Allowed

Ms Humming Bird Soft Solutions Pvt. Ltd. v. Export Import Bank of India

DRT9 Jun 2025SA/290/2023

Case brief

AI extract

What is this about?

This quasi-judicial order addressed an application challenging notices issued under the SARFAESI Act. The tribunal held that the bank could not take physical possession due to lease terms and discharged the guarantor because a restructuring agreement was executed without their consent, altering the original contract.

What did the court decide?

Securitization application allowed; notices under the SARFAESI Act set aside; applicant discharged from guarantee and mortgage obligations.

Ms Humming Bird Soft Solutions Pvt. Ltd. versus… — Contract and Commercial Disputes | DRT (2025)

¶1

IN THE DEBTS RECOVERY TRIBUNAL-II^{AT HYDERABAD} DATED THrS THE OgrH DAY OF^{JUNE, 2025}

¶2

PRESENT: SH. RAMESHWAR^{KOTHErB.Com,L.LB.(Hotrs.),M.A.} PRESIDING OFFICER

¶3

Securitization Application No.29O^{OF 2023}

¶4

M/s Humming Bird Soft Solutions Private Limited Rep by its Authorized Signatory Mr. Ram Mohan Patnaik Patanaikuni S/o Venkata Narsinga Rao, Aged 62 Flat No.305/1, Road No.78, Jubilee Hills Hyderabad-500033

¶5

.Applicant.

¶6

Versus

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The Authorized Officer Export-Import Bank of India Golden Edifice 2nd Floor 6-3-639 / 640, Khairatabad Circle Hyderabad-500004

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M/s Coastal Projects Limited Plot No.304-0, Road No.78 Film Nagar, Jubilee Hills Hyderabad-500033

¶9

.......Respondents.

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Counsel for the Applicant

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:Mr.P.S,N. Ravindra

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Counsel for 7tt Respondent Bank :Mr.Avinash Desai,

¶13

Learned Designated Sr. Counsel on behalf of Mr,B. Harinath Rao

Respondent No.2

:Ex parte

-:ORDER:-

This Securitisation Application is filed u/s.t7 of the Securitization and Reconstruction of Financial Assets and Enforcement

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of Security Interest Act, 2002^(hereinafter "the Act" for short) to declare the notices under Sec.13(2) and 13(4) of the Act^issuedby the 1't respondent bank against the application schedule^property as non est in law, set aside the same and also to declare the action in taking^{physical possession} of the schedule^{propertypursuant} to^order dated 02.06.2023 in Case No.541/23 as contrary^{to law, illegal,} arbltrary, void ab initio and without any^{justification;and} to^declare invocation of Securitization^proceedings as bad^{in law.}

¶21

The averments made in the application, briefly,^are that:-

¶22

i. The^principal debtor is !l/s Coastal^{ProjectsLimited,2nd} respondent herein. The applicant entered^{lnto lease deeddated} Oal2.2OO4 with New Okhla Industrial^{DevelopmentArea} (NOIDA) for 90 years in respect of application^schedule property. The applicant executed guaTantee agreement dated 08.06.2012 and created^{mortgageby depositof title deedson} 11.06.2012 in respect of^{applicationschedule propertyto} secure the Rupee Term^{Loan of Rs.28.80 crores sanctionedto} 2nd respondent company by the^{1't respondentbankvide} sanction letter dated 30.04'2012.^{There weremodiflcationsin} the credit facility on 10.08.2012^{$'ithadded personal guarantee} of Mrs. Sarojini.

¶23

ii. The 2nd respondent company^{defaulted in repayment, thereafter} corporate Debt Restructuring^{(CDR) Process was initiatedv/hich} led to execution of Master^{Restructuring Agreement(MRA)} dated 29.O4.2074 between^{lendersof 2'd respondent including}

¶24

the 1* respondent herein^{thereby a new transaction came into} existence without involvement^{of the applicant.Theapplicant} was neither communicated to the^{CDR/MM nor was it a} signatory and hence^applicant stood^{dischargedofits} guarantee.

