J. M Financial Reconstruction Co. Pvt. Ltd. v. International Hometex Ltd. & Ors.

J. M Financial Reconstruction Co. Pvt. Ltd.

…Appellant

…Respondent

Case No: Appeal No. 219/2013

Date of Judgement: 20/02/2023

Judges:

Mr Justice Ashok Menon, Chairperson

For Appellant: Mr Charles D’Souza i/b M/s. Consulta Juris, Advocates.

Download Court Copy CLICK HERE 

Facts:

This is an order passed in Appeal No. 219/2013 by the Debts Recovery Appellate Tribunal, Mumbai. The appellant, J. M Financial Reconstruction Co. Pvt. Ltd., is an Asset Reconstruction Company and an assignee of a debt from the Indian Overseas Bank (IOB). The respondents include International Hometex Ltd. (in liquidation), its directors (Respondents Nos. 2 to 4, who were personal guarantors), and other creditor banks having pari-passu charge over the mortgaged assets (Respondents Nos. 5 to 7). IOB had provided credit facilities and a term loan to International Hometex Ltd., for which the directors executed personal guarantees and mortgaged properties. The debt was defaulted, and IOB filed an Original Application (O.A.) No. 2 of 2010 before the Debts Recovery Tribunal (DRT) for recovery of the debt and enforcement of the mortgage. The debt was subsequently assigned by IOB to the appellant, who got itself substituted in the Original Application before the DRT. The DRT allowed the Original Application against Respondents Nos. 1 to 3 but dismissed it against Respondent No. 4, as she did not execute a subsequent letter of guarantee dated 28/12/2005.

Arguments by the Appellant:

Cases Cited:

Narinder Pal Agarwal of Mumbai, Indian Inhabitant vs. Saraswat Co-Operative Bank Ltd., A Multistate Co-Operative Bank and Ors. (2019 SCC OnLine Bom 45)

Sitaram Gupta vs. Punjab National Bank and Ors. (2008) 5 SCC 711

Sections and Laws Referred:

Section 130 of the Indian Contract Act (revocation of continuing guarantee)

Section 133 of the Indian Contract Act (discharge of surety by novation)

Chapter 8 of the Indian Contract Act (concerning indemnity and guarantee)