Allowed

The Mumbai District Central Co-Op. Bank Ltd. v. State of Maharashtra

Bombay HC24 Jan 2012SJ/30/2011

Case brief

AI extract

What is this about?

The court granted unconditional leave to defend multiple summary suits filed by a banking consortium against the State Government of Maharashtra to recover loans extended to sugar factories. The judgment identified triable issues regarding the interpretation of various Government Resolutions listed as guarantees and their associated conditions.

What did the court decide?

Unconditional leave to defend granted. Suits transferred to commercial causes list.

The Mumbai District Central Co-Op. Bank Ltd… — Contract and Commercial Disputes | Bombay HC (2012)

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1 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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skt

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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SUMMONS FOR JUDGMENT NO. 377 OF 2009

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SUMMARY SUIT NO. 2827 OF 2008

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AND

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SUMMARY SUIT NO. 2827 OF 2008

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WITH

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SUMMONS FOR JUDGMENT NO. 376 OF 2009

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SUMMARY SUIT NO. 1675 OF 2009

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AND

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SUMMARY SUIT NO. 1675 OF 2009

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WITH

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SUMMONS FOR JUDGMENT NO. 529 OF 2009

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SUMMARY SUIT NO. 2705 OF 2009

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AND

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SUMMARY SUIT NO. 2705 OF 2010

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WITH

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SUMMONS FOR JUDGMENT NO. 33 OF 2011

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SUMMARY SUIT NO. 1323 OF 2010

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AND

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SUMMARY SUIT NO. 1323 OF 2010

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WITH

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SUMMONS FOR JUDGMENT NO. 87 OF 2009

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SUMMARY SUIT NO. 3497 OF 2008

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AND

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SUMMARY SUIT NO. 3497 OF 2008

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WITH

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SUMMONS FOR JUDGMENT NO. 92 OF 2009

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SUMMARY SUIT NO. 143 OF 2009

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AND

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SUMMARY SUIT NO. 143 OF 2009

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WITH

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SUMMONS FOR JUDGMENT NO. 93 OF 2009

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SUMMARY SUIT NO. 43 OF 2009 AND

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2 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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SUMMARY SUIT NO. 43 OF 2009 WITH SUMMONS FOR JUDGMENT NO. 94 OF 2009 IN

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SUMMARY SUIT NO. 44 OF 2009

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AND SUMMARY SUIT NO. 44 OF 2009

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WITH

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SUMMONS FOR JUDGMENT NO. 155 OF 2009

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IN SUMMARY SUIT NO. 397 OF 2009

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AND

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SUMMARY SUIT NO. 397 OF 2009

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WITH

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SUMMONS FOR JUDGMENT NO. 225 OF 2009

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SUMMARY SUIT NO. 2837 OF 2008

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AND

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SUMMARY SUIT NO. 2837 OF 2008 WITH

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SUMMONS FOR JUDGMENT NO. 357 OF 2010

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SUMMARY SUIT NO. 1039 OF 2010 AND

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SUMMARY SUIT NO. 1039 OF 2010 WITH SUMMONS FOR JUDGMENT NO. 30 OF 2011

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SUMMARY SUIT NO. 1714 OF 2010 AND

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SUMMARY SUIT NO. 1714 OF 2010 WITH

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SUMMONS FOR JUDGMENT NO. 31 OF 2011

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SUMMARY SUIT NO. 2234 OF 2010 AND

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SUMMARY SUIT NO. 2234 OF 2010

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WITH

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SUMMONS FOR JUDGMENT NO. 32 OF 2011

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SUMMARY SUIT NO. 1930 OF 2010 AND SUMMARY SUIT NO. 1930 OF 2010

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3 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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The Mumbai District Central Co-operative Bank Ltd.

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..Plaintiff

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-Versus-

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State Government of Maharashtra ..Defendant

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Mr. Shekhar Naphade, Senior Counsel a/w. Mr.M.P.Rege, Ms.Shyama Parkar i/b M.P.Rege & Co. for the Plaintiff.

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Mr. Shailesh Shah, Senior Counsel a/w. Ms.Uma Palsuledesai, AGP - State-Defendant.

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CORAM : S.J. VAZIFDAR, J. DATE : 24^TH JANUARY 2012.

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P.C.

