THE S.K. AGRICULTURISTS CO-OPERATIVE MARKETING SOCIETIES LIMITED Vs. CANARA BANK, MORGANS GATE BRANCH AND ORS.

JUDGEMENT

(1.) THE legality and correctness of the order passed by the Debt Recovery Appellate Tribunal [DRAT], Chennai in RA No. 27 of 2006 dated 25 -8 -2006 is called in question in this petition.

(2.) THE facts leading to filing of this writ petition are that: First respondent - Canara Bank - filed Original Application No. 1299 of 1997 before the Debts Recovery Tribunal [DRT], Bengaluru against Canara Krishi Agencies and seven others. The writ petitioner was the eighth respondent in the original application. According to the bank, the first defendant - Canara Krishi Agencies is a proprietorship concern engaged in agro -chemical business, defendants 2 and 3 stood as guarantors to the loan granted to first defendant by the bank, defendants 4 to 7 are the mortgagors and eighth defendant [writ petitioner] was a debtor to the first defendant, as per the supply bills. First defendant -respondent had approached the bank for sanctioning of guarantee limit of Rs. 15.00 lakh and open cash credit (OCC) limit of Rs. 15.00 lakh. The bank sanctioned OCC limit of Rs. 5.00 lakh and the same was enhanced to Rs. 10.00 lakh on 29 -10 -1994 and a guarantee in favour of one TCM Kalamserry was issued for Rs. 15.00 lakh and the same was guaranteed by the other defendants. Again, the bank sanctioned a further financial assistance by way of key -shut cash credit limit of Rs. 47.00 lakh on 31 -1 -1995 and supply limit of Rs. 30.00 lakh.

(3.) PRIOR to the filing of the original application, the bank had raised a dispute against the writ petitioner invoking the provisions of Section 70 of the Karnataka Cooperative Societies Act, 1959 [for short, the Act] before the joint registrar of cooperative societies. The said dispute came to be dismissed on the ground that the provisions of Section 70 of the Act has no application, since the bank cannot be considered as a cooperative society. Aggrieved by the dismissal of the dispute, the bank had filed WP No. 36289 of 1995 against the writ petitioner herein and others. This court disposed of the said writ petition granting liberty to the bank to proceed against the writ petitioner herein by initiating proceedings before the DRT. In those circumstances, the writ petitioner was arrayed as eighth defendant in the original application, based on the promise made by the petitioner to the bank and also on the ground that the petitioner had not sent the proceeds of the bill Nos. 806, 807 and 808.