PATEL HARILAL CHATURBHAI v. ADARSH CO-OPERATIVE BANK LTD
2021-03-26
BIREN VAISHNAV, VINEET KOTHARI
body2021
DigiLaw.ai
ORDER : BIREN VAISHNAV, J. 1. Patel Haribhai Chaturbhai and Patel Ghanshyambhai Lavjibhai – present Appellants have approached this Court by way of the present Letters Patent Appeal challenging the oral judgement dated 28.06.2016 passed by the learned Single Judge in Special Civil Application No. 1497 of 2007. By the oral Judgement under challenge, the learned Single Judge dismissed the petition of the Appellants confirming the Order passed by the Gujarat State Cooperative Tribunal. 2. The Appellants were the original Petitioners who had challenged the order dated 04.10.2006 passed by the Gujarat State Cooperative Tribunal whereby the Judgement and Award dated 10.03.2003 passed by the Board of Nominees, Ahmedabad in Lavad Suit No. 1970 of 2002 has been confirmed. The learned Single Judge briefly recorded the chequered history of the case and for the benefit of the present Judgement, the facts as reproduced in para 2.1 of the judgement of the learned Single Judge reads as under: 2.1 The respondent-Bank had advanced a loan of Rs.20,00,000/ to a firm named S.B.Traders (“the Borrower”, for short). It is the case of the petitioners that in respect of the said loan transaction, they consented to become guarantors for an amount of Rs.2,50,000/ only. The Borrower failed to repay the loan advanced, therefore, the respondent Bank filed the abovementioned Lavad case before the Board of Nominees, Ahmedabad, for the recovery of Rs.28,56,848/ with running interest at the rate of 22.50% with effect from 01.06.2002. The Bank prayed for a decree of recovery of the aforesaid sum from all the defendants of the suit, including the petitioners, who were arrayed as defendants Nos.4 and 5, respectively. In the said suit, the petitioners preferred an application for leave to defend vide Exhibits18 and 23. By an order dated 16.12.2002, the Board of Nominees granted conditional leave to defend to each of the petitioners, on the payment of 13.50% of the suit claim. Thereafter, by a judgment and award dated 10.03.2003, the Board of Nominees decreed the suit in favour of the respondent-Bank, directing the defendants, including the present petitioners, to pay the said amount with running interest at the rate of 22.50% per annum. The petitioners preferred Review Applications Nos.82/2003 and 83/2003 before the Board of Nominees for recalling the judgment and award dated 10.03.2003 as, according to them, it was passed in the absence of the petitioners and their advocates.
The petitioners preferred Review Applications Nos.82/2003 and 83/2003 before the Board of Nominees for recalling the judgment and award dated 10.03.2003 as, according to them, it was passed in the absence of the petitioners and their advocates. The Board of Nominees granted an interim stay of the said judgment and award, by an order dated 12.05.2003. Thereafter, the applications preferred by the petitioners were rejected by an order dated 17.12.2003. The petitioners preferred application No.68/2004 and the other Borrower filed application No.69/2004 against the aforesaid judgment and award of the Board of Nominees, before the Tribunal. Initially, the Tribunal, by an order dated 29.01.2004, granted an interim stay of the impugned judgment and award. Thereafter, this order of the Tribunal dated 29.01.2004, was challenged by the respondent-Bank by preferring a petition, being Special Civil Application No.2224/2004 before this Court. By an interim order dated 23.02.2004, this Court directed the respondents therein, including the present petitioners, to deposit a sum of Rs.5,00,000/ each. The petition was finally disposed of by an order dated 21.09.2004, by noticing that the sum of Rs.5,00,000/ has not been deposited by the petitioners, therefore, there would be no interim relief in their favour against the judgment and order passed by the Board of Nominees and the Bank would be free to initiate recovery proceedings. Meanwhile, the Tribunal, by an order dated 30.06.2004, rejected the application for condonation of delay filed by the petitioners. Against the order dated 30.06.2004, the petitioners again preferred Review Application No.44/2004 before the Tribunal, which came to be allowed by the judgment and order dated 11.04.2005. While doing so, the Tribunal also granted a stay of the judgment and award passed by the Board of Nominees and directed that the appeal of the petitioners be registered. Being aggrieved by the above judgment dated 11.04.2005 passed by the Tribunal, the respondent-Bank approached this Court by filing Special Civil Application No.8109/2005. By an order dated 09.05.2005, this Court disposed of the said petition by directing the present petitioners to deposit the sum of Rs.5,00,000/ each with the respondent-Bank by 18.07.2005. It was further directed that upon failure to do so, the stay order granted by the Tribunal would automatically stand vacated. This Court also directed the Tribunal to decide the application for condonation of delay as well as the appeal, in accordance with law, without being influenced by the order passed by this Court.