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1 The above suits have been filed to recover an aggregate sum

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of Rs.263.26 crores together with interest. I have granted the defendant unconditional leave to defend the suits.

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The parties proceeded on the basis that the translation of the GRs are correct.

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2 The first four suits are based on certain Government Resolutions (for short ‘the GR/s’) as well as guarantees issued by the defendant. The remaining suits are based only on the said government resolutions which it is contended, constitute guarantees by the defendant.

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4 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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3 It is not necessary to set out in detail the circumstances that led to the plaintiff alongwith the consortium of banks led by the Maharashtra State Co-operative Bank Limited granting diverse financial facilities to various sugar factories in the State of Maharashtra.

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4 For convenience, I will refer to the facts in Summons for Judgment No. 377 of 2009 in Summary Suit No.2827 of 2008.

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5 By a letter dated 6^th March 1999, the plaintiff granted one of the sugar factories namely Dongarai Sugar Shetkari Sahakari Karkhana Limited a term loan of Rs.5 crores on the terms and conditions set out in Appendix 1 and Appendix 2 thereto. Clause VI /(ii) of Appendix I required the sugar factory to furnish by way of a security a 100% irrevocable guarantee of the defendant.

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6 On 12^th May 1999, the defendant issued a GR naming the eight banks which formed a consortium and the amounts to be advanced by each of them. The GR recorded that the defendant granted a guarantee to the extent of Rs.4,342.63 lacs. The GR inter-alia reads as under :

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Govt. Resolution Dtd.12.05.1999

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5 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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The Government hereby grants Government Guarantee for refund of the liability of the total sum of Rs.4342.63 lacs (in words forty three crores, forty two lacs sixth three thousand only) made of the Long Term Loan of Rs.2400.00 (Twenty four crores only) sanctioned by the Maharashtra State Cooperative Bank and other CO-operative, Commercial Bank and Nationalized Banks for setting up the Co-operative Sugar Factory viz. Dongarai Sagareshwar Shetakari Sahakari Sakhar Karkhana Ltd., Kadepur, Taluka-Khanapur, DistrictSangali and the interest thereon Rs.1942.63 Lacs (Rs.Nineteen Crores forty two lacs sixty three thousand only).

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7 Between 20^th May 1999 and 31^st August 2000, the plaintiff disbursed the entire loan. The plaintiff did so, I will presume, acting upon the defendant’s representation in the GR dated 12^th May 1999 that it should furnish the guarantee.

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8 The defendant furnished a guarantee dated 6^th May 2000. It was a composite guarantee for all the banks in the consortium including the plaintiff. The recitals referred to the facts leading to the sanction of the term loan facility by the consortium including the plaintiff. The operative part of the guarantee recorded that the grant of the above financial facilities, advanced/paid and partly agreed to be lent and advanced by the banks was on the condition that the

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6 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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defendant would guarantee the due repayment thereof. Clauses

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1(B), 2, 3, 6 and 16 of the guarantee read as under :

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Clause 1(B) :

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That if default shall be made by the Mortgagor in payment to the Second Mortgagee of the whole or any part of the said Second Mortgagee’s principal amount and/or any interest for the time being due and / or remaining unpaid by the Mortgagee unto the Second Mortgagee upon the security of the said Mortgage then and in any such event the Guarantor hereby guarantees the payment of and shall without demur pay to the Second Mortgagee forthwith upon demand the whole of the said Second Mortgagee’s principal amount of Rs.5,00,00,000/- (Rupees Five Crores) or any part thereof which shall then be due and / or remaining unpaid by the Mortgagor to the Second Mortgagee and all interest thereon which shall then be due and / or remaining unpaid by the Mortgagor to the Second Mortgagee and all costs, charges and expenses as aforesaid subject to a maximum of Rs.5,00,00,000/- (Rupees Five Crores) for principal and Rs. 4,04,72,000/- (Rupees Four Crore Four Lakhs and Seventy two Thousand) for interest AND will indemnify and keep indemnified the Second Mortgagee against all losses of principal upto the said sum of Rs.5,00,00,000/- (Rupees Five Crores) and interest up to the said sum of Rs.4,04,72,000/(Rupees Four Crores Four Lakhs and Seventy two Thousand) and all costs, charges and expenses which the Second Mortgagee may incur by reason of any default on the part of the Mortgagor, its successors and assigns.

