Gujarat High Court
Urmiladevi Mahavirprasad Jain vs Union Of India on 9 February, 2024
Author: Sunita Agarwal
Bench: Sunita Agarwal
NEUTRAL CITATION
C/LPA/134/2024 ORDER DATED: 09/02/2024
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 134 of 2024
In
R/SPECIAL CIVIL APPLICATION NO. 18776 of 2023
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2024
In
R/LETTERS PATENT APPEAL NO. 134 of 2024
With
CIVIL APPLICATION (FOR ADDITIONAL EVIDENCE) NO. 2 of 2024
In
R/LETTERS PATENT APPEAL NO. 134 of 2024
==========================================================
URMILADEVI MAHAVIRPRASAD JAIN
Versus
UNION OF INDIA
==========================================================
Appearance:
MS TRUSHA PATEL, SENIOR ADVOCATE with MR VINAY D
BAIRAGRA(8360) for the Appellant(s) No. 1,2
for the Respondent(s) No. 1,2,3,4,5
==========================================================
CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE
SUNITA AGARWAL
and
HONOURABLE MR. JUSTICE ANIRUDDHA P. MAYEE
Date : 09/02/2024
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)
1. Heard Ms. Trusha K. Patel, learned senior counsel, assisted
by Mr. Vinay D. Bairagra, learned counsel for the appellants
herein, and perused the record.
2. The instant appeal is directed against the judgment and
order dated 4.1.2024 passed by the learned Single Judge, whereby
while dismissing the writ petition, the learned Single Judge has
NEUTRAL CITATION
C/LPA/134/2024 ORDER DATED: 09/02/2024
undefined
relegated the petitioners to approach the Tribunal, i.e. the Debts
Recovery Tribunal, under Section 20 of the Recovery of Debts and
Bankruptcy Act, 1993 (hereinafter, to be referred as, "the RDB
Act, 1993"). We may note that the challenge before the learned
Single Judge was to the order dated 30.8.2023 passed by the Debt
Recovery Tribunal in Original Application No.7 of 2020, which has
been preferred by the respondent Bank under Section 19 of the
RDB Act, 1993 for recovering an amount of Rs.3,99,91,844.01.
Challenging the order passed by the Tribunal, the learned Single
Judge relegated the petitioners to approach the Appellate Tribunal
under the RDB Act, 1993.
3. The submissions of learned senior counsel are that the facts
and circumstances of the instant case are such where the suit for
recovery cannot proceed against the original petitioners/
appellants herein, inasmuch as, the original petitioners had
discharged their personal guarantee before the bank against the
loan extended in the name of the partnership firm namely,
Vardhman Enterprises. The attention of the Court is invited to the
two documents, appended at page '53' and '56' of the paper-book
which are dated 20.7.2020 and 4.8.2020, wherein it was agreed
between the petitioners/ appellants herein and the respondent
NEUTRAL CITATION
C/LPA/134/2024 ORDER DATED: 09/02/2024
undefined
bank that on payment of Rs.1.60 Crores, the bank will withdraw
the DRT suit filed against the guarantors and partners of M/s.
Vardhman Enterprises, namely Shri Pannalal M. Jain and Smt.
Urmila M. Jain, the parties who are the appellants before us. It
was agreed between the appellants and the bank that the suit will
proceed only against the remaining persons, namely M/s.
Vardhman Enterprises, and another partner, namely Smt. Renu A.
Jain shall continue to be liable for the outstanding amount payable
to the bank along with interest and charges till repayment of the
outstanding and bank will proceed with DRT suit against them. By
referring to the document at Page '53' of the paper-book, which is
a certificate dated 4.8.2020, allegedly issued by the Loan In-
charge and Branch Head of Punjab National Bank, it is vehemently
argued by the learned senior counsel for the appellants that even
the personal guarantee of two appellants herein, namely Pannalal
M. Jain and Urmila M. Jain, parties in the suit, was discharged by
payment of Rs.1,60,00,000/-, which they had deposited on
4.8.2020. Subject to the said deposit, the properties mortgaged by
these persons in their names had been released.
4. Noticing the above, we may record that the loan agreement
arrived between the bank and the two partners of the firm- M/s.
