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2023 (9) TMI 52 - HC - Indian LawsDishonour of Cheque - insufficient funds - Seeking a judgment and a decree jointly and severally against the defendants as guarantors under the deeds of guarantee dated 21st March 2018 executed by the defendants respectively in favour of the plaintiff - whether the matter could be preceded with ex-parte when during the pendency of the suit, the defendants were adjudged the insolvents? HELD THAT - With regard to the Court s query as to whether the suit can proceed when the Defendant is adjudicated insolvent pending the suit, in view of the Division Bench judgement of this Court in the case of Om Prakash Nihalani 2008 (12) TMI 831 - BOMBAY HIGH COURT , there are no impediment in proceeding to pass a decree. The Division Bench has concurred with the view taken by the Madras High Court in the case of Official Assignee, High Court Madras Ors. 1980 (2) TMI 287 - MADRAS HIGH COURT . The Madras High Court held that under Cl.(d) of section 68(1) the official assignee would be a necessary party only if the suit was relating to the property of the insolvent , and the term relating to cannot be taken to mean affecting . Thus, the Defendant has been adjudicated insolvent pending the proceeding, as it is a money decree and does not relate to the property of the defendant section 68(1)(d) is not attracted and the official assignee is not required to be made a necessary party. Thus, as per Order XXXVII Rule 6 (a) of the Code of Civil Procedure, the plaintiff is entitled to a judgment forthwith - suit disposed off.
Issues involved:
The issues involved in the judgment are the enforcement of a settlement agreement, breach of guarantee deeds, insolvency of the defendants, and the entitlement to a decree against the defendants. Enforcement of Settlement Agreement: The plaintiff filed a suit seeking a decree against the defendants as guarantors under the deeds of guarantee executed in favor of the plaintiff. The settlement agreement required the defendants to pay a sum of Rs 15,80,00,000/- along with interest, which the defendants failed to fulfill despite multiple demands and notices. Breach of Guarantee Deeds: The defendants executed unconditional and irrevocable deeds of guarantee in favor of the plaintiff, which were identical to each other. The plaintiff sought to recover the sum of Rs. 15,80,00,000/- along with interest, as per the terms of the deeds of guarantee. The defendants failed to make the payment, leading to the filing of the suit by the plaintiff. Insolvency of Defendants: During the pendency of the suit, the defendants were adjudged insolvent. The plaintiff sought to proceed with the suit and obtain a decree despite the insolvency of the defendants. The plaintiff argued that the claim in the suit was of a monetary nature and did not relate to the property of the insolvent, hence the official assignee's presence was not required. Entitlement to Decree: The court considered the arguments presented by the plaintiff's counsel and the documents on record. It was found that the defendants had admitted the allegations in the plaint, and the plaintiff was entitled to a decree. The court held that the defense raised by the defendants was frivolous, and leave to defend was refused. Consequently, the plaintiff was granted a decree against the defendants. The judgment concluded with the court decreeing in favor of the plaintiff against the defendants, ordering the defendants to pay the costs of the suit, refund of court fees, expeditious drawing up and sealing of the decree, and granting leave to proceed in execution without awaiting the sealing of the decree.
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