B R THADANI Vs. ORIENTAL BANK OF COMMERCE

JUDGEMENT

(1.) THE applicants have taken out the above company application praying for a direction to implead the applicant as party respondent to the Company Application No. 557 of 2000. In support of the Judges summons the applicant has filed an affidavit wherein it appears that the respondents have filed a claim application before the Debt Recovery Tribunal at Mumbai seeking to recover from the Official Liquidator and the applicants jointly and severally a sum of Rs. 8,20,76,369. 27 with interest thereon. According to the first respondent, this was the amount due and payable by the company in liquidation to them. It appears that the official liquidator by his notice of admission of proof dated 14th August, 2000 has allowed the applicants claim for the sum of Rs. 4,36,35,454 and since the first respondents having already received an amount of Rs. 3,62,91,150 out of the sale proceeds of the assets of Westerworks Engineering Limited a balance amount of Rs. 73,43,304/- was payable to the applicant as per the aforesaid notice of admission. It appears that the first respondent have challenged the aforesaid adjudication of the official liquidator by filing the above Company Application No. 557 of 2000. It appears that the applicant was a guarantor vide the deed of guarantee dated 24th November, 1987 and he is contesting the claim before the DRT. The respondents have opposed the application. Shri Tulzapurkar the learned Counsel for the respondents has submitted that the applicant is neither a necessary nor a proper party to be impleaded in the above company application as he is already contesting the claim before the Debt Recovery Tribunal. According to him, the company application is an appeal filed by respondent No. 1, challenging the adjudication made by the official liquidator. The claim of the respondent No. 1 was against the company in liquidation and was adjudicated by the liquidator and an appeal against such an adjudication would lie only against the liquidator. According to the learned Counsel, the applicant was neither the creditor nor a contributor to be vitally affected that as such the applicant to be impleaded as party in the company application. The proceedings were inter se between the respondent No. 1 and 2 and the applicant was not concerned with the adjudication made by the respondent No. 2 in respect of the claim of the respondent No. 1. It is further submitted that the cause of action of respondent No. 1 against the applicant is totally different and is based on the guarantee given by the applicant and the cause of action against the company in liquidation is based on the securities given by the company in liquidation to respondent No. 1

(2.) SHRI Madan, the learned Counsel for the applicant herein, on the other hand submitted that the applicant is vitally affected party as under section 128 of the Indian Contract Act, the liability of the guarantor is co-extensive with the principal debtor. According to him, whatever orders would be passed in the appeal against the adjudication orders of the liquidator, the applicant would be certainly affected. In case the appeal is allowed, the applicants liability would also be increased. Under the orders of the liquidator the liability of the applicant is reduced. Shri Tulzapurkar however has questioned the validity of the said submissions relying upon a judgment of this Court in the case of (Bank of India Ltd. v. Rustom Fakirji Cowasjee), reported in A. I. R. 1955 Bom. 419. According to him the following observations in para 28 of the said judgment are relevant and the same are reproduced hereinbelow :---

(3.) IN my opinion, the facts on which the claims are based and are being adjudicated the applicant is certainly an affected party in the final decision of the matter. Under the adjudication order of the liquidator, according to the applicant, his liability is reduced and he stands benefitted to that extent. If the respondents finally succeed in getting the said order of the liquidator set aside it cannot be said that the applicant would not be adversely affected. In my opinion it would not be proper to keep the applicants outside the company application which challenges the order of the liquidator whereunder the applicants liability is reduced. Finally it may so emerge that the applicants liability would stand as it is. However, the applicant should be given an opportunity to be heard in the matter where he is likely to be adversely affected if the order of the liquidator is set aside. I am, therefore, of the opinion that the applicant should be impleaded as a party respondent in the Company Application No. 557 of 2001. In the aforesaid circumstances, the Judges summons is made absolute in terms of prayer Clause (a) with no orders as to costs