¶25

iii. In pursuance of RBI Circular dated^{08.06.2015, lenders created} Joint Lenders Forum^{(JLF) under Strategic DebtRestructuring} (SDR) scheme and recorded 25.07.2OL5 as^{review date. SDR} was implemented by converting total^{debt of Rs.180.51 crores} at^par value of Rs.10^{per sharetherebyholding54.55% stake} in M/s Coastal Projects Limited.^{The applicant was neithera} party to the Equity conversion nor did it^give arly consent.

¶26

,//Y:.^,.t<n Llz^'o''rtt

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Vide letter 27.70.2017 issued by the^{1* respondentbank,} applicant came to know about CDR.^{Consequent uponfailureof} CDR, SBI initiated insolvency^{proceedings against2nd} respondent company before^{Hon'ble NCLT, Kolkatawherein the} 1st respondent bank flled a^clalm of^{Rs.218,21,34,469/-and} once the claim is admitted before^{the Liquidator,the applicant} stands discharged from the liability^{and 1't respondentcannot} proceed under the SARFAESI Act, 2002.

¶30

The 1st respondent bank issued demand^noticedated 06.|L.2077 u/s 13(2) to the applicant^{callingupon to pay an} aggregate amount of R9.38,70,6O,72O/-.^ThoughNocwas issued to sell the^property and remit^{Rs.9 crores towards} minimum target^price followed by further^{correspondenceon} the subject, the 1"t respondent bank issued^{Sec.13(4)notice} dated 04.11.2019 which was received by the^{applicant on} 18.11.2019. As per lease deed dated 08.12.2004,^prior permission of Government of Uttar Pradesh is required to^give or take^{physicatpossession} of the^{property since the 1't charge} lies with the Government of U.P. as^per Clause¹² of^{the lease} deed.

¶31

The contract of guarantee has become null and void on account of novation of contract due to CDR and conversion of debt^into equity without consent of the applicant company. Thus, the applicant stood discharged from all the obligations arose out of the initial contract and the object of said contract has been frustrated in terms of Sec.56 r/w Sec.32 of the Indian contract Acjt, 7872.

¶32

Any variation in the terms and conditions of the original loan sanction without consent of the^guarantor will absolve the guarantor as per Sec.133 of the Indian Contract Act, 1872.

¶33

The demand notice does not contain mandatory details which is in violation of Sec.13(3) of the Act. The possession notice was neither affixed on the secured asset nor published in two leading newspapers thereby respondent bank violated Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002 ("Rules" for short). The Branch-Fanager who issued notice is not an authorized officer. {*.1.y1-q i.'

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Hence the SA may be allowed.

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The 1st respondent bank filed reply statement. The submissions, inter alia, are that;-

¶38

i. The 2nd respondent availed Rupee Term Loan of Rs.28.80 crores vide sanction letter dated 30.04.2012 and subsequently modified at its request vide sanction letters dated 04.06.2072 and 10.08.2012. Necessary loan documents were executed, the applicant herein and !l/s Selection Aluminium Wires Pvt Ltd stood as Corporate Guarantor and Smt.Sabbineni Sarojini^stood as personal guarantor for the credit facility and they executed deed of^guarantee. The applicant herein deposited title^deedsof its property as a security to the credit facility.

¶39

[. At the request of 2nd respondent company, the account was restructured vide Ref. dated 2A.03.2074. The 2nd^respondent executed Master Restructuring Agreement^{(MRA) dated} 29.03.2074. In spite of restructuring, the 2nd respondent committed default in repayment and therefore all the lenders agreed to exit from the CDR and accordingly the 1st respondent bank exited from CDR on 31.08.2017 and issued recall notice dated 27.!O.2ol7 to 2nd respondent and also to the applicant herein and other^guarantors to clear outstanding dues^of Rs.192,54,40,900.63^ps as on 27.7O.2O77.

¶40

, The demand notice was issued u/s 13(2) of the Act on O6.L7.2017 to the applicant for Rs.38,70,60,720.37^{ps as on} 27.70.2017. As there was no response,^{possessionnotice was} issued on O4.ll.2ol9,^got affixed on the^{securedasset and} published in 'Business Standard' and 'Nava Bharath Time' English and Hindi newspapers^respectively on^10.11.2019. Thereafter respondent bank approached learned^District Magistrate, Meerut u/s 14 of the^{Act,2002by filing Case No.541} of 2023 for taking^{physicalpossessionand} the^samewas allowed vide order dated 02.06.2023.

