UNION BANK OF INDIA Vs. UNION OF INDIA

JUDGEMENT

(1.) Petitioner is a Bank constituted under the Banking Companies act, 1970. Petitioner had lent advance money to one Poddar Mills (Process House) , which was leased by M/s. Poddar Mills Ltd. to Shree laxmi Traders Limited. The said Poddar Processors was taken over by respondent No. 3 in the year 1983 under the Textile Undertakings (Takeover of Management) Act, 1983 and respondent No. 3 was appointed as additional custodian for the purpose of carrying on the said Undertaking.

(2.) On 14th October, 1986 the petitioner instituted a suit for the recovery of an amount of Rs. 1,46,97,156. 95 alongwith interest against Shree Laxmi Traders Limited and the guarantors viz. M/s Poddar Mills Ltd. Respondent No. 3 was also added as defendant to the suit. The case of the petitioner in the suit was that the respondent No. 1 had guaranteed to repay to the petitioner an amount of Rs 50 lakhs to be advanced by the petitioner to NTC by way of Cash Credit Facility. Accordingly, monies were advanced by the petitioner and a guarantee was executed by the respondent No. 1 dated 19th June, 1986 in favour of the petitioner. This guarantee was renewed from time to time.

(3.) In the meantime, on 18th October, 1983 the Management of the said Poddar mills was taken over by the respondent No. 1 and an Ordinance was issued on 27th june, 1995 nationalizing the said Poddar mills with effect from 1st April, 1994 and accordingly all rights, title and interest of the owners of Poddar Mills (Process House) stood transferred to and vested in the respondent no. 1. As per section 8 of the said act, it was the duty of the respondent No. 1 to pay a sum of Rs. 1,91,94,000. 00 plus interest to respondent No. 2 within thirty days from the specified date by respondent No. 1 in accordance with section 18 of the said act, and as per section 20 of the said act, every person having a claim against the owner of the undertaking was required to prefer such claim before the respondent No. 2 within 30 days from the specified date.