Chandra Mouli Vs Central Bank of India — Writ and Judicial Review | Karnataka HC (2025)

Chandra Mouli Vs Central Bank of India — Writ and Judicial Review | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Dismissed

Issue for consideration

Whether the order of the DRAT, Chennai in RA.No.44/2015 dated 02.08.2018, fixing 50% of the Bank's claim as joint and several liability on the petitioner and respondents 5 and 6 (legal representatives of the deceased guarantor), suffers from material error, perversity or jurisdictional error and ought to be quashed. +1 more

Court's answer

Legal representatives of a deceased party cannot adopt a stand contrary to that of the original party; they are bound by the statements of concession made by their deceased predecessor.

Ratio / Principle

The plea of novation of the contract of guarantee failed: nothing was demonstrated to prove novation, and the stand taken by the legal representatives of the deceased guarantor was wholly untenable in the eyes of law.

Key takeaways

Given the DRT's own observation and finding, the appellate Tribunal was justified in observing that the Presiding Officer of the DRT had failed to appreciate the importance of execution of guarantee documents by the deceased (defendant No.4).ratio¶¶60
The fact that documents were submitted by the deceased predecessor of the petitioner to the Bank is not denied by the petitioner.ratio¶¶64
No material error, perversity or jurisdictional error was found in the impugned DRAT order; on that basis the writ petition was dismissed.

Detailed headnote1 paragraphs

GM-DRT writ petition dismissed (Jayant Banerji & Umesh M Adiga, JJ.; order per Jayant Banerji, J.). The petitioner, son and legal representative of the late B.G.Annaiah (defendant No.4 in the Bank's OA before the DRT), sought quashing of the DRAT, Chennai's order in RA.No.44/2015 (02.08.2018), whereby the DRT's exoneration of the deceased guarantor's legal representatives was modified and they were made liable for 50% of the Bank's claim jointly and severally. His plea of novation of the guarantee contract under Section 62 of the Contract Act, allegedly without his consent, failed: nothing was demonstrated to prove novation. Holding that legal representatives cannot adopt a stand contrary to that of the deceased original party and are bound by his concessions, and that the DRAT was justified in faulting the DRT Presiding Officer for disregarding the execution of guarantee documents by the deceased, the Court found no material error, perversity or jurisdictional error in the impugned order and dismissed the petition.

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21^ST DAY OF AUGUST, 2025

PRESENT

THE HON'BLE MR. JUSTICE JAYANT BANERJI AND

THE HON'BLE MR. JUSTICE UMESH M ADIGA WRIT PETITION NO. 39228 OF 2018 (GM-DRT)

BETWEEN:

CHANDRA MOULI, S/O LATE B.G.ANNAIAH, AGED ABOUT 66 YEARS, R/O NO.81/5, II CROSS ROAD, MOUNT JOY (SRI KUMARSWAMY TEMPLE ROAD), HANUMANTHANAGAR, BENGALURU-560 019.

…PETITIONER

(BY SRI.SUNIL KUMAR P BANGARI., ADVOCATE)

AND:

Digitally signed by K G 1. CENTRAL BANK OF INDIA, RENUKAMBA A BODY CORPORATE ESTABLISHED UNDER, Location: HIGH COURT THE BANKING COMPANIES (ACQUISITION AND OF TRANSFER OF UNDERTAKING) ACT, 1970, KARNATAKA HAVING ITS HEAD OFFICE AT “CHANDRAMUKHI” NARIMAN POINT, MUMBAI AND ON OF ITS BRANCHES AT NO.75-76, COMMERCIAL STREET, BENGALURU-560 001. REPRESENTED HEREIN BY CHIEF MANAGER, ASSET RECOVERY BRANCH, BANK STREET, KOTI, HYDERABAD.

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M/S. MYSON TRADING AND MARKETING, A PROPRITARY CONCERN, HAVING ITS PLACE OF BUISESS AT NO.G-2, BRIGADE PARK VIEW, NO.4, B.P.WADIA ROAD, BASAVANAGUDI, BENGALURU-560 004. BY ITS PROPRIETOR.

SAJEEV KURUP, S/O K.K.NARAYAN KURUP, AGED ABOUT 53 YEARS, PROPRIETOR, MYSON TRADING AND MARKETING, R/O G-2, BRIGADE PARK VIEW, NO.4, B.P.WADIA ROAD, BASAVANAGUDI BENGALURU-560 004.

M/S RC(INDIA)-A PROPRITARY CONCERN, NO.1277, 8TH CROSS, 27TH MAIN, LIC COLONY, JP NAGAR, I PHASE, BENGALURU-560 078, REP. BY ITS PROPRIETOR RAJAGOPAL.

