BANK OF BARODA Vs. R. SUBRAMANIAN

JUDGEMENT

(1.) The 1st defendant in C.S.No.693 of 2011 has taken out this application seeking to reject the plaint in the above suit.

(2.) The case of the applicant/original 1st defendant Bank is that it has advanced a loan to M/s. Subhiksha Trading Services Ltd (In short "STSL"), the second respondent herein. The 1st respondent/ original plaintiff is a Guarantor to the applicant Bank in respect of dues payable by the STSL. As there was a default in paying the loan amount, the applicant/original 1st defendant Bank has filed an application in O.A.No.178 of 2011 before the Debts Recovery Tribunal -I (DRT), Chennai for recovery of a sum of Rs.88,16,33,236.28/- . The 1st respondent/ original plaintiff has also filed a written statement before the DRT contending that the said guarantee is unenforceable. Besides he has also filed interim application for discharge by raising the same allegation as has been made in the present suit and the same was dismissed. An appeal filed before the Debts Recovery Appellate Tribunal (DRAT) against the said order also did not yield result in his favour. In the above circumstances, he has filed the present suit declaring the Guarantee as null and void. According to the applicant/original 1st defendant Bank that the suit is hit by Section 18 of the Recovery Debts due to the Banks and Financial Institutions Act, 1993 (In short "RDDB"). Hence, the applicant/ original 1st defendant Bank prayed for rejection of the plaint in C.S.No.693 of 2011.

(3.) Denying the allegations, the 1st respondent/original plaintiff filed a counter contending that the applicant/original 1st defendant Bank has filed an Original Application No.185 of 2009, renumbered as OA.No.178 of 2011 for recovery of a sum of Rs.88,16,33,236.28p wherein, the 1st respondent/original plaintiff was arrived as a second defendant on the basis that there was Guarantee executed by him in respect of the loan availed by the original 2nd defendant, i.e. STSL. It is the contention of the 1st respondent/Original Plaintiff that the Guarantee was taken as a mere formality knowing that the same was not enforceable. According to the 1st respondent/original plaintiff, the various lender banks to STSL had taken Guarantees aggregating to Rs.800 crores from him even though all of them were aware that his networth was not even Rs.5 crores and there was no feasibility of such Guarantees being performed by him. As contracts not capable of being performed even at the time of being entered into the Guarantees executed by him in favour of various banks are ab initio void as per Section 56 of the Contract Act. According to the 1st respondent/original plaintiff that RDDB Act only bars suits by banks for recovery from being filed in Civil Courts and no manner bar suits against the Banks. Hence, he prayed for dismissal of the application.