C. Account number thereof is 425 and Machine loan of Rs.1,25,00,000/ (Rupees one crore and twenty five lacs only), loan account number thereof is M.A.C 127, and thus loan all in total Rs.1,75,00,000/ (Rupees one crore and seventy five lacs only) has been borrowed by M/s. Manibhadra Ispat Ltd., Rajkot from the plaintiff bank on 17.10.2002. The defendant nos. 1 to 3, loan borrowers have accepted the liability to pay the said loan on time in the personal capacity of director of the company. The defendant nos. 4 and 5 have remained guarantors in the said loan. Thus, the defendant nos. 1 to 3 have borrowed loan from the plaintiff institution by keeping the defendant nos. 4 and 5 as guarantors. The suit of plaintiff for the recovery of the loan has been filed under section – 99(4) of Cooperative Society Act, 1961 and according to summary procedure. The suit of plaintiff is based on promissory note, guarantor bond, and agreements etc. written agreement/documents. The said all documents have been submitted herewith vide documentary evidence list.”
7. The learned Tribunal has, on consideration and scrutiny of the relevant documents including the loan agreement and other documents related to the loan facility, recorded prima facie finding of fact that the defendant i.e. present petitioner has, accepted and undertaken the liability to repay the loan amount in his individual and personal capacity as well and has signed the documents and undertaking to the said effect.
8. The petitioner herein – original defendant No.3 has, before this Court, assailed the order of the learned Tribunal essentially on the solitary ground that he, i.e. the petitioner – defendant No.3 is not the applicant or the Guarantor and the application for loan facility was not made by him and that therefore he cannot be directed to make any payment or deposit any amount.
8.1. On this count, it is necessary and appropriate to note that the plaintiff Bank has, in the plaint filed before the learned Tribunal has specifically and expressly averred that the said defendants Nos. 1 to 3 (which includes present petitioner, he being original defendant No.3 in the suit) have accepted and undertaken the liability and responsibility for repayment of the loan, as company’s Director as well as in their individual and personal capacity.
8.2. It is also averred that the said defendants Nos. 1 to 3 are the Directors of the company i.e. Manibhadra Ispat Ltd. in whose name loan facility and cash credit facility to the tune of Rs.50,00,000/ and Rs.1,25,00,000/ have been granted and the said three Directors have in their individual and personal capacity undertaken the liability and responsibility for payment of the said amount with interest at agreed rate.
9. Now, when the suit is filed by the plaintiff Bank for recovery of the amount, the original respondent No.3 i.e. present petitioner has claimed that he signed the relevant documents including the loan agreement merely in his capacity as Director and not in his individual and personal capacity.
9.1. As against the said claim of the petitioner herein it prima facie appears from the documents on record that the claim is not supported by the plain reading of some of the relevant documents.
10. The contentions raised by the defendant No.3 – petitioner are such which can be examined after the evidence is recorded and when the Board of Nominee, in such circumstances and facts, has directed, so as to balance the equity and also to maintain balance of convenience, the petitioner to deposit specified amount with the Bank then such order, at this stage, cannot be held to be arbitrary or unjust.
11. In this background it is appropriate to take into account the document at page 89 to 91 of this petition. The said document bears the signature of present petitioner at the end bottom of the document (page 91 of present petition).
11.1. The signature is put below the undertaking and assurance and promise accepting the liability and responsibility of repayment, in individual and personal capacity and as joint and several and liability by the three persons whose signatures are put below the said undertaking and the other two persons who have signed as Guarantors. The two persons whose signatures are put as Guarantors have also been impleaded as defendants in the suit. However, the three signatures immediately below the said written undertaking are of original defendant Nos. 1 to 3 (which includes present petitioner as defendant No.3). On plain reading the undertaking below which the signatures are put by the said three persons including present petitioner clearly reflects what the said three defendants (including the petitioner) have undertaken and stipulated i.e. their undertaking and stipulation to the effect that “we accept all terms and conditions and undertake the joint and several liability to pay the amount individually and jointly.” Likewise, the other document (promissory note) which is dated 17th October 2010 (at page 88 of present petition) also bears signature of the original opponent Nos. 1 to 3 (which includes present petitioner). Similarly the document at page 78 also bears signature of present petitioner and the document at page 76 of present petition also clarifies that the three persons i.e. defendant Nos. 1 to 3 in the suit including present petitioner have signed the document and clarified that they have signed as Director as well as in their individual and personal capacity while the other two persons i.e. Shireshbhai Thakkar and Ajitbhai Thakkar i.e. original opponent Nos. 4 and 5 have signed the documents as Guarantors. Thus, the said documents on plain reading and prima facie give out that the defendant No.3 has accepted the liability and responsibility of repayment of the loan amount in his capacity as Director as well as in individual personal capacity.
Hence, at this stage there is no reason or justification to interfere with two concurrent orders which aim at securing interest of financial institute which balancing equity upon taking into account balance of convenience and strong prima facie case which are overwhelmingly in favour of plaintiff Bank.
12. However, now, when the plaintiff Bank is compelled to file Lavad Suit for recovery of the amounts due and payable to it on account of the failure in repayment of the amounts by the said three opponents and the company, the petitioner i.e. defendant No.3 has come forward with defence that the said documents have been signed only as Director and not in individual and personal capacity.
13. Having regard to the aforesaid aspects, it emerges that the plaintiff Bank made out, before the first Court, strong prima facie case in its favour and also established that the balance of convenience also tilts in its favour. Thus, it appears that if the petitioner’s request is accepted and the direction passed by the Board of Nominees and confirmed by the learned Tribunal is disturbed and set aside then the likelihood of Bank suffering irreparable loss is more than that in the case of the petitioner inasmuch as the amount directed to be deposited by the petitioner can be, by appropriate orders of the Court, directed to be repaid and the petitioner can be compensated in terms of money by appropriate direction including direction to the Bank to return the amount with appropriate rate of interest.
14. Under the circumstances, the order passed by the learned Tribunal, confirming the order passed by the Board of Nominees does not appear to be unjust or arbitrary or perverse and it is not possible to hold that the Board of Nominee and the learned Tribunal have exercised the discretion arbitrarily or with material irregularity and this Court is not inclined to interfere with two concurrent discretionary orders passed at interlocutory stage of Lavad Suit. There is no reason for this Court to exercise jurisdiction and/or discretion.
15. Having regard to the aforesaid aspect and when the learned Tribunal has already directed the Board of Nominee to hear and decide the suit expeditiously, any ground to interfere with the impugned orders is not made out and this Court is not inclined to exercise the limited jurisdiction under Article 227 of the Constitution of India so as to disturb and set aside the impugned orders. The petitions, therefore fail and are hereby rejected.
jani (K.M.THAKER, J.)