¶41

iv. After receiving^possession notice dated^{04.11.2019, the} applicant filed SA No.201 of^{2020 before learnedDRT-1,Delhi} and withdrew the same on Q7.O6.2023.^{Suppressingthe said} fact the present SA is fned.//1lv^,:r11 -,/^q'r"

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¶44

v. No prior permission as per clause 12 of the lease deed was required from Government of U.P. however, creation of mortgage was informed to the NOIDA ("Authority") and same was acknowledged on 06.09.2012.

¶45

The CDR/MM was not a new and entirely different contract and it was only a mechanism for restructuring the repayment of outstanding dues amount. The applicant agreed vide clause 7 of the Deed of Guarantee dated 08.06,2012 that guarantee would be a continuing guarantee and would remain until the outstanding due amount was fully paid by the principal borrower. Therefore, the applicant cannot be absolved from the guarantee/liability on account of CDR/MRA.

¶46

As per CDR letter of approval dated 28.03.2014 and I'IRA dated 29.O3.20L4, all exclusive securities including the third party collaterals would continue to remain exclusive to the respective lenders. No securities were released during CDR. The Promoter/Director of applicant company and the 2nd respondent company are one and the same i.e., Mr.sabbineni Su rendra.

¶47

l4ere admission of claim before Liquidator in Cp(IB) No.593/KB/2O77, the applicant is not automatically discharged from the liability. As per Sec.134 of the Indian Contract Act, 1872, a guarantor is discharged of its liability only if the creditor on its own instance discharges the principal debtor. Therefore, the creditor is discharged of liability by voluntary act of the creditor and not by operation of law. In the present case, corpoTate debtor can be discharged by approval of resolution plan by the adjudicating authority under the IBC irrespective of whether the creditor is in favour of a resolution plan.

¶48

tx.

¶49

Hon'ble Supreme Court in Lalith Kumar,s case ILalit Kumar Jain vs. Union of Indta, Transferred Case (Civil) No.245 of 2O2Ol held that approval of resolution plan does not ipso fact; discharge a guarantor of his/her/its liabilities under the contract of guarantee. Moreover, the release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process, that is, by operation of law or due to liquidation or insolvency proceedings, do not absolve the surety/guarantor of his/her/its liability, which arises out of an independent contract. l\i.fr*

¶50

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x. It is agreed vide^{clauses10, 11, and 12 of the Deedof} Guarantee dated^{08.06.2012that the guarantee shall not be} affected when the^{borrower/principal borroweris dischargedby} operation of^{law etc.}

¶53

xi. The applicant in^{fact, approachedthe bankwith a proposalto} sell the secured^{asset at Rs. 9 crores and to issue NOC Though} approval was^{given, borrower/guarantorsfailedto do so and} hence NOC had^{to be revoked.}

¶54

The 2nd respondent^{company was set ex parte on 09'04'2025as} called absent and^{no representation despite serviceof notice'}

¶55

Heard Mr.P.S'N.^{Ravindra, Iearned counsel appearing for the} applicant company^{and Mr.Avinash Desai, learned DesignatedSenior} Counsel representing^{Mr.B. HarinathRao,learned counsel for the 1't} respondent bank.^{Perusedthe written argumentsfiled by boththe} counsels and^{the material broughton record'}

¶56

Learned^{counsel for the appllcantin reiterationof the contents} of the applicatlon^{wouldcontendthat as per clause 12 of the lease} deed dated^{08.12.2004,the Governmentof UttarPradesh holds the} first charge^{and thereforeprior permissionis required from the U'P'} GovernmentformortgagingandgivingortakingPhysicalpossession of the^{property and hence l't respondentbank cannottakepossession} of the^{scheduleproperty.He furthercontended that the applicant} stood as^{guarantorfor the Rupee Term Loan availedby theznd} respondent^{companyand created mortgageover the application} schedule^{proPertyby depositof title deedson 11 06'2012However'} duetodefaultcommittedby2ndrespondent,thelstrespondentbank and other^{lendersinitiatedCorporate Debt Restructuringprocessand} entered into^{Master Restructuring Agreementdat)h29.O4.'21t4' lt ts}

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a new contract entered into^{without involvement of the applicantand} hence stands discharged of the obligation due to variance in^the original contract.

