2002 (2) TMI 1269 - HC - Companies Law

Summary

Issues:
Recovery of outstanding amount against bridge loan facility.

Analysis:
The plaintiff, a banking body corporate, sanctioned various credit limits to defendant No. 1, including a bridge loan. Defendant No. 1 executed a demand promissory note for the bridge loan amount, along with a deed of hypothecation as security. Defendant No. 6 provided an assurance to the plaintiff to make payment to defendant No. 1. Subsequently, defendant Nos. 1 to 5 acknowledged the outstanding amount through various letters and guarantees. The plaintiff issued a legal notice demanding repayment, which the defendants did not dispute, leading to the filing of the suit.

The defendants were proceeded ex parte as they did not appear in court. The plaintiff submitted evidence, including a power of attorney, letters requesting the bridge loan, confirmation of payment assurance, statements of accounts, balance confirmation letters, telegraphic notices, legal notices, guarantee deeds, and other relevant documents. The court noted that defendant No. 1 was the principal borrower, and defendant Nos. 2 to 5 were the guarantors. However, defendant No. 6's assurance was deemed a general assurance without legal force, as it did not constitute a guarantee deed like the ones executed by defendant Nos. 2 to 5.

Based on the evidence and legal arguments presented, the court decreed the suit in favor of the plaintiff against defendant Nos. 1 to 5 for the outstanding amount of Rs. 2,29,548.31, along with costs and interest at the rate of 19.5% till realization. The court clarified that defendant No. 6 could not be held liable as their assurance did not amount to a legally binding guarantee deed, unlike the guarantees provided by defendant Nos. 2 to 5. The decree sheet was ordered to be prepared accordingly.