Banking Law - the
terms and conditions of the guarantee agreement are to be relied upon and the
Bank cannot travel beyond the terms and conditions of the guarantee agreement.
Indian Contract Act, 1872 - Sections 128, 129, 130 - Surety’s Liability - Continuing Guarantee - Revocation of continuing guarantee - 'General Lien' - Alternative Remedy.
Held:- Alternative remedy is not an exclusive bar and in the present case, the petitioner cannot be thrown out on the basis of availability of alternative remedy as the Bank is proceeding against the petitioner and has marked lien on the account of the petitioner even though the guarantee provided by the petitioner has come to an end on account of commencement of commercial production. This Court does not find any reason to deny relief to the petitioner on the ground of availability of alternative remedy. Alternative remedy cannot be a bar and, therefore, this Court is of the considered opinion that as the commercial production started on 23/3/2012, the action of the Bank to treat the account of the petitioner Company as 'General Lien' is void, illegal and opposed to law.
Facts of the Case
The commercial production started on 23/3/2012, the petitioner was justified in raising a claim that his guarantee is no longer in existence and, therefore, the action of the Bank in marking the petitioner Company's account as 'General Lien' which is not in consonance with the sanction letter dated 13/7/2010 and the deed of guarantee dated 15/11/2010, deserves to be set aside. The respondents are directed to release the Bank Account of the petitioner which has been marked as 'General Lien' within a period of two weeks from the date of receipt of certified copy of this order. With the aforesaid, the present petition stands disposed of.
HIGH
COURT OF MADHYA PRADESH, BENCH AT INDORE
HON'BLE
MR. S. C. SHARMA, J
(17/01/2019)
MISCELLANEOUS
PETITION No. 849 / 2017
M/S.
ANIK INDUSTRIES LTD., INDORE Vs. IDBI BANK, INDORE
Mr.
S. C. Bagadia, learned senior counsel appearing with Mr. Lalit Kumar Inani,
Advocate for the petitioner.
Mr.
Nikhil Kumar Pandey, learned counsel for the respondent Bank.
O
R D E R
The
petitioner before this Court, a Company incorporated under the Companies Act,
1956, is having a Current Account No. 01420020338000 and the same has been
marked as 'General Lien' by the IDBI Bank. The contention of the petitioner is
that the petitioner Company had given a Corporate Guarantee in favour of M/s.
Suman Agritech Ltd., and M/s. Suman Agritech Ltd., defaulted in making payment
to the Bank. It has been further stated that as per the terms and conditions of
the Corporate Guarantee it was valid till M/s. Suman Agritech Ltd., starts its commercial
production. The contention of the petitioner is that the commercial production
started on 23/3/2012 and on account of the commercial production which started
in the year 2012, the Corporate Guarantee came to an end. The petitioner's
grievance is that inspite of the aforesaid the Bank Account of the petitioner
has been marked 'Lien' and the respondent Bank is not releasing the amount
which is available in the account of the petitioner.
Mr.
S. C. Bagadia, learned senior counsel has argued before this Court that on
15/11/2010 the petitioner Company gave a Corporate Guarantee for financial
assistance availed by M/s. Suman Agritech Ltd., in terms of the sanction letter
dated 13/7/2010 and as per the letter of sanction as well as Corporate
Guarantee, it was valid till commencement of commercial production. The
petitioner has further stated that subsequently the Bank modified the sanction
letter on 13/7/2010 and the petitioner Company passed a resolution on 15/11/2010
to sign the Corporate Guarantee in terms of the sanction letter dated
13/7/2010. A resolution to that effect was passed by the petitioner Company on
15/11/2010. It has been further stated that subsequently a facility agreement dated
15/11/2010 was executed between M/s. Suman Agritech Ltd., and IDBI Bank and
again as per clause 3.1(A) (iv) the guarantee was valid upto the time of
commencement of commercial production. It has been further stated that on 19/1/2012
the respondent Bank renewed the financial assistance sanctioned on 13/7/2010
and modified on 9/11/2010, however, the terms and conditions of the corporate
guarantee were not changed. The petitioner has also filed a certificate dated
23/3/2012 in support of the averments that the commercial production has
commenced in respect of M/s. Suman Agritech Ltd., After 2012 ie., after the commencement
of the commercial production the Bank on 3/4/2013 renewed the financial
assistance sanction dated 13/7/2010 and no resolution was passed by the
petitioner Company pursuant to the renewal dated 3/4/2013 and no corporate
guarantee was signed by the petitioner Company.
