Guarantors not responsible for prior transactions unless specifically mentioned in Guarantee document.
Central Bank Of India vs Virudhunagar Steel Rolling Mills ... on 29 December, 2015
Bench: Vikramajit Sen, Shiva Kirti Singh
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVILAPPELLATE JURISDICTION
CIVIL APPEAL No. 3654 OF 2006
CENTRAL BANK OF INDIA ... APPELLANT
Vs.
VIRUDHUNAGAR STEEL ROLLING MILLS
LTD. & ORS. ... RESPONDENTS
6 The decision in Sita Ram Gupta v. Punjab National Bank (2008) 5 SCC 711 is of no advantage to
the Appellant Bank. That decision concerns the possibility of a guarantor revoking his continuing
guarantee, with the objective of escaping his liability. This is not the case before us inasmuch as the
defence of Respondent Nos. 2 to 4 is that they had agreed to stand surety only for transactions after
30.8.1974. Our attention was also drawn to B. G. Vasantha v. Corporation Bank, Mangalore (2005)
10 SCC 215 as also M.S. Anirudhan v. Thomcos Bank Ltd. AIR 1963 SC 746 but these decisions do
not call for a detailed analysis. It is the Appellant Bank which drafted the Guarantee Deed, and in
case of doubt, the document would be read against it. This is the contra proferentem rule, which is
of a vintage which brooks no contradiction.
7 In view of the foregoing discussion, there appears to be no controversy as to the fact that the
Guarantee Deeds executed by Respondent Nos. 2 to 4 on 30.8.1974 rendered them personally liable
for any transactions or advances made by the Appellant Bank to the Respondent Company after
30.8.1974. There is also no controversy whatsoever that the Bank account lay dormant after this
date, all dealings having been transacted much prior thereto. Such being the position, it is not open
to the Appellant Bank to pursue Respondent Nos. 2 to 4 for recovery of debts incurred by the
Respondent Company in favour of the Appellant Bank. We may clarify that our decision is founded
on the evidence that has been recorded in this suit. We should not be misunderstood to have held
that a guarantor can, in no circumstances be fastened with liabilities which had been incurred in the
past which the guarantor assumed liability for. 8 We accordingly dismiss the Appeal by affirming
the concurrent findings arrived at by both the Courts below
Central Bank Of India vs Virudhunagar Steel Rolling Mills ... on 29 December, 2015
Bench: Vikramajit Sen, Shiva Kirti Singh
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVILAPPELLATE JURISDICTION
CIVIL APPEAL No. 3654 OF 2006
CENTRAL BANK OF INDIA ... APPELLANT
Vs.
VIRUDHUNAGAR STEEL ROLLING MILLS
LTD. & ORS. ... RESPONDENTS
6 The decision in Sita Ram Gupta v. Punjab National Bank (2008) 5 SCC 711 is of no advantage to
the Appellant Bank. That decision concerns the possibility of a guarantor revoking his continuing
guarantee, with the objective of escaping his liability. This is not the case before us inasmuch as the
defence of Respondent Nos. 2 to 4 is that they had agreed to stand surety only for transactions after
30.8.1974. Our attention was also drawn to B. G. Vasantha v. Corporation Bank, Mangalore (2005)
10 SCC 215 as also M.S. Anirudhan v. Thomcos Bank Ltd. AIR 1963 SC 746 but these decisions do
not call for a detailed analysis. It is the Appellant Bank which drafted the Guarantee Deed, and in
case of doubt, the document would be read against it. This is the contra proferentem rule, which is
of a vintage which brooks no contradiction.
7 In view of the foregoing discussion, there appears to be no controversy as to the fact that the
Guarantee Deeds executed by Respondent Nos. 2 to 4 on 30.8.1974 rendered them personally liable
for any transactions or advances made by the Appellant Bank to the Respondent Company after
30.8.1974. There is also no controversy whatsoever that the Bank account lay dormant after this
date, all dealings having been transacted much prior thereto. Such being the position, it is not open
to the Appellant Bank to pursue Respondent Nos. 2 to 4 for recovery of debts incurred by the
Respondent Company in favour of the Appellant Bank. We may clarify that our decision is founded
on the evidence that has been recorded in this suit. We should not be misunderstood to have held
that a guarantor can, in no circumstances be fastened with liabilities which had been incurred in the
past which the guarantor assumed liability for. 8 We accordingly dismiss the Appeal by affirming
the concurrent findings arrived at by both the Courts below
Comments
Post a Comment