:1: pdp IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO. 1962 OF 2008 M.K. Subramanian ..Appellant Vs. Canara Bank and ors ..Respondents Mr. Nitin Deshpande i/by Mr. V.D. Borwankar for appellant. CORAM: CORAM: CORAM: B.H. MARLAPALLE & D.G. KARNIK,JJ. B.H. MARLAPALLE & D.G. KARNIK,JJ. B.H. MARLAPALLE & D.G. KARNIK,JJ. Date Date Date : January 30, 2009. : January 30, 2009. : January 30, 2009. P.C.: P.C.: P.C.: 1. This appeal was heard on more than one occasions and we had noted in our order dated 16/1/2009 that it would be decided at the admission stage itself after receipt of the R & P. The learned counsel for the appellant has submitted private paper book copies and we have perused the R & P as well. 2. The appellant - plaintiff claims to be a Consulting Engineer serving overseas and he maintains the NRI and other deposit accounts with the defendant no.1-bank. In or about 1994 he was desirous of investing his savings in a profitable debenture and, therefore he had contacted defendant no.2, who introduced him to one Mr.P.G. Naik, the Director of :2: the defendant no.5-company. After negotiations with the said company management, on 14/7/1994 he signed the Memorandum of Understanding (for short MOU) with the defendant no.5-company in the presence of defendant no.2 and one Mr. V.G. Herwadkar as a witness. On or about 13/3/1995 the defendant no.1-bank had sanctioned a rehabilitation package in favour of defendant no.5. The plaintiff became one of the Directors of defendant no.5 before the sanction of rehabilitation package to the said company in the sum of Rs.60,00,000/- and one of the conditions for the said loan was that the Directors of defendant no.5 ought to execute deeds of guarantee in favour of a Bank. In addition, he executed a letter dated 16/10/1995 confirming the execution of personal guarantee and undertaking that he did not receive any commission for execution of the guarantee. 3. The plaintiff filed Special Civil Suit No. 847 of 1997 on or about 2/5/1997 for a declaration that the guarantee/surety bond dated 16/10/1995 was illegal, null and void and not binding upon him. He also sought the permanent restraining order against the defendant no.1 and its officers i.e. defendant :3: nos.2 to 4 from invoking and for taking aid thereof for any purpose whatsoever, including the recovery of the loan amount covered by the said guarantee bond. He claimed that he was misrepresented and the defendant no.1-bank instead of obtaining the guarantee bond from other Directors, namely, Mr.P.G. Naik and Mr.Pramod Rane, chose only the plaintiff under the pretext that the bond would be for the future liabilities. He alleged that the defendant no.1-bank and defendant nos.2 to 4 made a false representation deliberately and obtained his signatures without even giving any time for him to read the terms and conditions of the bond. He claimed that the stamp paper for the execution of the bond was purchased on 22/6/1995 on behalf of the plaintiff through one Mr.Sanjay Bhadale and the time gap between the purchase of the stamp paper and the execution of the bond on 16/10/1995 is sufficient to speak for itself and goes to show that there was a deliberate design on the part of the defendant no.1-bank and its officers to defraud the plaintiff. It was further alleged that the plaintiff was deliberately and with malafide intentions made to act upon such fraudulent representation and he suffered injury. The entire :4: conduct on the part of the defendant no.1-bank and its officers was not at all befitting a public financial institutions. It was his case that there was never, at any time, any proposal by him to stand as a guarantor for a sum of Rs.60,00,000/- nor was there any requisition from the defendant no.1-bank. Thus there was no ad-idem amongst the parties or to the subject matter and execution of the said guarantee bond and, therefore, it could not be in law, as well as in the facts and circumstances of the case, a valid enforceable instrument as per the plaintiff. 4. The defendant no.1-bank resisted the suit claim by its Written Statement at Exh.22 and it denied all the material allegations set out in the plaint. It admitted that the plaintiff was a regular client since 1974 and was maintaining NRI and other deposit accounts with the bank and was sending remittances from abroad. It further stated that the defendant no.1-bank was granted loan sometimes in March, 1995 subject to terms and conditions set out in the sanction order and one such condition was that the Directors of the Defendant No.5 ought to execute Deeds of Guarantee in its favour. Since the defendant no.5 :5: was not performing well, a rehabilitation package was evolved by it and under the same, certain concessions were given to the defendant no.5-company and despite this it failed to pay the dues in time. In the meantime, the plaintiff became the Director of defendant no.5 and executed a Deed of Guarantee. He also executed a letter confirming the execution of personal guarantee and undertaking on 16/10/1995. As per the Bank, when the plaintiff realised that the amounts due to him are substantial and hence started to wriggle out by raising false defences. By a pursis at Exh.41, the plaintiff stated that he did not have any claim against defendant nos.2 to 4 and, therefore, the said defendants did not file any separate written statement. So far as defendant no.5 was concerned, the suit proceeded ex parte. 