IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8th DAY OF JULY 2019 PRESENT THE HON’BLE MR. ABHAY S. OKA, CHIEF JUSTICE AND THE HON’BLE MR. JUSTICE H.T. NARENDRA PRASAD WRIT PETITION NO. 24322 OF 2018 (GM-DRT) BETWEEN Smt.V.Girija, W/o.Sri M.Thimma Reddy, Aged about 58 years, No.145, Nagavarapalya, C.V.Raman Nagar Post, Bengaluru – 560 093. ... Petitioner (By Mr.V.Vinod Reddy, Advocate for Sri G.Papi Reddy, Advocate) AND 1. The State Bank of India, Bengaluru City Branch, No.22, J.C.Road, Bengaluru – 560 002, Represented by Its Chief Manager.
2. Sri Shivarama Naidu, S/o.Sri Rama Naidu, Major by age, R/at No.30, 4th Cross, 14th Main Road, Hanumanthanagara, Bengaluru, Pin: 560 019.
3. M/s.Ushodaya Transport, No.55, 8th F Main Road, 3rd Block, Jayangar, Bengaluru – 560 011, Represented by its Partner, Sri D.V.Ramana.
4. Sri D.V.Ramana, S/o.Sri D.Ganapathi Rao, Partner, M/s.Ushodaya Transport, No.2620, 8th A Main Road, 15th Cross, Banashankari Second Stage, Bengaluru – 560 070.
5. Sri K.Bhaskar, S/o.Late Sri K.Radhakrishna, Partner, M/s.Ushodaya Transport, No.5-2, “Snehasri Apartments”, Flat No.52/54, Methodist Colony, Begumpet, Hyderabad Andhra Pradesh Pin: 500 016.
6. Smt.G.Shyamala, W/o.Sri G.Radhakrishna, Major by age, No.275/A, 11th Main, 5th Block, Jayanagar, Bengaluru – 560 011.
7. Smt.N.Roopa, W/o.Sri G.Umesh, Major by age, No.46/1, 4th Cross, Ganesha Block, T.B.Kaval, Mahalakshmi Layout, Bengaluru – 560 096.
8. Sri G.Umesh, Major by age, No.46/1, 4th Cross, Ganesha Block, T.B.Kaval, Mahalakshmi Layout, Bengaluru – 560 096.
9. Sri V.Venkatapathi, Major by age, No.62/25, 8th F Main Road, 3rd Block, Jayanagar, Bengaluru – 560 011. ... Respondents (By Sri. S.Rajashekar, Advocate for R1) This writ petition is filed under Articles 226 and 227 of the Constitution of India praying to call for the concerned records and to quash the order dated 30.01.2013 passed by the Debt Recovery Appellate Tribunal, Chennai in RA No.108/2011 vide Annexure-B in so far as fixing liability on the petitioner is concerned, and the order dated 03.03.2017 passed by the Debt Recovery Appellate Tribunal, Chennai on Review Application on I.A.No.176/2013 in R.A.No.108/2011 vide Annexure-C and order dated 05.12.2017 passed by the Debt Recovery Appellate Tribunal, Chennai on Review Application in I.A.No.621/2017 in RA No.108/2011 vide Annexure D and etc.
This writ petition, coming on for orders, this day, Chief Justice made the following:
ORDER Heard learned counsel appearing for the petitioner.
2. The challenge in this writ petition under Article 226 of the Constitution of India is to the orders passed by the Debt Recovery Appellate Tribunal (for short, ‘the DRAT’) dated 30th January 2013 and 5th December 2017.
3. It is not in dispute that the third respondent, which was at the relevant time, a proprietary concern of the fourth respondent, had obtained certain financial facilities from State Bank of India and that the petitioner stood as a guarantor. In fact, it is an admitted position reflected from the averments made in the review petition filed by the petitioner on which the second impugned order has been passed that the petitioner guaranteed repayment of the amount by the third respondent to the extent of more than Rs.45 lakhs and the petitioner had created an equitable mortgage by deposit of title deeds with the Bank. As the third respondent defaulted, application was filed by the Bank before the Debts Recovery Tribunal (for short, ‘DRT’). As relief was not granted by the DRT against the appellant, the Bank preferred an appeal before the DRAT, which was allowed by a first impugned order dated 30th January 2013. The order passed by the DRT was modified and even the present petitioner and another guarantor were held liable to satisfy the entire dues of the principal borrower. The contention of the petitioner was that there was a novation of contract without the consent of the appellant in as much as after conversion of third respondent into a partnership firm of which, the fourth respondent was a partner, a facility of higher amount was granted to the partnership firm. Based on the said contention, the petitioner had applied for review of the order of DRAT. By the second impugned order, the review petition was partly allowed and the liability of the petitioner was held to be limited to Rs.45 lakhs.
4. The learned counsel appearing for the petitioner submitted that even assuming that the proprietor of the proprietary concern and one of the partners of the partnership firm are the same, in view of modification of the terms and conditions, on which loan/advance was granted to the proprietary concern, without consent of the present petitioner, appellant stands discharged as a guarantor. Reliance was placed on Sections 123 and 124 of the Contract Act.
5. After having perused the impugned order and after considering the submissions of the learned counsel appearing for the petitioner, we find that, admittedly, an equitable mortgage was created by the petitioner for guaranteeing repayment of a sum of Rs.45 lakhs out of the due amount advanced to the third respondent, which was a proprietary concern. In fact, the title deeds deposited by way of an equitable mortgage remain deposited with the State Bank of India even as of today.
6. We may note here that there is a separate transaction between the bank and the newly created partnership firm. It is not as if that the terms and conditions on which advance was granted by the bank to the proprietary concern were modified without notice to the petitioner.
7. Therefore, in the review petition, the DRAT has confined the liability of the petitioner to a sum of Rs.45 lakhs. We find no error in the view taken by the DRAT in the impugned order passed on appeal as modified by the second impugned order in the review petition.
Accordingly, petition is dismissed.
Sd/- CHIEF JUSTICE Sd/- JUDGE Cm/-