On
5/6/2013 the petitioner Company submitted its representation to the respondent
Bank requesting the Bank that the Company cannot provide corporate guarantee beyond
a certain limit and as the production started in respect of the Unit in
question, the account cannot be kept in lien. It has been further stated that
the Bank kept silent over the matter and on 17-2-2015 / 17-2-2016 a letter was
issued to the petitioner reflecting that M/s. Suman Agritech Ltd., has
defaulted in making the payment and the petitioner was directed to regularise
the default in terms of the corporate guarantee.
It
has been contended that on 10/4/2015 the respondent Bank further renewed
financial assistance given to M/s. Suman Agritech Ltd., and no corporate
guarantee was signed by the petitioner in pursuance to the renewal letter dated
10/4/2015. The petitioner again informed the Bank vide letter dated 17/2/2015
that the Corporate Guarantee has come to an end on account of the commencement
of commercial production and inspite of the aforesaid, the petitioner Company
was directed by the Bank to make the payment in respect of the default
committed by M/s. Suman Agritech Ltd., The petitioner Company kept on reminding
the Bank that the Corporate Guarantee has come to an end. It has been further
stated that a cheque was issued by the petitioner Company on 1/10/2016 for a
sum of Rs.10.25 lacs in favour of other company, however, the cheque was dishonoured
and the petitioner after making enquiry with the Bank, came to know that the
petitioner's account has been marked as lien against the dues of M/s. Suman
Agritech Ltd., Thereafter, all the transactions of the petitioner Company have
not been honoured by the Bank on account of the lien mark of the current
account of the petitioner Company and for the first time on 2/2/2017, the
respondent Bank has informed the petitioner Company that the corporate guarantee
is still in force because M/s. Suman Agritech Ltd., is holding 5.98% shares in
the petitioner's Company. The petitioner's grievance is that inspite of there
being a categoric clause in the guarantee deed, no objection certificate is not
being issued and, therefore, in those circumstances, the petitioner has prayed
for the following reliefs : (i)
By issue of an appropriate writ, direction or order, directing the respondent
Bank to remove the 'lien' marked on the current account bearing number 01420020338000
of the petitioner Company; (ii) By issue of an appropriate writ, direction or order,
directing the respondent Bank to release the margin money lying in the form of
Fixed Deposit No. 0382105400008617 and 0382105400008907 of the petitioner
Company; (iii) By issue of an appropriate writ, direction or order, directing
the respondent Bank to issue No Dues Certificate the petitioner Company; A detailed and exhaustive reply has
been filed on behalf of the respondent Bank and it has been stated that vide sanction
letter dated 13/7/2010, the IDBI bank has granted M/s. Suman Agritech Ltd.,
credit facility to the tune of Rs.70 crores, out of which 30 crores was by way
of term loan for establishing Soya Solvent Extraction Plant and also accepted the
offer of the petitioner to accept the corporate guarantee which will remain in
force upto the date of commencement of commercial production in the said plant
and the said letter was accepted by the principal debtor who subsequently entered
into facility agreement with the respondent and other consortium Bank. The Bank
has further stated that the principal debtor and the Bank executed a deed of
guarantee on 15/11/2010 and a corporate guarantee was furnished in favour of
the respondent which was to remain in force till the commencement of the
commercial production in the principal debtor's account. It has been further
stated that the petitioner acted as per its undertaking.
It
has been further stated that Such modification vide Renewal Sanction Letter
dated 19.01.2012 has been done by the Bank in accordance with Clause 5(a) of
the Guarantee Agreement executed by the present petitioner in favor the respondent
Bank. It is submitted that petitioner has concealed this material fact that the
modification of Sanction Letter is done in presence of all the three parties
i.e The Lender, The Borrower and The Guarantor in terms of the Clause 5(a) of
the Guarantee Agreement which provides for modification of sanction letter, the
only competent authorities are the Lender and Borrower.
It
has been further stated that the contention of the petitioner that the
petitioner is not liable to pay any amount as a consequence of novation of
contract for the reason that the Bank has modified /renewed the credit limits
is illegal and not sustainable in the eyes of law. The deed of Guarantee permits
the enhancement of credit limits without notice to the guarantors. The
petitioners have agreed to the bank’s making any variance that the Bank as it
may think fit in the terms of the Bank’s contract with the Borrower, to the Bank’s
determining, enlarging or varying any credit to the Borrower to the Bank’s
making any composition with the Borrower or promising to give the Borrower time
or not to sue him and to the Bank’s parting with any security the Bank may hold
for the guaranteed debt.
