NIRMAL KUMAR JHA Vs. BANK OF INDIA

JUDGEMENT

(1.) THE Petitioners have filed this writ petition under Articles 226 and 227 of the Constitution of India challenging the order dated 19.4.2005 passed by the Presiding Officer, Debts Recovery Tribunal, Cuttack in Original Application No.26/2002 allowing the said application filed by the O.P. No.1 -Bank of India and directing recovery of loan amount of Rs.92,63,594/ - with interest @ 12% per annum from the date of filing of the said Original Application till the date of realisation with costs from the defendants. The petitioners, who stood as guarantors for the loan availed by O.P. No.1 and arrayed as defendant Nos.4 to 6 in the Original Application, have filed this writ petition with a prayer to quash the impugned order dated 19.4.2005 with regard to the determination of their liability. It is urged on behalf of the petitioners that M/s. Sri Krishna Pipes (P) Ltd. - O.P.2, which manufactures asbestos, cement, pressure pipes, was incorporated as a limited Company and was duly registered under the Companies Act. O.Ps.3 and 4 were the promoters of the aforesaid Company and the petitioners had joined the Company as Directors on being induced by O.Ps. 3 and 4 but they were ultimately victimized by O.Ps. 3 and 4. The petitioners were induced to become the guarantors and did execute guarantee bonds with limits of Rs.25.00 lakhs and simultaneously of Rs.20.00 lakhs towards cash credit and book debts. It is further alleged that O.Ps. 3 and 4 were in active management of the Company and they siphoned the Companys funds in connivance with the Bank.

(2.) THE petitioners at all relevant time intimated the Bank about the clandestine sale of the pipes by O.Ps. 3 and 4 compelling the Bank to take immediate action against the such illegal sales of the hypothecated goods. The finished goods, at all relevant time, were in the custody of the Bank with their lock and key and without making corresponding payment to the Bank, O.Ps. 3 and 4 in connivance with the Bank Officers, got the goods out of the Banks custody and sold the same without making payment to the Bank. It was further alleged that there was variance in the contract and the Bank without taking the petitioners/guarantors into confidence; O.Ps. 3 & 4 diverted the finance of the Company to another project, for which the petitioners resigned from the directorship and simultaneously revoked the guarantee on 7.9.1999.