9911796707
TMI Blog2012 (5) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... the principal debtor were dishonoured, the parties on 09 September, 1996 entered into a fresh Agreement cum Pledge amongst the petitioner, principal debtor and respondent-guarantor. Two cheques were also issued by the principal debtor towards the principal amount and interest. 3. In June, 1999, the petitioner's name was changed from M/s. CRA Global Securities to M/s. Global Infosystems Limited. 4. As the principal debtor defaulted in repaying the loan, on 12 February, 2000, petitioner issued statutory winding up notice to the respondent. 5. Since no reply was received by the petitioner, on 07 March, 2000, present winding up petition was filed. 6. On 09 August, 2004, proceedings were stayed as the principal debtor had become a sick company under Sick Industrial Companies (Special Provisions) Amendment Act, 1993 ('SICA'). 7. On 13 May, 2010, as the principal debtor was ordered to be wound up by BIFR, present proceedings were revived. 8. Mr. Virender Ganda, learned senior counsel for petitioner submitted that respondent had guaranteed repayment of loan obtained by the debtor by way of bill discounting facility and the same was recoverable from the respondent indepen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he would now serve the notice on the respondent as contemplated under Section 434 of the Companies Act at its present address. In case the petitioner is able to effect service of the notice under Section 434 of the Companies Act upon the respondent even after disposal of this petition, it would be open to the petitioner to revive this petition by placing on record the averments of having effected service on the respondent. 10. Mr. Niraj Kumar Singh further submitted that though the respondent had been described in the Agreement-cum-Pledge dated 09 September, 1996 as a guarantor, it was a cardinal principle of law that it was not the nomenclature or designation which would determine the true status of a party. According to him, the respondent was not a guarantor under the said agreement as the borrower was solely responsible for the liability arising out of the loan facility along with an additional obligation to replenish the security in the event its value fell. He stated that other than the Agreement-cum-Pledge, there was no agreement either between the principal debtor and surety or between the creditor and surety to show that a contract of guarantee had been executed. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a position to compel the principal debtor to pay the debt. In my view, therefore, exhibit A is a contract of indemnity and not a contract of guarantee the principal debtors, namely the constituents introduced by the plaintiff not only knew nothing of the alleged guarantee, but were unascertained when the contract was made. 11. Mr. Niraj Kumar Singh also submitted that under the Agreement- cum-Pledge, the respondent's liability was limited only to the extent of shares pledged by the respondent debtor. In this connection, Mr. Niraj Kumar Singh relied upon the preamble and Clauses 5 and 7 of the Agreement-cum-Pledge. The said clauses are reproduced hereinbelow: AND WHEREAS THE GUARANTOR has agreed to provide security to secure the said bill discounting facility by way of pledging of certain marketable securities. xxx 5. The market value of all such securities included in the schedule / supplementary schedule attached hereto would be monitored by the LENDER at intervals of 15 days If at any time the value of the said securities falls so as to create a deficiency in the margin requirement as specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discs.] xxx 53. Service of documents on members by company. xxx (2) Where a document is sent by post- (a) service thereof shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the document, provided that where a member has intimated to the company in advance that documents should be sent to him under a certificate of posting or by registered post with or without acknowledgement due and has deposited with the company a sum sufficient to defray the expenses of doing so, service of the document shall not be deemed to be effected unless it is sent in the manner intimated by the member; 14. According to Mr. Ganda, statutory notice sent in the present case in accordance with the said Sections by properly addressing, prepaying and posting the notice by registered A.D. constituted proper service. In support of his submission, he relied upon a judgment of the Bombay High Court in Ispat Industries Limited, In Re. 2005 2 CLJ 235 Bombay, wherein it has been held as under: 15. The judgment would apply to a notice under Section 434(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same would furnish a valid ground for contending in the petition that may be filed that no presumption should be drawn against the company merely by virtue of the company not having replied to the said notice. On the other hand a view to the contrary would not only cause great prejudice to the creditors of a company but would in fact have the effect of rendering the provisions of sections 433 and 434 of the Companies Act otiose. 15. Mr. Ganda emphatically denied that under the Agreement-cum-Pledge, the petitioner could have only sold the shares pledged by the respondent debtor. 16. Having heard the parties and having perused the papers, this Court finds that statutory winding up notice had been issued by the petitioner to both the principal debtor as well as to the respondent guarantor at their respective registered office and administrative office. In fact, the statutory notices sent to the respondent by registered A.D. at its registered office had been returned back unserved with the remarks "no such firm at such address". In the opinion of this Court, the petitioner had discharged the duty cast on it under the Act by sending the winding up notice at the respondent's l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplementary schedule(s). xxx 12. The said pledged securities and the promissory note would be a continuing security to the LENDER for all monies which are due from the BORROWER. xxx 17. The provisions of this agreement, in particulars provisions of Clause 4, 11 and 12 shall, to the extent applicable, apply to the BORROWER and / or the GUARANTOR, as the case may be. 20. The Board Resolution dated 04 September, 1996 passed by the respondent company also proves beyond doubt that the respondent was a guarantor. The relevant portion of the said resolution is reproduced hereinbelow: RESOLVED that the consent of the Board is hereby accorded for giving guarantee to M/s. CRA Global Securities Limited, New Delhi for the amount of Rs. 52,55,500/-(Rupees Fifty two lacs Fifty five thousand five hundred only) being granted by way of Bill Discounting facility to M/s. Lunar Diamonds Limited by them. RESOLVED FURTHER that Mr. S.L. Maloo, Director of the Company be and is hereby authorised to pledge and following shares of Sunrise Securities Limited held by the company as colla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overy of amount due and payable under the loan agreement. Also in law, in the event there was any balance amount due and payable after the sale of the pledged shares, petitioner in law would be entitled to file recovery proceedings for the balance amount against the guarantor. Section 176 of the Indian Contract Act, 1872 reads as under:- 176. Pawnee's right where pawnor makes default.-If the pawnor makes default in payment of the debt, or performance; at the stipulated time or the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale. If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor. 25. The Bombay High Court in State Bank of India vs. Smt. Neela Ashok Naik & Anr. AIR 2000 Bom 151 has held as under:- 12. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiff Bank had in its wisdom exercised the first option of filing the suit and retaining the collateral security. 13. We are in respectful agreement with the legal proposition propounded in the aforesaid decision and thus there would be no question of judicious or arbitrary exercise of discretion by the Bank as to the time of appropriation of the amount from the collateral security given to it in the form of FDRs. 26. The Supreme Court in State Bank of India vs. Indexport Registered and others, 1992 75 Comp Cas 1 (SC) has held as under: 14. In Pollock & Mulla on Indian Contract and Specific Relief Act, Tenth Edition, at page 728 it is observed thus: Co-extensive--Surety's liability is co-extensive with that of the principal debtor. xxx 17. In The Hukumchand Insurance Co. Ltd. v. The Bank of Baroda and Ors. AIR 1977 Kant 204, a Division Bench of the High Court of Karnataka had an occasion to consider the question of liability of the surety vis-a-vis the principal debtor. Venkatachaliah, J. (as His Lordship then was) observed: The question as to the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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