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2 The Guarantor hereby agrees and undertakes that in the event of delay/failure by the Guarantor to make payment

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7 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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ON DEMAND under the guarantee i.e. within 3 days from the date of invocation of guarantee by the Mortgagee's the Guarantor shall pay entire amount of guarantee as demanded by the Mortgagee's with interest thereon at the rate of 17.50 per cent per annum compounded with quarterly rests from the date of invocation of guarantee till the date of payment of the said amount including interest.

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3 The Mortgagees shall have the fullest liberty without in any way affecting this guarantee and discharging the Guarantor from his liability hereunder to postpone for any time or form time to time the exercise of any of the powers conferred by the said Mortgage executed by and between the Mortgagor in favour of the Mortgagees or under any other deed or documents that may have been or that may hereafter be executed by the Mortgagor in favour of the Mortgagees and exercise the same at any time and in any manner and either to enforce or forbear to enforce the covenants for payments of principal or interest or any other covenants contained in or implied by any document or any other remedies or securities available to the Mortgagees or to grant any indulgence or facility to the Mortgagor and the Guarantor shall not be released by any exercise by the Mortgagees or any of them of their or its liberty with reference to the matters aforesaid or any of them or by reason of time being given to the Mortgagor or of any other forbearance, act or omission on the part of the Mortgagees or any of them or any other indulgence by the Mortgagees or any of them to the Mortgagor or by any other matter or thing whatsoever which under the law relating to sureties would but for this provision have the effect of so releasing the Guarantor and the Guarantor hereby waives all suretyship

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8 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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and other rights, if any, which the Guarantor might otherwise be entitled to enforce which are inconsistent with the above or any other provisions of this guarantee.

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6 In order to give effect to the Guarantee herein contained the Mortgagees shall be entitled to act as if the Guarantee was the principal debtor to the Mortgagees having full responsibility and liability for all payments and covenants guaranteed by him as aforesaid to the Mortgagees.

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16 The Guarantor hereby agrees that copies of the accounts of the Mortgagor contained in the books of account of the respective Mortgages signed by the respective Managers/Officers for the time being of the respective offices at which such accounts shall be kept or any other office of the respective Mortgagees shall be conclusive evidence against the Guarantor of the amount for the time being due and/or remaining unpaid to the respective Mortgagees from the Mortgagor in any action or other proceedings brought against the Guarantor.

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..(emphasis supplied)

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9 The due date for repayment of the entire loan was 6^th January 2006. The same was however extended on two occasions. The terms on which these extensions were granted, according to me, require consideration and are not as clear as Mr.Naphade would have me hold. It is in view thereof that I have granted the defendant unconditional leave to defend the suits.

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9 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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10 A further GR dated 21^st March 2003, was issued by the defendant. This GR is the main defence. It is necessary therefore to set out the relevant portions relied upon by both Mr.Naphade and Mr.Shah :

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GOVERNMENT OF MAHARASHTRA

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CO-OPERATION AND TEXTILES DEPARTMENT GR NO.CSF-1003/M.NO.9/3-C

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MANTRALAYA EXTENSION BUILDING, MUMBAI – 400 032.

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Date : 21 March, 2003.

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Preface :

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Union Finance Secretary (Banking and Insurance) had convened a meeting on the date 17 December 2002 for making discussion about Comprehensive Package, prepared by Maharashtra State Co-operative Bank with the concurrence of Reserve Bank of India and NABARD, for providing financial assistance to the co-operative sugar factories, which are facing financial crisis, in the State. Union Finance Ministry vide its letter dt.19 December, 2002 had informed to the State Government that the State Government may grant approval to the things discussed in the said meeting/give consent to the terms imposed/confirmation to the issued of the Government Counter-guarantee, so that Reserve Bank of India/NABARD, Maharashtra state Co-operative Bank may get an opportunity to provide financial assistance afresh to the co-operative sugar factories. In pursuance thereof, in the Cabinet Meetings held on the date 15 January 2003 Wednesday and on the date 25^th February 2003, Wednesday, the decision has been taken to give Government Counter-guarantee, as per the comprehensive

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10 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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Package presented by Maharashtra State Co-operative Bank, District Central Co-operative Banks and Apex Urban Cooperative Bank of Maharashtra & Goa.

