DEUTSCHE BANK Vs. S P KALA

JUDGEMENT

(1.) THE plaintiff-Bank had, in or about November, 1983, on the request made by the second defendant, in his then capacity as sole proprietor of the firm Sea Transportation Enterprises Private Limited sanctioned several credit facilities including overdraft facility. Subsequently, the said firm was incorporated as company and in pursuance of a resolution passed by the Board of Directors of the Company on 5th January, 1984, all the liabilities of the said proprietory firm were taken over by the said company. On the request of the second defendant, therefore, the plaintiff transferred to the name of the company the credit facilities which were then enjoyed by the said firm together with the debit balances of the said firm. By an agreement of hypothecation dated 21st September, 1984 the said Company created first charge of all their products, moveable property and goods as well as their book debts, monies, receivables, claims etc. as security for payment of all amounts due and payable by the company to the plaintiff under any facility or account whatsoever. The second defendant in his personal and individual capacity, by letter of guarantee dated 21st September, 1984, guaranteed payment of all amounts due and payable by the company to the plaintiff in respect of all the present or future advances and liabilities upto a limit of the principal sum of Rs. 12 lakhs and also interest thereon as mentioned in the guarantee.

(2.) IN or about April, 1987 pursuant to the request made by the Company to the plaintiff and the second defendant, the plaintiff agreed to grant the overdraft facility upto a limit of Rs. 16 lakhs and for the said purpose the company executed promissory note dated 23rd April, 1987 promising to pay to the plaintiff on demand the said sum of Rs 16 Lakhs with interest thereon at the rate of 7. 5. % per annum over the Reserve Bank of India rate and with a minimum of 17. 5% per annum and also executed a deed of hypothecation of book debts dated 23rd April, 1987 thereby hypothecating by way of first charge in favour of the plaintiff of the present and future book debts; outstandings, monies, receivable, claims, bills, encashments, etc. as security for repayment of the plaintiffs dues under the said facility. The amounts under the overdraft facility were repayable together with interest and all costs, charges and expenses by 30th December, 1987. The interest payable was 17? % per annum with quarterly rests and in case of default, additional interest of 2% was payable.

(3.) THE company, by undated letter which was received by the plaintiff on or about 6th January, 1988, admitted and acknowledged their liability to the plaintiff under the said facility and while confirming their commitment to bring the outstanding liability down to Rs. 10 lakhs by 31st December, 1987, sought extension of time till 29th February, 1988. The Company was unable to honour the said commitment and the company was asked to pay all the outstanding dues with interest by letter dated 16th November, 1988. The plaintiff also invoked personal guarantee dated 21st September, 1984 and demanded from the second defendant all dues with interest. The company as well as defendant No. 2 failed to pay the amount due. In the meantime, liquidation proceedings had started against the said company under section 434 of the Companies Act for winding up. Accordingly, the plaintiff sought permission of this Court to file civil suit for the recovery of the said amount and this Court, vide order dated 25th January, 1990 granted permission to the plaintiff Bank to file suit before this Court. This order, was in fact, challenged by the plaintiff Bank to the limited extent that permission should be granted to file the suit in Bombay, but by order dated 11th January, 1991 the said request was turned down by the Division Bench of this Court in Company Appeal filed against the judgment of the learned Single Judge who had granted leave to the plaintiff Bank to file the suit against the said company under liquidation proceedings, defendant No. 1 was appointed as liquidator of the company.