¶61

Learned counsel would further contend that following the^RBI Circular dated 08.06.2015^providing for conversion of^debt to^equity under the Strategic Debt Restructuring, lenders of 2nd respondent company formed Joint Lenders Forum and Strategic^Debt Restructuring was implemented by cumulatively converting total^debt of Rs.180.51 crores at^par value of^{Rs.1Oper share therebythe 1't} respondent became a share holder of equity shares and^hence it cannot invoke Securitization^proceedings. The applicant was not a party to the equity conversion scheme. Hence applicant being guarantor stands discharged under Sec.62 of the Indian Contract Act on account of novation of original contract.

¶62

Learned counsel would further contend that after the failure of CDR, the financial creditor of 2nd respondent company viz., State^Bank of India initlated insolvency^proceedings before^{Hon'ble NCLT, Kolkata} and order for liquidation was^passed on 06.12.2018. The^1't respondent filed its claim before the Liquidator for^{Rs.27A,27,34,469/-} and the same has been admitted.^{With admissionof the claim, the} applicant is absolved the^{liability and hence1"t respondent bank} cannot^proceed under^{the SARFAESIAct.}

¶63

Learned counsel also^{contendedthat the SA No.20U2020was} filed challenging the^{possessionnotice which was withdrawn'No} suppression of^{factis involvedsince the cause of action is differentin} both the SAs. As^{per clause 2.1 of the MRA, all the original} a^g reements^{stoodsu perseded.Existin gf aciI ities w%ewr,yT.:ructured as} 'Jr'o' - per clause E of the MRA.

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¶66

Learned counsel^{wouldalso contendthat clause 7 of the general} conditions of the deed of^{guarantee does not speak that guarantee} continues even if new contract^{like1,4 RA takes place. Accordingto him,} clauses 7 and 8 cannot override^{Sec.133and Sec'62of the Indian} Contract Act. Learned^{counsel relied on judgmentof Hon'ble Allahabad} High Court between Shesh Narain^{Awasthi & Another v. Chairperson,DMT,} Attd. & others t2011⁽¹⁾ D.R.T.C.^{466 (///.)Jin support of his contention} of discharge of liability of^{guarantordue to variance in termsof} original contract under Sec.133^{of the Indian Contract.}

¶67

With the above contentions,^{learned counselsought to allow the SA as} prayed for.

¶68

Per contra, learned designated^{senior counselfor the1st} respondent bank would submit that the applicant^{made a false} statement before DRT-1^{Delhi while withdrawingthe SA No.201/2020.} The^present SA is also filed^{suppressingthe fact of filing anotherSA} earlier. This^proves that the applicant^{has not approachedthe Tribunal} with clean hands. Learned designated^{senior counsel relied on} judgement of Hon'ble Supreme Court in Amar Singh vs. Union Bank of India [(2011) 7 SCC 69] whereln vide^{para Nos.50 and 51 it is} categorically held that action in^{law in not a game of chess.He also} refereed to order of learned DRT, Chennai in SA No.22 of²⁰²² between suJatha Biotech and Ors vs. The Authorized Officer, Indian Bank, Stressed Assets Management Eranch whereby learned Tribunal non suited the applicant for suppression and distortion of the fact that another SA was filed.

¶69

t2. Learned designated senior counsel would further submit that no new debt has been created by virtue of restructuring of outstanding dues of 2nd respondent company. The lenders unan i mous l y aqreed to '^{t'no"ff llilun.""".} '

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exit the CDR and accordingly all the concessions were^{recalled on} 37.08.2017 and thereafter a recall notice was issued on^27.70.2077 to the 2nd respondent bank and other guarantors including the applicant for Rs.192.54,40,900. 63 ps. Since none of them came forward to clear the amount, the 1't respondent bank issued demand notlce dated 06.LL.2017 u/s 13(2) of the Act, 2002 to^pay Rs.38,70,60,720.37 ps. As demanded amount was not paid, possession notice was issued on 04.11.20t9 u/s 13(4) of the Act which was duly published in newspapers and affixed on secured asset.