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GR :

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In-principle approval of the State Government is granted to convert into medium term loan, for the period of five years of the amount of short margin created on account of declining in the rates of sugar prices at the end of 16.11.2002 of the Cooperative sugar factories provided with financial assistance by Maharashtra State Co-operative Bank Ltd., Mumbai/District Central Co-operative Banks and Apex Urban Co-operative Bank of Maharashtra & Goa Ltd., Mumbai, subject of the amount of Rs.1578.58 crores and the short margin created due to other reasons, subject to the belowmentioned conditions and by factor wise ensuring that the concerned Co-operative sugar factories have growing capacity and efficiency and Government counter- guarantee is granted.

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(A) Government default guarantee will be given, after scrutinizing individuals proposal of respective co-op sugar mills which are having short margin on their pledge account & have been converted into medium term loan. In respect of such co-op. sugar mills the respective banks will deduct and recover the loan amount of converted medium term loan on priority basis from sale proceed of sugar produced from crushing season 2002-03 and thereafter bank should recover other loans. The respective bank and co-op. sugar mills should submit their undertaking in this respect to the Commissioner of Sugar and Commissioner for co-op. should ensure that undertaking furnish by respective Bank and sugar mills are executed in that spirit.

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11 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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(B) As regards the demand made recently by the bank that the Government should make good (compensate) the sum of Rs. 354.32 crores including interest, being the amount of counter guarantee, given by the Govt. of Maharashtra State Co-operative Bank on behalf of Co-operative sugar factories, Cotton Mills and other Co-operative Societies in the State, before March 2003, will be reconsidered and will be withdrawn.

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For the co-operative sugar factories of the seventh, eight and ninth five years plan, Maharashtra State Co-operative Bank Ltd., Mumbai District Central Co-operative Banks (Plaintiff) and Apex Urban Co-operative Bank of Maharashtra and Goa Ltd., Mumbai and other banks, under the participatory scheme, have sanctioned medium term loan for the repayment period of seven years (including five years moratorium period.) In order to convert medium term loan into long term loan and to make repayment period upto 9 years approval is granted subject to the terms mentioned at (A) & (B) of Para 1.

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..(emphasis supplied)

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11 Mr.Shah, the learned senior counsel appearing on behalf of the plaintiff submitted that on a conjoint reading of clause 1(A) and clause 2 , the plaintiff was bound and liable to ensure that the banks would deduct and recover the loan amount from the sale proceeds of the sugar products from the year 2002-03 and thereafter recover the other loans. Mr.Naphade submitted that this condition would apply only in respect of the sugar factories that had not furnished the entire margin and not to sugar factories who had furnished the entire

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12 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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margin. Mr.Naphade submitted that clause 1 made it clear that the conditions stipulated therein did not apply to sugar factories which had furnished the entire margin money and to whom the loans had already been disbursed. The opening part of clause 1 and sub clause ‘A’ apply only to those cases where there was a short margin credit.

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12 This aspect to say the least, requires further consideration. The condition requiring the banks to deduct and recover the loan amount on priority basis from the sale proceeds of sugar produced from the crushing season in the year 2002-03 and thereafter recover the other loans was extended to and incorporated in clause 2 which applied to all other banks as well including the plaintiff. The plaintiff is, in fact, mentioned by name in clause 2. By these GRs, the defendant had agreed to convert the minimum term loan into a long term loan and to extend the repayment period upto nine years but subject clause (1-A). To say the least, Mr.Shah’s interpretation of the GR cannot be said to be unsustainable.

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13 The defendant expressly contended that this condition was not complied with by the banks. Had the conditions been complied with, according to the defendant, the liability of the sugar factory to the banks would have been fully satisfied.

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13 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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14 Assuming that the GR itself constitutes a guarantee it is expressly conditional upon the plaintiff complying with the terms and conditions stipulated therein. In that event, the defence that the plaintiff failed to comply with the conditions stipulated therein raises a triable issue.

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If, on the other hand, the GR had the effect of extending the earlier guarantee, it is a moot point whether the conditions stood incorporated into the guarantee thereby making it a conditional guarantee. This aspect, itself, is a triable issue. If held in the defendant’s favour, this, in turn, would lead to a further triable issue viz. whether or not the conditions of the GR dated 21^st March 2003 had been fulfilled.

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15 Thus, whether the GR constituted a guarantee or whether the condition thereof stood incorporated into the said guarantee makes no difference. In either case triable issues arise.