It
is contended on behalf of the respondent Bank that the Corporate Guarantee
executed by the Petitioner in favor of IDBI Bank is Continuing Guarantee in
terms of section 129 of the Indian Contract Act. Section 129 of the Indian Contract
Act reads as under :
"129.
'Continuing guarantee' A guarantee which extends to a series of transactions is
called a 'continuing guarantee."
It
is further argued that the said Corporate Guarantee does not permit the
revocation of the Guarantee. There was a specific clause in the deed of
continuing guarantee that the “guarantee shall be a continuing one and shall
remain in full force and effect till such time the borrower repays in full the Loan
together with interest, liquidated damages, costs, charges and all other monies
that may from time to time become due and payable and remain unpaid to the
lender under the Loan Agreement”. Therefore, in terms of the contract entered
upon by the guarantor with the Bank, it was clear that even if the loan account
shows no liability, the guarantor will continue to be bound by the terms of the
guarantee in the case of continuing guarantee.
It
has been further contended that Section 130 of the Contract Act deals with the
Revocation of continuing guarantee. Section 130 reads as under :
“130.Revocation of continuing
guarantee: A continuing guarantee may at any time be revoked by the surety, as
to future transactions, by notice to the creditor."
It has been further argued that no such
letter/notice were ever issued by the petitioner to the bank in terms of section
130 of the Indian Contract Act, Thus, even if a letter was written to the Bank
by the Petitioner on 05.06.2013 vide Annexure P-11 stating that “As per law, Anik
Industries Ltd. cannot give Corporate Guarantee beyond a certain limit, therefore,
we hereby humbly request you not to stipulate the corporate guarantee clause of
Anik Industries Ltd. towards the regular facilities sanctioned to Suman
Agritech Ltd.”, it was contrary to the clause in the agreement of guarantee, as
stated above. Therefore, it was not open to the petitioner to revoke the
guarantee as the petitioner had agreed to treat the guarantee as a continuing
one and was bound by the terms and conditions of the said guarantee. Although
the said letter was issued by the petitioner in the context of clause No. 5(xi)
which states that the corporate guarantee remain in force up to the time of
commercial production, however, the said clause was modified and accepted by
the petitioner vide Renewal Sanction Letter dated 19.01.2012 to the effect that
the Corporate Guarantee of M/s Anik Industries Ltd shall continue to remain
valid and applicable beyond the envisaged COD.
It
has been further contended that M/s Suman Agritech (Borrower) failed and
neglected to pay IDBI Bank (Petitioner), the installments of principal amount
of the Financial Assistance, interest & other monies upon which, Respondent
Bank issued the Recall Notice dated 20.02.2017 (Annexure R-1) to the Borrower
as well as the Corporate Guarantor (Petitioner) but no appropriate steps were
taken by the borrower to repay the loan amount. Being aggrieved by the
aforesaid, the respondent Bank again issued the Notice to the Personal
Guarantor vide letter dated 10.03.2017, but all remained in vain.
It
has been further argued that consequent upon the default committed by the
Borrower Company, the account in respect of the Financial Assistance has been
classified by the petitioner Bank as Non Performing Assets in accordance with
the direction / extant guidelines issued by the Reserve Bank of India from time
to time, and thereafter, a statutory notice under Section 13(2) of the
Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 was served to the Borrower as well as to the Corporate
Guarantor (Petitioner) on 29.09.2017.
Respondent
Bank has further contended that thereafter respondent along with the consortium
member i.e. Allahabad Bank obtained the Joint Symbolic possession along with Allahabad
Bank on 05.01.2018 in accordance with section 13(4) of SARFAESI Act 2002. It is
further submitted that Allahabad Bank (Consortium Member) has also filed an Application
under Section 14 of SARFAESI Act 2002 before the Learned District Magistrate at
Bhojpur, which is pending.
The
respondent Bank has further contended that the respondent Bank has filed an
Original Application before the DRT at Jabalpur and the same has been
registered as OA No. 497/2017, which is pending for consideration. The Borrower
Suman Agritech Ltd. (Defaulter) has also approached DRT by filing Application
registered as SA No. 68/2018. Similarly, Allahabad Bank has also lodged suit before
the DRT at Jabalpur for its financial assistance sanctioned to Suman Agritech
Ltd registered as OA No 348/2018 which is also pending. It has also been
brought to the notice of this Court that the proceeding under SARFAESI Act 2002
are also pending against M/s Suman Agritech Limited before DRT and it has been
pointed out that as per the provision of Section 128 of the Indian Contract
Act, the liability of the petitioner company is co-extensive with that of the
principal debtor.