¶73

It is further contended that the as per clause 7 of deed of guarantee executed by the applicant, the guarantee shall be a continuing guarantee and shall remain in force until the outstanding principal amount are paid off in full and till such time, the guarantee is not extinguished. On this context, learned designated senior counsel relied on the judgement of Hon'ble Supreme Court in Laxmi pat Surana vs. Union Bank of India K2021) I SCC 4811. He also relied on the judgement of Hon'ble Supreme Court in Lalit Kumar lain vs. union of India t(2021)^{9 SCC 3211} with specific attention to paras 125 and 126 in support of his contention that approval of resolution plan does not ipso facto discharge a guarantor of its liability under the contract of guarantee. The release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process i.e., by operation of law, or due to liquidation or insolvency proceeding. does not absolve the surety/guarantor of his/her/its liability, which arises out of an independent contract. He informed that the 1st respondent filed its claim for Rs.218 crores plus which was admitted whereas received only Rs.13.92 lakhs and therefore the 1st respondent bank can^proceed against the applicant to the extent of unpaid amounts. iM6s

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L4. Learned designated senior^{counsel further submittedthat as per} clause no.12 of the^{lease deed dated 08.12.2004, no prior permission} is required in the event of^{mortgageor mortgagewithout possession} in favour of Export Import^{Bank of India (l't respondent bank) and in} case of mortgage the Authority^{will have the first chargetowards} transfer charges, extension^{charges, lease rent and any other dues,} taxes payable to NOIDA'^{Creation ofmortgage has been} acknowledged bY^NOIDA.

¶77

Learned designated^{senior counsel addedthat the OTS proposal} is essentially an^{acknowledgement of debt though the same was} rejected.

¶78

with the above^{submissions, learned counsel sought for dismissal of} the SA with exemPlary^costs.

¶79

¶80

Now, the^{points that arise for consideration are:-}

¶81

i. Whether the^{7st respondentbank is entitledto take physical} possession of the apptication^{schedule property in the light of} clause 72 of^{the lease deed dated 08'12'2004?}

¶82

ii. Whether^{the applicant's guaranteeunder deed of guarantee} dated 08.06.2072^{can be treated as a continuing guarantee} as per clause^{7 therein or dischargedin viewof the clause 2'1} of MM so^{also the moftgage on account of novation of} contract?

¶83

iii. Whether the^{7't respondentbank is entitled to proceed} against the^{applicant company beingguarantorfor the unpaid} ionies, under^{the SARFAESIAct, 2002 in addition to CIRP} proceedings against the^{principat borrower i'€''2'd}

¶84

respondent? OwP

¶85

iv. To what^relieft

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¶88

Point Nos.(i) and^(ii):

¶89

At the very outset, it is^{observed that the applicantherein} earlier filed SA No.2O112020 before^{the learned DRT-1at Delhi} challenging the^{possessionnotice and subsequently filed Interlocutory} Application No.2689/2023 for^{withdrawal of the SA.LearnedDRT} inadvertently recorded that the matter^{is settled and the has been} closed. However. The same^{was modifiedvide order dated 09.08.2023} in MA No.51/2023^{whereby SA was dismissedas wlthdrawn. It was} made clear in the observations that the^{applicantdid not state about} settlement of account. As such, no^{misrepresentation was madeby} the applicant and I do not Rnd any^{serious suppressionof factleading} to rejection of the SA.