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16 On the basis of these GRs, the defendant would be entitled to

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unconditional leave to defend the suit as there are serious issues to be tried as regards the interpretation of the GR dated 21^st March 2003.

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14 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

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17 Mr.Naphade then submitted that even assuming that the above

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issues are answered in the defendant’s favour, it would make no difference in view of the subsequent GRs which I will now refer to.

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18 A GR dated 28^th October 2003 reads as under :

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GOVERNMENT OF MAHARASHTRA

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CO-OPERATION AND TAXTILES DEPARTMENT GR NO.CSF-1003/M.NO.9/3-C

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MANTRALAYA EXTENSION BUILDING,

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MUMBAI – 400 032.

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Date : 28 October, 2003.

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Preface :

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In the Cabinet Meeting dt.15^th October, 2003, Wednesday, a decision has been taken to make revision in the decision taken for granting Government default guarantee in the Cabinet meeting held on Wednesday dt.15^th October 2003, as per the comprehensive package presented by Maharashtra State Cooperative Bank, District Central Co-operative Banks and Apex Urban Co-operative Bank of Maharashtra and Goa Ltd., Mumbai.

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GR :

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The Government grants approval to make revision in the condition at “A” in the GR, dt.21.03.2003, referred to at Sr.No.6 in the aforesaid preamble, as follows :

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A. It will be the responsibility of the concerned bank to recover of medium term loan availed on the Government default guarantee, alongwith interest thereon, from the sale proceed of sugar produce by the concerned Co-operative sugar mills from

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15 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

¶155

crushing season 2002-03 onwards in the same year within maximum 5 years.

¶156

B. Moreover, the condition at “B” in the aforesaid GR, dt. 21.03.2003, is cancelled.

¶157

Maharashtra State Co-operative Bank Ltd., Mumbai, District Central Co-operative Banks and Apex Urban Co-operative Bank of Maharashtra & Goa Ltd., Mumbai and other banks have sanctioned medium term loan for the period of 7 years (including the moratorium period of 2 years) for repayment of the said loan, under the Participatory Scheme, to the Co-operative Sugar Factories under seventh, eight and ninth five years plan. Approval is granted to convert this medium term loan into long term loan and to make the period of repayment of 9 years.

¶158

By order and in the name of the Government of Maharashtra.

¶159

..(emphasis supplied)

¶160

19 This GR extended the term for repayment to nine years. It is important to note that the GR revises condition ‘A’ of the said GR dated 21^st March 2003 only to the limited extent mentioned therein. The condition precedent regarding the adjustment of the sale proceeds received by the banks has not been altered. Where the defendant intended deleting a particular provision, it provided so, expressly. For instance, clause 3B expressly stated that condition ‘B’ in the GR dated 21^st March 2003 was cancelled.

¶161

16 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

¶162

It is certainly arguable that this extension was also subject to the other conditions mentioned in the GR dated 21^st March 2003 which had not been deleted by this GR.

¶163

20 The reliance upon the GR dated 20^th October 2003, therefore does not entitle the plaintiff to a decree or even warrant an order of conditional leave to be passed on the summons for judgment.

¶164

21 Mr.Naphade submitted that this GR was superseded by the subsequent GRs dated 12^th February 2004 and 30^th July 2004. The conditions in the earlier GRs therefore ceased to be applicable.

¶165

22 (A) The relevant parts of the GR dated 12^th February 2004 read as under :

¶166

GOVERNMENT OF MAHARASHTRA

¶167

CO-OPERATION, MARKETING AND TAXTILES

DEPARTMENT

GR NO.CSF-2904/

M.NO.15/3-C,

MANTRALAYA EXTENSION BUILDING,

¶172

MUMBAI – 400 032.

¶173

Date : 12 February 2004.

¶174

Preface :

¶175

As per the decision taken in the Cabinet meeting held on Wednesday, the date 28^th January 2004 in respect of granting

¶176

17 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

¶177

counter-guarantee under comprehensive package for providing financial assistance to the co-operative Sugar factories in the State, an approval has been granted to the co-operative Sugar factories of the 7^th , 8^th & 9^th five years plans to convert medium term loan with 7 years repayment period (inclusive of 2 years late period) granted to the said sugar factories under the participatory scheme, from Maharashtra State Co-operative Bank Mumbai, District Central Co-operative Banks and Apex Urban Co-operative Bank of Maharashtra & Goa Ltd., Mumbai etc. banks, into long term loan with the repayment term of 11 years (inclusive of 4 years late period). In pursuance thereof, a request had been made to grant State Government Counter Guarantee to the liability of increased interest, subject to the relaxation of the condition set out in the Memorandum of Understanding made with the Central Government, a proposal was under the consideration of the Government to grant approval to the same.

