9911796707
TMI Blog2000 (9) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... 000, ( ii ) cash credit hypothecation limit of Rs. 4,00,000 and ( iii ) a documentary D.D. limit of Rs. 5,00,000. The respondent-company opened cash credit pledged and cash credit hypothecation accounts with the bank on August 1, 1977. In the middle of the year, 1978, the bank agreed to enhance the aforementioned limits with effect from August 7, 1978. In consideration of the aforesaid credit facilities, defendant No. 3 Kishori Lal Seth and defendant No. 4 Sri Nand Kishor Seth agreed to and became guarantors of defendant No. 1 for repayment of the entire borrowings of defendant No. 1 together with interest, etc., to the bank with their liability being joint and several and co-extensive with defendant No. 1. These guarantors executed agreement of guarantee and indemnity on August 1, 1977, and a supplementary agreement on August 7, 1978. Defendant No. 1 pledged certain goods with the bank. The defendants however, failed to pay the amount and the total sum due on the date of filing the suit was Rs. 57,27,575.44. During the pendency of the suit defendant No. 2 died and his heirs were substituted. It was claimed that the liability of the guarantors were joint and several. Defendants N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion by way of C.C. Pledge limit Rs. 10,00,000, C.C. Hypothecation Rs. 4,00,000 and D.D. Limits Rs. 5,00,000 to M/s. Laxmi Industrial and Trading Company (P.) Ltd. Najibabad (Bijnor) U.P. (hereinafter called the borrowers) on the terms and conditions contained in the documents executed by the borrowers. And whereas the guarantors have agreed to guarantee due payment of the amount due to the bank in respect of the said limits of Rs. 19,00,000. Now this indenture witnesseth as under: That in consideration of the bank allowing, at the request of the guarantors, an accommodation by way of cash credit and DI cy D.D. Limit the borrowers at its Najibabad branch on terms and conditions contained cash credit agreement, the guarantors hereby agree with the bank as under: (2) The guarantors hereby guarantee jointly and severally to pay the bank on demand all principal, interest, costs, charges and expenses due and which may at any time become due to the bank from the borrowers, on the accounts opened in respect of the said limits (hereinafter called the 'said accounts') down to the date of payment and also all loss and damages, costs charges and expenses and in the case of legal costs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Contract Act." (emphasis supplied) It appears that with the consent of the board of directors the management was changed and one Sri R.N. Agarwal was appointed as managing director of defendant No. 1 on January 29,1982. Prior to him Sri N.K. Seth, respondent No. 4 and Shri Ram Seth were the directors. The court below took the view that as the management of the company was changed the liability of the guarantors ceased and they will be treated as discharged from their liability as guarantors. Defendant No. 1 is a company incorporated under the provisions of Companies Act, 1956. Defendant No. 1-company was a borrower. The company has been defined under section 3 of the Companies Act, 1956. It is a juristic person. The company is managed by the board of directors. The powers of board of directors are given under section 291 of the Companies Act. The board is empowered to exercise all such powers and do all such acts and things as the company is authorised to exercise. The members of the board of directors may change. It may appoint another person as managing director of the company. This, however, does not cancel or change the terms of a contract which a person has entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts possession. Defendant No. 1 as alleged, whenever it took goods from the appellant-bank it used to charge the amount of such goods and only thereafter the goods were permitted to be removed from its godown. The bank was a bailee. The bailment is defined under section 148 of the Contract Act as it is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. Section 151 provides that in all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take care of his own goods of the same bulk, quality and value as the goods bailed. Section 152 of the Act does not make the bailee responsible for the loss, destruction and deterioration of the thing bailed, if he has taken the amount of care as described in section 151. The bank had given cash credit facilities to defendant No. 1 in August, 1977. Defendant No. 1 pledged the goods with it and the transactions were continuing. The bank filed the suit on January 24, 1983, giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant contended that some of the goods were stolen and for such theft the bank is not responsible. The mere fact that the goods were stolen will not absolve the liability of the bank as bailee unless it is shown by it that it has taken all possible care as a prudent owner could have taken. There is no specific evidence on this point. It has not been further pointed out as to the quantity and quality of such stolen goods. Lastly, it is urged that if any goods have been lost or destroyed on account of any negligence by the receiver, the bank shall not be held responsible for the damage and loss of such goods. It is urged that the receiver is an officer of the court and for any fault of the receiver the party should not be made liable to suffer. Admittedly the receiver was appointed at the instance of the appellant. If a receiver is appointed by the court on an application of a party and it is found that the receiver is mismanaging the property or is guilty of any misappropriation, it is the duty of the applicant who gets the receiver appointed to file an application before the court to take action against the receiver. The receiver appeared as witness in the case and the bank nev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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