NEUTRAL CITATION
C/LPA/134/2024 ORDER DATED: 09/02/2024
undefined
Vardhman Enterprises, at no stage of proceedings, involved the
partnership firm or the other partners. It seems to be a settlement
arrived between the bank and the two partners, otherwise jointly
and severally liable along with third partner namely Smt. Renu A.
Jain, for the loan extended in the name of their partnership firm.
There is no dispute about the fact that the bank did not discharge
the entire liability towards the outstanding loan in the name of the
partnership firm. Being jointly and severally liable, each of the
partners of the firm is liable till the discharge of the entire loan
liability extended in the name of the partnership firm, i.e. till
payment of the last penny towards the outstanding loan.
5. We may further note that the Debt Recovery Tribunal,
categorically recorded taking note of the said contention of the
appellants herein that in spite of giving sufficient opportunity to
the bank, it has not explained as to under which provisions of law,
it has entered into a partial OTS for an amount of Rs.1.60 Cr. with
two partners, namely the defendant Nos.3 and 4 therein. The bank
has failed to indicate any provision of law or to produce any
circular issued by the RBI or its own bank policy, if any, in that
regard. It was noted by the Tribunal that a partnership firm has to
NEUTRAL CITATION
C/LPA/134/2024 ORDER DATED: 09/02/2024
undefined
act through its partners and there is no separate entity of a
partnership firm from its partners who while acting on his own or
on behalf of all partners carry business of the firm, which means,
any one partner may carry business of the firm on behalf of
himself and also on behalf of all other partners and liability of all
the partners is joint and several as per Section 4 of the
Partnership Act. Referring to Sections 10 and 25 of the
Partnership Act, it was noted that Section 25 does not make a
distinction between continuing partner and erstwhile part and
makes liable every partner for all acts of the firm done while he is
a partner. It was, thus, held that it does not lie in the mouth of a
partner that he is not liable to discharge liabilities of the firm, but
it is liable only to the extent of his share and lien could not be
created against his securities. It was further noted that a perusal
of Section 10 of the Partnership Act, it is clear that liability of each
and every partner of the partnership firm is joint and several and
it is not restricted to his share in the profit of the firm and third
party, the appellant then could have recovered its entire dues from
any of the partners, if he/ she is capable of paying outstanding
dues of the bank and there is no separate entity of the partnership
firm from its partners. It was, thus, noted that the bank while
NEUTRAL CITATION
C/LPA/134/2024 ORDER DATED: 09/02/2024
undefined
entering into the settlement with OTS with two of the partners for
an amount of Rs.1.60 Cr. not only released the mortgaged
property but also released the partners from personal guarantee
which act was in gross violation of the provisions of the
Partnership Act. The Tribunal has further taken serious note of the
act of the bank and has directed for inquiry into the conduct of its
officials/ officers who have acted in gross violation of the
provisions and principles of the Partnership Act.
6. Taking note of the above findings returned by the Debt
Recovery Tribunal, we do not find any substance in the argument
of the learned senior counsel appearing for the appellants that any
error has been committed by the learned Single Judge in
relegating the petitioners/ appellants herein to approach the Debt
Recovery Appellate Tribunal, by holding that there was no error of
jurisdiction on the part of the Tribunal. The contention of the
learned senior counsel appearing for the appellants that the
appellants have discharged their liability as a guarantor towards
the dues against the partnership firm is liable to be turned down
as 'misconceived'.
7. For the aforesaid, we DISMISS the present appeal as being
NEUTRAL CITATION
C/LPA/134/2024 ORDER DATED: 09/02/2024
undefined
devoid of merits. It is open for the appellants to approach the
Tribunal in accordance with the provisions of the RDB Act, 1993.
It is, however, clarified that the observations made by us in the
instant appeal are only to test the arguments of the learned senior
counsel for the appellants made before us and the Appellate
Tribunal shall not be guided by any of the observations made
herein-above. It is incumbent upon the Appellate Tribunal to
decide all issues independently without being influenced by any of
the observations made herein-above. All pending Civil Applications
do not survive and stand DISPOSED OF accordingly.
(SUNITA AGARWAL, CJ )
(ANIRUDDHA P. MAYEE, J.)
OMKAR