¶178

GR :

¶179

Taking into account the less availability (scarcity) of the sugarcane, arose on account of drought situation in the State and an adverse and serious affect caused on the financial condition of the co-operative sugar factories, Government approval is granted to give counter-guarantee to the additional liability by converting (medium) term loan raised under the participatory scheme by the co-operative sugar factories of the 7^th , 8^th 9^th five years plans, from Maharashtra State Co-operative Bank Ltd., Mumbai, District Central Co-op. Banks and Apex Urban Co-operative Bank of Maharashtra & Goa Ltd. Mumbai and other coparticipant banks, into loan term loan by assuming 11 years repayment term (inclusive of 4 years late period) in place of 9 years repayment term of the (medium) term loan and to the

¶180

18 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

¶181

additional interest and to the total liability, subject to the approval from Central Government and NABARD.

¶182

By order and in the name of the Governor of Maharashtra. ..(emphasis supplied)

¶183

(B) The relevant part of the GR dated 30^th July 2004 read as

¶184

under :

¶185

GOVERNMENT REOLUTION :-

¶186

The Government has granted approval to supersede the Government of Resolution dated 12/2/2004 referred to herein above at Sr.No.6 under the head, viz. “READ”, and considering the scarcity of sugarcane arose due to the famine in the state and considering the adverse and serious impact as a result thereof, on the financial condition of the Sugar factories, to give counter guarantee to the increased liability of term and increased liability of interest arose due to conversion of loan into loan term loan by presuming the period of repayment of term loan from 9 years to 11 years (together with period of delay of 4 years) given under the Participation Scheme by Maharashtra State Co-operative Bank Ltd., Mumbai District Central Co-operative Banks and Apex Urban Co-op. Bank, Bank of Maharashtra and Goa Ltd., Mumbai and under the participating Banks to the Cooperative Sugar Factories under the Seventh, Eighth and Ninth Five Year Plan.

¶187

By Order and in the name of the Governor of Maharashtra.

¶188

..(emphasis supplied)

¶189

19 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

¶190

23 These GRs extended the repayment period to 11 years. I will presume that the condition regarding the 12^th February 2004 GR being subject to the approval of the loan by the Central Government and NABARD was deleted by the GR dated 30^th July 2004. This is not relevant for the present purpose. It is difficult however in a summons for judgment to determine the various questions that arise on account of these GRs.

¶191

24 For instance at the hearing of the suit, it will be necessary to consider whether the terms and conditions of the GR dated 21^st March 2003 continued to apply to or after this GR. If these GRs novated the GR dated 21^st March 2003, it could well have the effect of having novated all the other prior agreements as well. In that event, the guarantee would also cease to be operative. If that is so, the clauses therein which could well have justified orders against the defendant, absent anything else, would no longer be applicable. In that event, there would be no question of passing even a conditional order in the above summons for judgment.

¶192

25 Thus, for the purpose of the summons for judgment, it makes no difference whether the GR dated 12^th February 2004 novated the earlier transactions and terms and conditions between the parties or

¶193

20 - 904.sj.87.09 ss.3497.08 & 905.sj.377.2009.ss.2827.08

¶194

not. Either way the defendant would be entitled to unconditional leave to defend the suit.

¶195

26 In view of the above , it is not necessary to consider the other defences raised on behalf of the defendant.

¶196

27 In these circumstances, unconditional leave is granted to the defendant to defend the suits. The suits are transferred to the list of commercial causes. The defendant to file their written statement within four weeks from today. Affidavit of documents to be filed within six weeks thereafter. Discovery and inspection forthwith thereafter.

¶197

All the Summons for Judgments are accordingly disposed of.

The Mumbai District Central Co-Op. Bank Ltd. v. State of Maharashtra

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The Mumbai District Central Co-Op. Bank Ltd. v. State of Maharashtra

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