Section
128 of the Contract Act is reads as under :
“128.
Surety’s liability – The liability of the surety is co-extensive with that of
the principal debtor, unless it is otherwise provided by the contract.”
Reliance
has been placed upon a judgment delivered by the Hon'ble Supreme Court in the
case of Industrial Investment Bank of India Ltd. Vs. Biswanath Jhunjhunwala reported
in (2009) 9 SCC 478. Hon'ble the Supreme Court in the
aforesaid case has observed that the legal position as crystallised by a series
of cases of the Supreme Court is clear that the liability of the guarantor and
principal debtors is coextensive and not in alternative, therefore, petitioner cannot
escape from the liability merely by saying that the Corporate Guarantee was for
a particular time limit. It has been argued that the present petition filed by
the petitioner is not maintainable as petitioner has remedy to file appropriate
Application / Appeal against the action taken by the Respondent Bank under
Section 17 of SARFAESI Act 2002.
Heard
learned counsel for the parties at length and perused the record. The present
petition is being disposed of with the consent of the parties at the motion
hearing stage itself.
The
petitioner before this Court is a Company registered under the Companies Act,
1956 and the petition has been filed by filing a Resolution to file this
petition. The respondent is a Bank and is State within the meaning of Article
12 of the Constitution of India, thus, amenable to the writ jurisdiction of
this Court.
The
undisputed facts of the case reveals that the petitioner Company is having a
current account bearing No. 01420020338000 and the said Bank Account has been marked
as General Lien by the respondent Bank on account of the fact that the
petitioner Company has given a corporate guarantee in favour of M/s. Suman
Agritech Ltd., which is again a Company incorporated under the Companies Act, 1956.
M/s. Suman Agritech Ltd., has defaulted in making the payment in respect of the
loan advanced by the respondent Bank. Undisputed facts further reveal that a
corporate guarantee in respect of financial assistance availed by M/s. Suman
Agritech Ltd., was given for a limited duration ie., upto the time of
commencement of commercial production of newly set up project of M/s. Suman
Agritech Ltd., The loan was sanctioned to M/s. Suman Agritech Ltd.,vide sanction
letter dated 13/7/2010. Relevant clause of Appendix I (Terms and conditions of
the financial assistance) of sanction letter which is in respect of corporate
guarantee furnished by the petitioner, reads as under :
Xi
Security
Primary 1st charge by way of Equitable Mortgage / Hypothecation
of entire fixed assets of the company, both present and future.
Collateral:
2nd charge
by way of hepothecation of entire current assets (both present and future) of
the company.
Guarantor/s:
An irrevocable and unconditional guarantee Personal Guarantee of Mr. Suresh
Shahra.
No
guarantee commission shall be payable by the company to the guarantor.
Corporate
Guarantee: An irrevocable and unconditional Corporate Guarantee of Anik
Industries Limited which shall remain in force upto the time of commencement of
commercial production. No guarantee commission shall be payable by company to the
corporate guarantor.
Thus,
the sanction letter clearly reflects that the financial assistance was
sanctioned on submission of irrevocable and unconditional corporate guarantee
of M/s. Anik Industries Ltd., which shall remain in force upto the time of
commencement of commercial production.
The
petitioner in terms of the aforesaid, executed a guarantee agreement on
15/11/2010 and clause 18 of the Guarantee Agreement is as under :
“18. This guarantee shall be a
continuing one and shall remain in full force and effect till such time the
Borrower repays in full the Loan together with all interest, liquidated damages,
costs, charges and all other monies that may from time to time become due and
payable and remain unpaid to the Lender under the Loan Agreement.”
The aforesaid condition makes it very
clear that the corporate guarantee was in existence upto the time of commencement
of commercial production.
The
respondent Bank on 19/1/2012 renewed the financial assistance sanctioned on
13/7/2010, further modified on 9/11/2010, subject to the terms and conditions apart
from others and the cash credit facility was enhanced. Again
a sanction renewal letter was issued by the Bank on 19/1/2012 and the cash
credit facilities were renewed which was again subject to the normal terms and
conditions contained in the loan / facilities agreement. It was also mentioned
that it shall form an integral part of the loan / facilities agreement entered
on 15/11/2010. The undisputed facts also reveals that the petitioner Company
did not pass any resolution in terms of the renewed sanction letter 19/1/2012
and did not sign any fresh corporate guarantee and the commercial production of
M/s. Suman Agritech Ltd., commenced on 23/3/2012.