5. The plaintiff examined himself as PW 1, Mr. Vijay Herwadkar - PW 2, and Sanjay Bhadale - PW 3. While the defendant-bank examined Mr.Vilas Ghadge -DW 1 and Mr. K.N. Suresh - DW 2. The trial court framed the following issues and recorded its findings as shown against each of them on perusal of the oral as well as documentary evidence and considering the :6: pleadings of the respective parties: ISSUES FINDINGS ------ -------- 1. Whether the plaintiff proves that the surety bond dated 16/10/1995 for Rs.60,00,000/- was fraudulently obtained or obtained by misrepresentation and therefore it is null and void? No 1-A.Whether Memorandum of Understanding dated 14/7/1994 is valid? Yes 1-B.Whether the plaintiff is entitled to declaration as sought? No 2. Whether plaintiff is entitled to declaration as sought? No 3. What order and decree? Suit is dismissed 6. The first two issues are the main issues. The trial court held that the plaintiff failed to prove his allegations that the surety bond dated 16/10/1995 in the sum of Rs.60,00,000/- was fraudulently obtained by misrepresentation. It further held that the MOU dated 14/7/1994 was valid. It is important to note at this juncture that the plaintiff did not challenge the MOU (Exh.68) dated 14/7/1994 and his challenge was only to the security bond dated 16/10/1995 (Exh.144) :7: and on the limited grounds as set out hereinabove. A perusal of the document at Exh.114 goes to show that it was executed on 16/10/1995 and the plaintiff stood as a guarantor for the defendant no.5 for the total liability of Rs.60,00,000/- with interest thereon. The guarantee covering letter is also on record at Exh.114-A forwarding the guarantee letter (Exh.114). The document at Exh.114 reveals that it was duly filled in usual manner and signed by the plaintiff in his capacity as the Director of defendant no.5 along with Mr.K.N. Suresh (DW 2) in his capacity as Manager of the defendant no.1-bank. The letter at Exh.114-A describes that the plaintiff had acknowledged the execution of agreement of guarantee admitting his liability upto Rs.60,00,000/- for any credit by way of loan, overdraft, discount of bills or otherwise extended to the defendant no.5 with or without co-obligation of others or any other kind of security. The plaintiff remained silent regarding the covering letter at Exh.114-A and this letter is an additional telling circumstance which reinforces the contentions of the bank that plaintiff stood as a guarantor for the credits to be provided by the bank to the company by way of loan upto a limit of Rs.60,00,000/-. These :8: documents were exhibited by the plaintiff in the presence of DW 2 Shri K.N. Suresh as is clear from the testimony of the said witness and this has not been denied by the plaintiff himself. All that he went on claiming was that there was a misrepresentation by defendant nos.2 to 4 as the officers of defendant no.1-bank while he signed the documents at Exhs.114 and 114-A. Undoubtedly, the plaintiff is an Engineer and not an illiterate lay person. He cannot take a position that blank documents were placed before him and he was forced to sign them. He could have refused to sign any such documents. In his cross-examination he took a position that he signed blank document but could not disclose any extra ordinary circumstance which forced him to sign such blank guarantee form given by the bank. The document at Exh.114 clearly shows that it was duly filled in usual manner, signed by the plaintiff as the Director of defendant no.5 along with Shri K.N. Suresh - DW 2 in his capacity as the Manager of the defendant no.1-bank. Just because the stamp paper was purchased on 22/6/1995 and the guarantee agreement at Exh.114 was executed on 16/10/1995, it could not be accepted that it was a :9: fabricated document or was fraudulently got executed by the bank officers from the plaintiff. . The evidence of DW 1 - Mr. Vilas Ghadge and DW 2 - Mr.K.N. Suresh remained unshaken and it was consistent with the documents at Exhs.114 and 114-A. The factum of the plaintiff joining as an additional Director of the defendant no.5 - company was not in dispute and the plaintiff invented a new story during the course of the cross-examination of the bank witnesses that as other Directors of the company had not signed the guarantee bond, the plaintiff was alone made a scapegoat. 7. The reasoning recorded by the trial court that the plaintiff challenged the security agreement by way of an after thought and to escape from the liability of Rs.60,00,000/- against the loan sanctioned to the defendant no.5-company cannot be termed as perverse or erroneous. The trial court has appreciated the evidence of all the five witnesses from both the sides, considered the educational and professional background of the plaintiff as well as the testimony of the bank officers and recorded a finding that the :10: plaintiff could not prove his allegations that the surety bond was fraudulently obtained or it was obtained by a misrepresentation. The trial court was fully justified in rejecting the plaintiff’s contentions as the surety bond being null and void and consequently in dismissing the suit. Hence, the impugned decree passed by the trial court requires to be confirmed as it calls for no interference at the hands of this court. 8. In the premises, this appeal fails and the same is hereby dismissed in limine. (D.G. (D.G. (D.G. Karnik,J.) Karnik,J.) Karnik,J.) (B.H. (B.H. (B.H. Marlapalle,J.) Marlapalle,J.) Marlapalle,J.)