It was further directed that upon failure to do so, the stay order granted by the Tribunal would automatically stand vacated. This Court also directed the Tribunal to decide the application for condonation of delay as well as the appeal, in accordance with law, without being influenced by the order passed by this Court. The petitioner preferred Letters Patent Appeal No.1128/2005 before the Division Bench of this Court against the above order, which ultimately came to be withdrawn, by an order dated 24.08.2006. By the impugned judgment of the Tribunal dated 04.10.2006, the appeal was partly allowed only qua another Guarantor, namely, Madhuben Vishnubhai Agrawal, who is not before this Court. The matter was remanded to the Board of Nominees for fresh consideration. However, insofar as the present petitioners are concerned, the application for condonation of delay as well as the appeal were rejected by the Tribunal. Aggrieved thereby, the petitioners have approached this Court by way of the present petition.” 3. Briefly stated, it was the case of the Appellants who were the original petitioners before the learned Single Judge that they had consented to become guarantors for a loan advanced by the Deesa Cooperative Bank, later known as Adarsh Cooperative Bank Limited of Rs. 20 lakhs to a firm named S.B. Traders. According to the Petitioners, though the loan advanced by the Bank to S.B. Traders was Rs. 20 lakhs, they had consented to become guarantors only for an amount of Rs. 2.50 lakhs. On the borrower failing to repay the loan, the Bank had filed a Lavad Suit wherein the Petitioners – Appellants were defendants no. 4 and 5. The Suit was decreed on 10.03.2003 directing the defendants including the appellants to pay the amount of Rs. 28,56,848/with running interest at the rate of 22.50% per annum. Finally, the Tribunal by its judgement and award dated 04.10.2006 confirmed the decree of the Board of Nominees. 4. The case of the petitioners before the learned Single Judge was that the petitioners were not at all liable to the amount of guarantee of the loan of Rs. 20 lakhs. It was their case as reiterated by learned Senior Counsel Mr. B.S. Patel for the appellants that their liability was limited to an amount of Rs. 2.50 lakhs only and the Tribunal as well as the learned Single Judge ought to have appreciated this fact. According to Mr.
20 lakhs. It was their case as reiterated by learned Senior Counsel Mr. B.S. Patel for the appellants that their liability was limited to an amount of Rs. 2.50 lakhs only and the Tribunal as well as the learned Single Judge ought to have appreciated this fact. According to Mr. Patel, there was no evidence on record to suggest that the petitioners had stood guarantee for the full amount of Rs. 20 lakhs for the loan that was advanced to S.B. Traders. The contention of the Bank before the learned Single Judge was that even in the written statement filed by the petitioners in the Lavad Suit, no defence was taken or a contention was raised that their liability was limited to Rs.2.50 lakhs only. The petition was dismissed. Hence the appeal. 5. Mr. B.S. Patel, learned Senior Advocate for the appellants would contend that the learned Single Judge ought to have appreciated the fact that the liability of the petitioners was only to the tune of Rs.2.50 lakhs and therefore the appellants could not have been saddled with any amount more than Rs.2.50 lakhs. Mr. Patel would invite the attention of the court to the interim orders passed by the Court during the pendency of the petition, especially, the order dated 11.05.2007 by which the Bank was directed to depute a responsible officer with the original record of the loan transaction in order to satisfy the Court regarding the contention of the Petitioners that their liability as guarantors was only limited to the tune of Rs. 2.50 lakhs. The bank failed to do so. 6. Mr. Pravin Panchal, learned counsel appearing for the bank would defend the order of the learned Single Judge and submit that evidently the document of loan signed by S.B. Traders was for a loan of Rs. 20 lakhs and therefore the guarantors – appellants herein had stood guarantee for an amount of Rs. 25 lakhs as the loan amount that was ultimately advanced was Rs. 25 lakhs. 7. Considering the issue on hand, the court while hearing the appeal, on 18.02.2021, passed the following order: “1. Learned Senior Counsel Mr. Bharat S. Patel for the Appellant, after arguing for some time, prays for some more time to produce the Proof of Deposit of Rs.2,50,000/, as noted by the Coordinate Bench in the order dated 25.07.2016 in the present Letters Patent Appeal No.623 of 2016.
