Dismissed

Andhra Pradesh State Federation of Co-operative Spinning v. Indian Bank, Mahabubnagar Branch, represented by Assistant

Telangana HC1 Sept 2017WP/29425/2017

Case brief

AI extract

What is this about?

This order dismisses a writ petition challenging a decree passed by the Debts Recovery Tribunal against a liquidated but undissolved corporate guarantor. The Court held that the bank was entitled to proceed under the RDDB Act and found no jurisdictional error, noting the petitioner has an alternative remedy before DRAT.

What did the court decide?

Writ petition dismissed; miscellaneous petitions, if any, also dismissed. No order as to costs.

Andhra Pradesh State Federation of Co-operative… — Banking and Recovery | Telangana HC (2017)

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THE HON’BLE THE ACTING CHIEF JUSTICE RAMESH RANGANATHAN AND

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THE HON’BLE Ms. JUSTICE J. UMA DEVI

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Writ Petition No.29425 of 2017

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Order: (Per the Hon’ble The Acting Chief Justice Ramesh Ranganathan)

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The fact that the petitioner herein stood as a guarantor for the loan, sanctioned by the 1^st respondent to the 2^nd respondent, is not in dispute. The loan advanced by the 1^st respondent to the 2^nd respondent was on the hypothecation of the stocks. The stocks became worthless and were destroyed. The 2^nd respondent is said to have been subsequently dissolved. The Debts Recovery Tribunal has held that no decree could be passed against 2^nd respondent as their plant and machinery was disposed of, the sale proceeds were distributed among the secured creditors, and nothing was left over to meet the claim of the unsecured creditors. On the ground that the petitioner herein, though under liquidation, had not yet been dissolved and continued to exist, and since it stood as the guarantor of the loan, a decree was passed by the Debts Recovery Tribunal against the petitioner herein.

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Sri K. Rajanna, learned counsel for the petitioner, would submit that the remedy available to the 1^st respondent was to approach the liquidator under Section 12-A of the A.P. Cooperative Societies Act, 1964. The fact, however, remains that the petitioner stood as a guarantor for the loan extended by the 1^st respondent-bank to the 2^nd respondent. The 1^st respondentbank was, therefore, entitled to proceed against both the petitioner and the 2^nd respondent for recovery of the dues payable by the 2^nd respondent, by filing an application before the Debts

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Recovery Tribunal under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter called “the RDDB Act”).

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We find no jurisdictional error in the order of the Debts Recovery Tribunal. In any event, the petitioner has an effective, alternative remedy of approaching the DRAT against the order passed by the Debts Recovery Tribunal-I, Hyderabad. Leaving it open to the petitioner to avail their remedy of an appeal, the writ petition fails and is, accordingly, dismissed. Miscellaneous Petitions pending, if any, shall also stand dismissed. There shall be no order as to costs.

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________________
(RAMESH RANGANATHAN, ACJ)

(J. UMA DEVI, J)
1 st September, 2017
pnb

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THE HON’BLE THE ACTING CHIEF JUSTICE RAMESH RANGANATHAN

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AND

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THE HON’BLE Ms. JUSTICE J. UMA DEVI

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Writ Petition No.29425 of 2017

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