1985 (11) TMI 206 - HC - Companies Law

Issues Involved:
1. Authority of Mr. S.K. Kalia to file the suit.
2. Compliance with Section 125 of the Companies Act regarding registration of charges.
3. Amount due from the defendants.
4. Entitlement to interest and applicable rates.
5. Requirement to sell hypothecated goods before filing the suit.
6. Plaintiff's responsibility for the closure of defendant No. 1's business.
7. Infructuousness of Petition No. 75 of 1983.
8. Liability cessation of defendants Nos. 3 and 5 to 8.
9. Misjoinder of parties and causes of action.
10. Relief.

Issue-wise Detailed Analysis:

Issue No. 1: Authority of Mr. S.K. Kalia to file the suit
The court held that Mr. S.K. Kalia, as the branch manager, was authorized to file the suit under the State Bank of India General Regulations, 1955. Regulation 76 authorized branch managers to sign documents, and Regulation 77 allowed them to file suits. This was supported by precedent cases.

Issue No. 2: Compliance with Section 125 of the Companies Act regarding registration of charges
The court found that the plaintiff had submitted the particulars of the charges in Form 8 to the Registrar of Companies. Since no defects were pointed out by the Registrar, the charges were deemed to be registered even though they were not actually registered. The court cited previous judgments to support this conclusion.

Issues Nos. 3 and 8: Amount due from the defendants and liability cessation
The court determined that the bank provided various loan facilities to the company, which were secured by agreements, guarantee deeds, promissory notes, and mortgage deeds. The company and guarantors were liable for the amounts due. The court found that the company owed Rs. 55,04,645.72 as of December 31, 1977, and the guarantors were liable as per the agreements. The court rejected the arguments that the defendants were discharged from liability due to the amalgamation of accounts or the acceptance of new guarantors.

Issue No. 4: Entitlement to interest and applicable rates
The court held that the plaintiff was entitled to interest as per the agreements, which allowed for varying rates above the State Bank of India advance rate. However, since the plaintiff failed to prove the bank rate, the court applied a minimum rate of 15.5% per annum. For the period from the date of the suit till realization, the court granted interest at 12% per annum.

Issues Nos. 5, 6, 7, and 8A: Requirement to sell hypothecated goods, plaintiff's responsibility for closure of business, infructuousness of Petition No. 75 of 1983, and misjoinder of parties
These issues were not pressed by the defendants and were decided against them.

Issue No. 9: Relief
The court passed a consolidated preliminary decree for recovery of Rs. 69,19,208.76 with costs and interest at 12% per annum from the dates of the suits till realization. The liability of each defendant was limited to specific amounts, and the decretal amount could be realized from their persons or mortgaged/hypothecated properties. The court provided specific instructions for the realization of the decretal amount and the sale of mortgaged properties.

Conclusion:
The court ruled in favor of the plaintiff, holding the defendants jointly and severally liable for the amounts due, with specified limits for each defendant. The plaintiff was entitled to recover the decretal amount with interest and costs, subject to the provisions of the Companies Act. The court provided detailed instructions for the execution of the decree.

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