¶90

The applicant is a lessee of the application^{schedulepropertyfor} a period of ninety^years with effect from 25,11.2002 by^{virtue of lease} deed dated 08.12.2004 between the applicant and the^NoIDA ("Authority" for brevity). According to applicant, the 1st respondent bank cannot take^{physicalpossession} of the subject^property as^per covenants under clause 12 of the lease deed. In this context, I deem it appropriate to extract relevant portion of clause 12 of the lease deed as hereunder:

¶91

"(12) That the lessee shall not, without the^{previousconsentin} writing of the Lessor transfer, relinquish or assign his interest in the demised premises or the building standing thereon or both before making the unit functional and every such transfer, assignment, relinquishment, shall be subject to and the transferees, or assignees shall be bound by all the covenants and conditions herein contained and be answerable to the Lessor in all respect therelore and in no case consent of the Lessor to assiqn, relinquish, transfer or^part with possession of any portion less than the whole of the demises premises or causing any subdivision there of by metes and bounds or otherwise shall be granted. However the Lessee can mortgage the demised pre.mises for raising loan to implemenrrr,., ,t "OOryAOn^{:::t

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Provided also that prior permission as aforesaid shall not necessary in the event of mortgage or mortgage without^possessions favour of the Government of the Uttar Pradesh or of the Industrial Finance Corporation of India or in favour of the U.P. Financial Corporation or Industrial Development Bank of India or the Life Insurance Corporation of India or Industrial Credit and Investment Corporation of India and Export Import Bank only after the100o/o^payment of premium and interest has been recovered. In case of mortgage the Authority will have First Charge towards transfer charges, extension charges, lease rent and any other dues, taxed^payable to Noida".

¶96

In view of the above extracted clear condition, it is indisputable that the Government of U.P, has the first charge in case of mortgage and^{prior permission} is not required only in case of mortgage without possession. The 1tt respondent bank might have accepted the mortgage based on this crucial document by diligently^going through the contents therein, Under such circumstances, I^{haveno hesitation} to find that the 1't respondent bank is not entitled^{to take physical} possession of the application schedule property under the Act,²⁰⁰² unless by following the conditions^{stipulatedin the lease deed.}

¶97

The next contention of the applicant^is that^{the original contract} under deed of^guarantee was^{replacedby the Master Restructuring} Agreement and all the agreements^{stoodsupersededby clause 2.1.} The lst respondent bank refuted the^{contention stating that no new} debt was created v,a CDR/MRA and^{CDR waseven recalled. Sec.62of} the Indian Contract Act, lB72 deal with^novation of^{contractand it} reads as hereunder:

¶98

"62, Effect oI novotion, rescission, ond alterotion^of contruct.-f^{the porties to o} controct ogree to substitute^{o new controct} Ior^{it, or to rescind or alterit, the} originol controct, need not be^performed.

¶99

ttlustrotions^(o) A owes money^to I^{under o controct.lt is ogreed between A, B} ond c, thot B sholl^{thenceforthocceptc os his debtor, insteodof A. The old debt} oI A to B is at an end,^{ond o newdebt} from^{C to B hos been ga4){octed.} //A;6vh

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(b) A owes B 10,000 rupees. A enters into on orrongement with B, ond^{gives B o} mortgoge of his^(A"s) estote for 5,000^{rupees in ploce ol the debt of 10,000} rupees, This is o new controct ond extinguishes^{the old.}

¶104

(c) A owes B 7,000 rupees under o controct. B owes C 1,000 rupees, B orders^A to credit C with 7,OOO rupees in his books, but^{C does notossentto the} orronqement. B still owes c 7,000^rupees, ond^{no new controcthosbeen} entered into."

¶105

2L. Section 133 of the Indian Contract Act, L872 enumerates^the cases where surety is discharged and it reads as hereunder:

¶106

"733. Dischorge oI surety by vorionce in terms of controct.-

¶107

Any vorionce, mode without the surety's consent, in the terms of the controct between the principol debtor ond the creditor, dischorges the surety os to tro nsoctions su bseque nt to the vorionce."

¶108

It is observed that the applicant and the 2nd respondent companies are different legal entities. While entering into CDR/MM in 2014, the applicant was neither made a signatory nor was any communication sent to it. After failure of CDR, the applicant was communicated and was demanded payment of Rs.38 crores plus. There is a submission by the 1st respondent bank that the promoter/director of 2nd respondent company and the applicant company is the same. That may be true, but as stated supra they are different legal entities and applicant should have been made a party/signatory to the key document covenants of which contain superseding clause. The guarantee of the applicant company would have been a continuing one by virtue of deed of guarantee dated 08.06.2012 under Sec. 134 of the Indian Contract Act, 1972 as averred by the 1st'respondent bank; however, clause 2.1 of the MRA dated 29.03'2014 comes in the way of such continuity. For better appreciation, relevant portion of the clause 2 of MM is extracted as hereunder:

