Case: J.G. Glass Limited Vs. Indian Bank &amp; Another

2.Briefly, the facts are that M/s. J.G. Moulds Ltd. the Respondent No.2 herein had applied for cash credit facility, key cash credit term loan and bill discounting facilities for its business and obtained the same from Indian Bank, the original Plaintiff. In that behalf the said Respondent No.2 had hypothecated various movables in favour of the Plaintiff Bank. Original Defendant No.2 M/s. J.G. Glass Industries Ltd. was the principal company whereas M/s. J.G.Moulds Ltd. was its subsidiary. The said M/s. J.G. Glass Industries Ltd. being the original Defendant No.2 had fully guaranteed repayment of all dues of M/s. J.G. Moulds Ltd. to Indian Bank. It appears that the said M/s. J.G. Glass Industries Ltd. had even acknowledged its liability to pay the Bank, in its annual balance sheets upto 1981.3.During the pendency of the suit, the said J.G. Glass Industries Ltd., being Defendant No.2 was amalgamated with Defendant No.3 M/s. J.G. Glass Ltd. the Appellant herein. The said amalgamation was granted on 7th July, 1983, with effect from 1st April, 1982. Thereby the Respondent No.2 herein became the subsidiary of Appellant and the Appellant was fully liable to pay the Banks dues on such amalgamation. The Respondent No.2 had originally obtained the facilities in 1971, the same was renewed in 1974 and further fresh documents were executed renewing the liability on 4th September, 1978. 4.The Appellant to guarantee the repayment had executed a promissory note on 4th September, 1978 and the covering letter accompanying the same refers to renewal of the earlier promissory note dated 24th September, 1975, executed by the Appellant in favour of the Bank. The said J. G. Glass Industries Private Limited had also duly executed a continuing guarantee on 30th November, 1974 in favour of Indian Bank, being Exhibit 54 before the Trial Court. 5.The said continuing guarantee clearly mentions various credit facilities availed of by the said J.G. Moulds Pvt. Ltd. The Guarantor J.G. Glass Industries Private Ltd. had guaranteed full repayment with interest thereon, including all costs, charges etc. Clauses 3, 4, 5, 6 and 7 of the said guarantee read as under :"3. The Guarantor further declares that this Guarantee shall be a continuing guarantee and shall not be revocable by the guarantor except on their making full payment of the amount due to the said Bank from the said Company.4. The Guarantor further declares that this Guarantee shall not in any manner be affected by reason of the said Bank granting any indulgence or enlargement of time to the said Company without reference to the Guarantor.5. The Guarantor further declares that as between the said Bank and the Guarantor, the Guarantor will be treated as debtors jointly with the said Company and accordingly the Guarantor or any of them shall not be entitled to and the Guarantor hereby waive all the rights conferred on the Guarantor by Sections 133, 134, 135, 139 and 141 of the Indian Contract Act.6. The Guarantor further declares that this guarantee shall not in any event be affected by reason of the said Bank obtaining further securities nor would it be affected by reason of the said Bank failing to recover and realise any of the securities.7. The Guarantor further declares that this guarantee shall not in any manner be affected by reason of any latches on the part of the said Bank to recover the amount due from the said Company."The said guarantee has been duly executed by its Director and Secretary. Prior to execution of the said guarantee, on the very same day, the Board had passed a resolution to execute such a guarantee.

Court's reasoning:
Over and above, the Appellant had also executed a promissory note on 24th September, 1975 and the reference of the same is made in the covering letter dated 4th September, 1978 while executing another promissory note on that very day. Therefore, it is not that after 1974 upto 1978 no document was executed as contended. The published balance sheets of Appellant upto 1981, show clearly the liability of the Appellant. For the aforesaid reasons, the contention that the claim is barred by law of limitation, has no merit whatsoever.8.We have also perused the reasoning of the Trial Court. We do not find anything erroneous or illegal in the reasoning and findings of the trialthe instant case also the account was alive, not settled and there was no refusal on the part of the guarantor to carry out its obligation and the continuing guarantee was subsisting. Therefore, the Appellant was very much liable. 11.Under the aforesaid facts and circumstances, we do not find any substance in the contention of Mr. Mhamane, the learned Counsel for the Appellant that the suit claim is barred by law of limitation.