SYNDICATE BANK Vs. NARAYANA IYER

JUDGEMENT

(1.) A.S.22/1922 is filed by the plaintiff in O.S.528/1982 on the file of the Principal Sub Judge, Kottayam. A.S.608/1996 is an appeal filed by the first defendant in the above suit. These two appeals are disposed of by this common judgment and the parties will be referred to in this judgment as they are referred to in the suit.

(2.) The first defendant was the Managing Director of M/s.Kottayam Textiles Limited, a Company incorporated under the Companies Act. At the time of institution of the suit there was only one defendant in the suit and the Company was subsequently impleaded as additional second defendant. The bank filed the suit against the defendants for realisation of an amount of Rs.11,26,026.51, the amount outstanding as due to the bank in a loan transaction. The suit was decreed by the Trial Court allowing realisation of the amount with interest at the rate of 21.65% per annum from the date of suit till realisation and costs of the suit. There is a direction in the judgment that the execution of the decree will stand postponed till the claim filed by the plaintiff before the Commissioner appointed under Act 27 of 1985 is disposed of. There is also direction that credit shall be given to the first defendant of any amount which the plaintiff might realise in terms of Act 27 of 1985.

(3.) A.S.22/1992 is filed by the plaintiff challenging the direction in the judgment of the Trial Court that execution of the decree will stand postponed till the claim filed by the plaintiff before the Commissioner appointed under Act 27/1985 is disposed of. The other appeal is filed by the first defendant by contending that he is not at all liable for the payment of the amount. According to the first defendant, since the entire assets and the plant and machinery of the second defendant had vested in the State free of all encumbrances under S.4(1)(2) of the Act 27/1985 it has become impossible for the first defendant to realise the amount from the second defendant after paying the amount to the bank as per the terms of the agreement of guarantee. The contention that the bank cannot proceed against the first defendant, the surety for realisation of the amount without exhausting the remedies against the principal debtor is also raised by the first defendant.