SICOM LIMITED Vs. RAJARAM B SURYAVANSHI

JUDGEMENT

(1.) THE plaintiff sanctioned and advanced to a company known as Nesari Dairy Products Ltd. a Short Term Bridge Loan of Rs. 22,50,000/- on the terms and conditions contained in a loan agreement dated 24th April, 1995. In these proceedings the defendants have been sued upon a Deed of Guarantee executed by the defendants on 26th April, 1995 by which the defendants guaranteed the payment of the dues of the plaintiff. The loan agreement between the plaintiff and the principal borrower, inter alia, provided that a joint and several Demand Promissory Note be executed by the borrower and the guarantors in favour of the plaintiff in respect of the principal sum of Rs. 22. 50 lakhs and interest thereon at the rate of 22. 5% per annum. The loan agreement also stipulated that a guarantee shall be executed by the defendants herein. The loan was to carry interest at the rate of 20% per annum or at such lending rate as may be prevalent at the time of the execution of the agreement. There was a default clause under which in the event of the principal borrower failing to pay any instalment of interest on the loan on the respective due dates, additional interest was liable to be charged at the rate of 2. 5% per annum over and above the plaintiffs lending rate as applicable on the total amount in default during the period of such default.

(2.) THE defendants were asked to execute a Guarantee dated 26th April, 1995 in favour of the plaintiff. The execution of the guarantee is not disputed except in so far as defendant Nos. 6 and 7 are concerned and whose case is consequently considered separately in this order. Clause (1) of the guarantee provided that if any default is made by the borrower in the payment of Rs. 22. 50 lakhs, the guarantors shall without demur jointly and severally pay to the plaintiff on demand, the loan together with interest thereon and all other moneys which shall be due to the plaintiff. Under Clause (2) the plaintiff was given the liberty without affecting the guarantee or discharging the guarantor to postpone the exercise of the power conferred upon it by the loan agreement to revise the rate of interest, to agree to a revision of the schedule of repayment and to forebear to enforce a convenant of the loan or interest or any other terms and conditions. Under Clause (4), the guarantee was irrevocable and enforceable under the guarantor, notwithstanding that the securities or any of them specified under the loan agreement were outstanding or unrealised. Under Clause (5) of the guarantee, any amount appearing due from the company in the books of account of the plaintiff maintained and kept in the ordinary course of business shall be conclusive evidence against the guarantors of the amount due on the said account and shall not be questioned by the guarantors. Under Clause (8) of the guarantee, the plaintiff was entitled to act as if the guarantors were the principal debtors to the plaintiff. The guarantee was to be a continuing guarantee under Clause (10 ). By Clause (16) of the guarantee, it is once again stipulated that the guarantors shall as between them and the plaintiff be regarded as principal debtors and shall not be entitled to any of the rights conferred under sections 133, 134, 135, 139 and 141 of the Indian Contract Act, 1872.

(3.) THE plaintiff has stated that it disbursed an amount of Rs. 19 lakhs to the principal borrower. Interest was payable quarterly on 31st January, 30th April, 31st July and 31st October each year. The borrower has failed to pay the interest dues of the plaintiff every quarter. In the circumstances, by a demand notice dated 29th January, 1996, the plaintiff called upon the principal borrower to repay the dues and outstanding of the plaintiff under three facilities which were granted to the principal borrower including those in respect of the short term bridge loan to which the present suit relates. This was followed by recall notice dated 7th March, 1996. Under the said notice, the amount due and outstanding in respect of the short term bridge loan inclusive of interest is Rs. 21,02,060/ -.