SMT.KEMPAMMA, W/O LATE B.G.ANNAIAH, AGED ABOUT 94 YEARS, R/O NO.81/5, II CROSS ROAD, MOUNT JOY, (SRI KUMARASWAMY TEMPLE ROAD), HANUMANTHANAGAR, BENGALURU-560 019.

SMT.ANNAPURNA, D/O B.G.ANNAIAH, W/O N.SHAMANNA,

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AGED ABOUT 62 YEARS, POST BOX NO.1470, DIERA-DUBAI, UNITED ARAB, EMIRATES.

R5 AND R6 PRESENTLY R/AT: NO.133, DIAMOND ENCLAVES, CHOKKASANDRA VILLAGE, (NEAR BONE MILLS), YESHWANTHPURA HOBLI, HESARAGHATTA ROAD, BANGALORE-560 059.

…RESPONDENTS

(BY SRI.Y.P.GOKUL, ADVOCATE FOR R1, VIDE ORDER DATED 14.01.2020, NOTICE TO R2 AND R3 IS DISPENCED WITH, SRI.S.B.TOTAD, ADVOCATE FOR R4, R5 SERVED AND UNREPRESENTED, SRI.K.B.PRASANNA, ADVOCATE FOR R6)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER PASSED BY THE LEARNED JUDGE OF DRAT AT CHENNAI IN RA NO.44/2015 DATED 02.08.2018, VIDE ANNEXURE-D IN SO FAR AS THE 50% LIABILITY FIXED ON THE PETITIONER, AND ALSO ON THE RESPONDENTS NO. 5 AND 6 JOINTLY AND SEVERALLY AND ETC.

THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE JAYANT BANERJI AND HON'BLE MR. JUSTICE UMESH M ADIGA

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ORAL ORDER

(PER: HON'BLE MR. JUSTICE JAYANT BANERJI)

Heard learned counsel for the petitioner.

This petition has been filed seeking quashing of

the order passed by the Debt Recovery Appellate Tribunal at Chennai (for short 'the DRAT') in RA.No.44/2015 on 02.08.2018, inasmuch as it fixes a liability against respondent Nos.4 to 7 therein, to the extent of 50% of the amount claimed by the respondent-Bank jointly and severally.

The contention of learned counsel for the petitioner is that in the Original Application (for short 'OA'), originally, the father of the petitioner was impleaded as defendant No.4. The defendant No.4 had filed his written statement and as well as additional written statement denying the fact that he had stood as guarantor in respect of the loan advanced by the Bank in favour of defendant Nos.1 and 2. It is stated that during pendency

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of the OA before the Debts Recovery Tribunal (for short

'the DRT'), respondent No.4 passed away and so defendant Nos.5, 6 and 7 were substituted in his place.

It is stated that the DRT after considering the entire material on record, held that defendant No.5 (the petitioner herein), as well as defendant Nos.6 and 7 were not liable and directed that the outstanding amount of the Bank be recovered from the properties of defendant Nos.1 and 2. Aggrieved against the aforesaid order of the Tribunal, the respondent-Bank approached the DRAT at Chennai filing RA.No.44/2015, which appeal came to be partly allowed holding that the Presiding Officer of DRT had failed to appreciate the importance of execution of guarantee documents by the deceased (the defendant No.4, before the DRT). It was held that in such a situation the order challenged deserves modification.

The order passed by the DRT against

respondent Nos.1 and 2 was upheld. However, it was stated that against respondent Nos.4 to 7, the OA should

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have been partly decreed. It was held that respondent Nos.4 to 7 would be liable for recovery of 50% of OA amount, jointly and severally, and the remaining amount and interest etc, will be realised from respondent Nos.1 and 2.

A perusal of the array of parties appearing in the order of DRAT reflects that the respondent No.5 is stated to be Annaiah (since deceased). Respondent No.6 was Smt.Kempamma and respondent No.7 was Smt.Annapurana. Therefore, respondent Nos.4, 6 and 7 were the legal representatives of respondent No.5, who was their father.

It is noted that the memo dated 27.10.2021 was filed by the learned counsel for the petitioner stating that the petitioner and respondent No.6-Smt.Kempamma are the legal representatives of the deceased respondent No.5, who are already on record. Death Certificate of the deceased Smt.Kempamma is also enclosed with the aforesaid memo.

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Learned counsel for the petitioner has relied

upon the provisions of Section 62 of the Contract Act, to contend that there was novation of the contract of guarantee and therefore, since it was done without the consent of the petitioner, he was not bound by the contract of guarantee.