¶109

"2, FACILITY 2.1 Modification of Existing Documents

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¶112

Subject to the aforesaid and other than the terms of the CDR LOA, on and from the Effective Date, this Agreement and the other CDR Documents constitute the entire agreement between the parties concerning the Restructured Facilities, and supersedes all previous proposals, agreement, understandings, negotiations and other written and oral communications in relation thereto,"

¶113

Though CDR had been recalled, the fact remains that it was entered into without notice to the applicant company^{therebycaused} novation in the original contrad. Hon'ble^{AllahabadHigh Courtin Shesh} Narain Awasthi case^(supra), while^referring to^{the judgements in M.S.} Anirudhan v. Thomco's Eank^Ltd [AIR^{1963 SC 746] and Ram Khilonav.} sardar [2002 Atl. L.J. 1822] and^{consideringthe Sec.129and 133 of the} Indian Contract Act,^{1872, held in para 21 as hereunder:}

¶114

"27. After considering^{Sections 129 and 133 of the said} Act as well as the^{law reportscited on behalf of the} petitioners what follows is that a surety upon^alteration for variance of contract^{between the principaldebtor and} the creditor without^{his consentand if suchvarianceis} material and to the disadvantage^{of the surety he shall} stand discharged as to^{transactionssubsequentto the} variance. In lhe^{presentcasepleadinqsof the parties} reflect that totally new^{sets of contractscameinto} existence between^{the principal debtor and the creditoras} well as between^{the principal debtor and other guarantors} other than the^{petitionerson 21.8.1995, by which the} respondent No.3^{M/s AnandeshwarIndustries was} allowed credit^{facitity of Rs.25 lacs in substitutionof} earlier credit limit^{of Rs'14 lacs, but as far as the} Detitionerc are concerned^{neither the terms of the original} Zuarantee^{werealteredto enhancethe limit from 74 lacs} io 25 lacs^{nor any freshcontractbetweenprincipaldebtor} and the^{petitionerswere executed as regardto.the} inhaiced'liability^{and entirely newsets of contractswhich} htad the effect of^{varyinq the terms of originalcontract} between the^{petitionersand the principal debtor were} Lririiea *itiort^{the consent and knqledge of the} petitioners." ,^\Tt'U.t'

¶115

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¶117

24, In the case on hand, as discussed supra there is variance in the original contract in the form of CDVMM without involvement of the applicant.

¶118

In the light of the above discussion, I find that the applicant is able to establish that there is variance or novation in the original contract. Accordingly, applicant stands discharged of the guarantee and the mortgage as well, under the provisions of secs.62 and 133 of the Indian Contract Act, L872.

¶119

Point No.(iii):

¶120

As the points (i) and (ii) have been answered in favour of the applicant and against the 1't respondent bank, I deem it not necessary to examine the issue whether the 1st respondent bank can invoke provisions of the Act, 2002 even after admission of its claim before the Liquidation in the CIRP proceedings.

¶121

Point No.(iv):

¶122

27 ' In the result, the Securitization Application is allowed by holding that the 1't respondent bank is not entiiled to proceed against the application schedule property under the provisions of the SARFAESI Act, 2002. consequenUy, all the notices issued under the Act, 2oo2 are hereby set aside.

¶123

34' The Interrocutory Apprications pending if any, shail stand closed. No order as to costs. communicate a copy of this order to the parties concerned and uproad in the officiar website.

¶124

(Typed to my dictation by the ps, corrected, signed ond pronounced by me in the open court on this the 09,n doy oflune, 2025).

¶125

'_"t':'

¶126

(RAMESHWAR KOTHE) PRESIDING OFFICER RAMESHWAR KOTHE ''Z:1,'nS, fl:Ji:"

¶127

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Ms Humming Bird Soft Solutions Pvt. Ltd. v. Export Import Bank of India

Case brief

What is this about?

What did the court decide?

Ms Humming Bird Soft Solutions Pvt. Ltd. v. Export Import Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

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