Learned Senior Counsel Mr. Bharat S. Patel for the Appellant, after arguing for some time, prays for some more time to produce the Proof of Deposit of Rs.2,50,000/, as noted by the Coordinate Bench in the order dated 25.07.2016 in the present Letters Patent Appeal No.623 of 2016. The claim of the Appellant – Petitioner is also that there is no Record with the Respondent – Adarsh Cooperative Bank Ltd., which indicates that the liability of the Guarantors, the present Appellants – Petitioners, is beyond a sum of Rs.2,50,000/. 2. Mr. Bharat S. Patel, learned Senior Counsel for the Appellant, has drawn our attention to the documents now produced as Annexure-R/ 1 by the Respondent – Bank in pursuance of our previous order dated 01.02.2021, in which only a sum of Rs.2,50,000/in the Consent Letter of the Guarantor, is indicated. Therefore, he submits that the liability of the Appellants – Petitioners, being Guarantors for M/s. S.B. Traders, cannot exceed beyond Rs.2,50,000/, though the Loan Application signed by the Borrower for loan taken from the then Shree Deesa Nagarik Sahakari Bank Limited, which later on merged with Adarsh Cooperative Bank Ltd., shows that loan was applied for a sum of Rs.25 Lakhs. 3. This contention, prima facie, appears to be correct and therefore, we have again requested Mr. Pravin Panchal, learned Counsel appearing for the Respondent – Bank to produce before the Court, if there is any Document available with the Respondent Bank, signed by the present Appellants – Petitioners/Guarantors, for establishing the Guarantors' their liability beyond a sum of Rs.2,50,000/towards the loan taken by M/s. S.B. Traders. He may also produce the Documents about the recovery so far made from the Original Borrower, M/s. S.B. Traders, as during the course of arguments, he has submitted that a sum of Rs.14 Lakhs has been recovered from the Original Borrower – M/s. S.B. Traders. The Documents for the same may also be produced before this Court. 4. List on 23.03.2021. 5. Interim relief granted earlier to continue till then. 6. Civil Application No.1 of 2021, for bringing legal heirs on record is allowed. The Cause Title may be amended accordingly. ” 8. As recorded in the order reproduced hereinabove, Shri Varunbhai Prajapati s/o Naranbhai Prajapati filed an Affidavit on behalf of the Bank. Mr.
4. List on 23.03.2021. 5. Interim relief granted earlier to continue till then. 6. Civil Application No.1 of 2021, for bringing legal heirs on record is allowed. The Cause Title may be amended accordingly. ” 8. As recorded in the order reproduced hereinabove, Shri Varunbhai Prajapati s/o Naranbhai Prajapati filed an Affidavit on behalf of the Bank. Mr. Panchal, learned Counsel for the Bank would take us to para 2 of the Affidavit and indicate that the borrower had demanded a loan form/application for an amount of Rs. 25 lakhs. The letter of guarantee was signed by the appellants – guarantors to accept the full liability of amount of Rs. 25 lakhs but it is by mistake that the amount written was Rs. 2.50 lakhs. For the perusal of the court, he invited the attention of the Court to the documents of guarantee (page 389). The consent letter (page 331) would indicate that for the loan to be advanced, the Appellants had stood guarantee for only Rs. 2.50 lakhs. Though Mr. B.S. Patel, learned Senior Counsel would contend that the signatures on the guarantee form were not of the appellants, we are not impressed by this submission. 8.1 Evidently, therefore, from the guarantee letter produced on record with the Affidavit filed on 18.03.2021, the stand of the Bank is that the consent letter of the guarantors mentioned a figure of Rs.2.50 lakhs as the liability as guarantors, however, it was a mistake on the part of the Bank to have recorded this amount. In the opinion of this Court, the contention of the Bank that such an amount was recorded in the consent letter by a mistake appears to be a clear afterthought. Admittedly, viewing the letter would indicate that the liability of the appellants for guaranteeing the loan amount was limited only to the extent of Rs. 2.50 lakhs. 9. Based on this material therefore, the only conclusion that can be drawn is that the liability of the appellants was limited to Rs. 2.50 lakhs only. Therefore, at best what the appellants can be directed to pay is Rs.2.50 lakhs to the Bank in consonance with the consent letter of guarantee that they had given for the loan amount in question. 10. The appeal is accordingly allowed. The oral Judgement of the learned Single Judge dated 28.06.2016 is quashed and set aside.
2.50 lakhs only. Therefore, at best what the appellants can be directed to pay is Rs.2.50 lakhs to the Bank in consonance with the consent letter of guarantee that they had given for the loan amount in question. 10. The appeal is accordingly allowed. The oral Judgement of the learned Single Judge dated 28.06.2016 is quashed and set aside. The Appellants are directed to pay an amount of Rs. 2.50 lakhs towards their liability as guarantors for the loan amount to be paid to the Respondent Bank. It is clarified that if any amount has already been paid, the same may be adjusted against Rs.2.50 lakhs and the net remaining amount thereafter shall be paid by the Appellants to the Respondent Bank within four weeks from the date of receipt of the writ of this order. No costs. Civil Application is disposed of.