Corporate Law : CONTRACT OF GUARANTEE - SCHEME OF CONTRACT ACT,1872 1(a) It is submitted that Sections 133, 134, 135, 139, 140,141 and 145 of the...
Corporate Law : 1. It is submitted that the recovery proceedings against the Guarantor before hon’ble Debts Recovery Tribunal (hereinafter ‘DR...
Corporate Law : The jurisdiction of the Civil Court to entertain, try and decide any suit or proceeding in respect of the property, which is the s...
Corporate Law : Section 34 of the RDB Act provides that the said Act would have overriding effect. We have referred to the aforesaid provisions to...
Corporate Law : The author has first hand knowledge and experience that a large majority of projects fail, firstly, due to inexcusable delay in sa...
Corporate Law : Recently, hon’ble Supreme Court in Gangadhara Palo Vs The Revenue Divisional Officer & Another {(2011) 4 SCC 602; Decided on 08....
CONTRACT OF GUARANTEE – SCHEME OF CONTRACT ACT,1872 1(a) It is submitted that Sections 133, 134, 135, 139, 140,141 and 145 of the Indian Contract Act, 1872 provide as follows. 133. DISCHARGE OF SURETY BY VARIANCE IN TERMS OF CONTRACT.—Any variance, made without the surety’s consent, in the terms of the contract between the principal debtor and the creditor, discharges the surety as to transactions subsequent to the variance.
1. It is submitted that the recovery proceedings against the Guarantor before hon’ble Debts Recovery Tribunal (hereinafter ‘DRT’ or ‘Tribunal’) under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter ‘DRT Act’) are absolutely without jurisdiction.
The jurisdiction of the Civil Court to entertain, try and decide any suit or proceeding in respect of the property, which is the subject matter of security interest created in favour of a secured creditor, is barred only to the extent of the matters, which the Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under the Act to determine
Section 34 of the RDB Act provides that the said Act would have overriding effect. We have referred to the aforesaid provisions to singularly highlight that the sacrosanct purpose with which the tribunals have been established is to put the controversy to rest between the banks and the borrowers and any third party who has acquired any interest.
The author has first hand knowledge and experience that a large majority of projects fail, firstly, due to inexcusable delay in sanction of working capital and secondly, due to inexcusable delay in disbursement of working capital by the idle bureaucracy in the Banks.
It is submitted that the recovery proceedings under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 against the Guarantors are absolutely without jurisdiction. As per Black’s Law Dictionary, Ninth Edition, at page 1389, recovery means the regaining or restoration of something lost or taken away. It follows that the DRT has no jurisdiction to proceed against the Guarantor, as he has not taken any debt, which he has to repay.
Security is taken generally to make certain that bank is able to secure repayment of loan when operations collapse. However, security may also be taken to prevent third parties to deal with the assets. Generally, hypothecation of movable property, mortgage on immovable property,
Narendra Sharma (1) Ratio Decidendi: It is settled law that broadly, every judgment of a superior court has three segments, viz. (i) the facts and the point at issue; (ii) the reasons for the decision; and (iii) the final order containing the decision. The principle on the basis whereof a legal issue is answered forms […]
It is respectfully submitted that the recovery proceedings against the Guarantor before hon’ble Debts Recovery Tribunal under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter ‘the Act’) are absolutely unlawful. DRT has no jurisdiction to proceed against the Guarantor as he has not taken any debt, which he has to repay.
Narendra Sharma, Consultant (Legal) Introduction – Recently, after going through my Articles on the website {namely (1) Director’s Personal Guarantee-A Void Agreement and (2) Personal Guarantee-A Void Agreement), one visitor informed me that, on the contrary, commenting on his case regarding enforcement of his personal guarantee by the Bank, a well known Supreme Court Advocate […]