With regard to the aspect of novation of the contract of guarantee, nothing has been demonstrated to prove the same. As a matter of fact, the facts appearing from the order of the DRT itself, reflect that the stand taken by the legal representatives of the deceased guarantor were wholly untenable in the eyes of law.

A perusal of the order of DRT dated 30.04.2009 reflects that, it was admitted by the legal representatives of defendant No.4 therein, that is the petitioner and others, regarding the creation of mortgage by their father that is defendant No.4, but no specific benefit was derived either by defendant No.4 or his legal representatives in this particular case ( sic ). It was further observed that the

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heirs of respondent No.4, specifically pleaded that they have not at all mortgaged the property but in some other connection their documents were with the applicant Bank, but the applicant Bank intentionally involved defendant No.4 as a party to the proceedings without returning those documents, which was given in some other connection to the Bank. It was therefore held that under the circumstances the applicant Bank failed to produce material evidence against defendant No.4 regarding creation of mortgage as security for bill discounting facilities availed by defendant Nos.1 and 2 from the Bank.

Given this observation and finding by the DRT, the appellate Tribunal was justified in observing that the Presiding Officer of the DRT had failed to appreciate the importance of execution of guarantee documents by the deceased (defendant No.4). It is trite that the legal representatives of the deceased party, cannot adopt a stand contrary to the stand of the original party. They are as a matter of fact bound by the statements of the

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concession made by their deceased predecessor. The fact

that documents were submitted by the deceased predecessor of the petitioner to the Bank is not denied by the petitioner.

In this view of the matter, we find no material error, perversity or jurisdictional error in the order of the DRAT that is impugned in the present petition.

This writ petition is accordingly dismissed .

Sd/(JAYANT BANERJI) JUDGE

Sd/(UMESH M ADIGA) JUDGE

PK List No.: 1 Sl No.: 13

Procedural history

How this case reached the court

AI extract

Order under challenge
Order of the DRAT, Chennai in RA No.44/2015 dated 02.08.2018 (Annexure-D), partly allowing the Bank's appeal and modifying the DRT's exoneration of the deceased guarantor's legal representatives by fixing 50% of the Bank's claim on the petitioner and respondents 5 and 6 jointly and severally.¶¶27
Debt Recovery Appellate Tribunal at Chennai (DRAT) · 02.08.2018
Prior proceeding
Original Application before the DRT: the petitioner's father was impleaded as defendant No.4 and filed a written statement and additional written statement denying that he had stood guarantor for the loan advanced by the Bank to defendant Nos.1 and 2.¶¶38
Prior proceeding
Defendant No.4 (father of the petitioner) passed away during pendency of the OA before the DRT; defendant Nos.5, 6 and 7 were substituted in his place.¶¶42
Prior proceeding
DRT order dated 30.04.2009: it was admitted by the legal representatives of defendant No.4 that their father had created a mortgage, but no specific benefit was derived by defendant No.4 or his legal representatives; the heirs pleaded the documents were with the Bank in some other connection.¶¶56
Prior proceeding
DRT held that the applicant Bank failed to produce material evidence against defendant No.4 regarding creation of mortgage as security for the bill discounting facilities availed by defendant Nos.1 and 2.¶¶59
Prior proceeding
DRT held defendant No.5 (the petitioner herein), as well as defendant Nos.6 and 7, not liable and directed that the Bank's outstanding amount be recovered from the properties of defendant Nos.1 and 2.¶¶43
Prior proceeding
Aggrieved, the respondent-Bank approached the DRAT at Chennai filing RA.No.44/2015, which came to be partly allowed, holding that the Presiding Officer of the DRT had failed to appreciate the importance of execution of guarantee documents by the deceased and that the challenged order deserved modification.¶¶43
Prior proceeding
DRAT upheld the DRT order against respondent Nos.1 and 2 but held the OA should have been partly decreed against respondent Nos.4 to 7, making them liable for 50% of the OA amount jointly and severally, with the remaining amount and interest realisable from respondent Nos.1 and 2.¶¶48
Prior proceeding
In the writ petition, notice to respondents 2 and 3 was dispensed with vide order dated 14.01.2020; respondent 5 was served but unrepresented.¶¶26
Prior proceeding
Memo dated 27.10.2021 filed by counsel for the petitioner stating that the petitioner and respondent No.6 (Smt.Kempamma) are the legal representatives of the deceased respondent No.5 (Annaiah); death certificate of Smt.Kempamma enclosed.¶¶50