On
3/4/2013 the respondent Bank further renewed the financial assistance
sanctioned on 13/7/2010, modified on 9/11/2010 and the corporate guarantee was
valid as per the terms and conditions mentioned in the corporate guarantee. Thus,
the corporate guarantee furnished by the petitioner was in force upto the time
of commencement of commercial production. The Government of Bihar, Department
of Industries (Technical Development) has certified that the date of commercial
production of the Unit for manufacturing edible oil is 23/3/2012. The certificate
was issued on the basis of recommendation of the Inspecting Team of the Departmental
Officers (Certificate Annexure P/9). The Government of India has also
acknowledged the receipt of Memorandum intimating the commencement of
commercial production vide letter dated 8/8/2012 and it is nobody's case that
commercial production did not start on 23/3/2012. The Bank has placed heavy
reliance upon the sanction letter dated 13/7/2010, facility agreement dated
15/11/2010 and reliance has been placed upon clause 3.1 ie., Security for the Facility.
Respondent Bank has also placed reliance upon the deed of validity dated
15/11/2010 and contention of the learned counsel is that unless and until all
the outstanding dues are repaid, the Corporate Guarantee shall be continued to
be in existence. It has been further stated that the principal debtor has not
cleared dues of the Bank and, therefore, the question of absolving the
guarantor does not arise.
This
Court has carefully gone through the entire return filed by the respondents and
the return it has not been denied that the commercial production has commenced
on 23/3/2012. It has been stated that it was a continuing guarantee till the
entire amount of loan was repaid. It is true that the petitioner does have an
alternative remedy, but the fact remains that the petitioner cannot be thrown
out only on the ground of alternative remedy. The respondent Bank with open
eyes has incorporated a special clause in the sanction letter as well as in the
deed of guarantee and the guarantor was liable for the repayment of dues /
stood as a guarantor / the guarantee was in force upto the time of commencement
of the commercial production.
It
is pertinent to note that in any guarantee arrangement there are three parties
involved and most likely two contractual arrangements. In the present case, the
first arrangement is between M/s. Anik Industries Ltd., and the IDBI Bank and
the second arrangement is between the IDBI Bank and M/s. Suman Agritech Ltd.,
The guarantee agreement between M/s. Anik Industries Ltd., makes it very clear
that the guarantee was in force upto the time of commencement of commercial
production. Where a demand for payment is made under a guarantee, the
obligation of a guarantor are to be found solely within the guarantee document.
The apex Court in the case of Central Bank of India Vs. Virudhunagar Steel
Rolling Mills Ltd., and others reported in (2015) 16 SCC 207 was dealing with a situation wherein the issue was in
respect of liability of surety / guarantor with respect to a pre-existing debt
/ liability prior to the date of entering into guarantee / surety contract. The
apex Court in the aforesaid case has held that the guarantor can be made liable
for the outstanding dues on account of pre-existing debt / liability if the
guarantee deed provides for the same and in case of any doubt the document
(guarantee deed) would be read against the guarantor Bank which drafted it.
Paragraph 6 and 7 of the aforesaid judgment reads as under:
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. Thomco’s 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. There shall however be no order as to costs.
In
the light of the aforesaid, it can be safely gathered that the terms and
conditions of the guarantee agreement are to be relied upon and the Bank cannot
travel beyond the terms and conditions of the guarantee agreement.
The
respondents have placed reliance upon the judgment delivered in the case of
Industrial Investment Bank of India Vs. Biswanath Jhunjhunwala reported in (2009) 9 SCC 478. In the aforesaid case, the apex Court
has held that the liability of the guarantor and the principal debtors is
coextensive and not in alternative.
This
Court has carefully gone through the aforesaid judgment. There cannot be any
iota of doubt in respect of the law laid down by the apex Court. However, the
fact remains that in the present case the guarantee was a conditional guarantee
and it has come to an end the moment M/s. Suman Agritech Ltd., (borrower) has
started commercial production and, therefore, the judgment relied upon by the
learned counsel for the respondent is of no help to the respondent Bank. The
respondents have also placed reliance upon the judgment delivered in the case
of Kerala State Electricity Board Vs. Kurien Kalathil and others reported in (2000) 6 SCC 293 on the ground of availability of
alternative remedy. This
Court is of the considered opinion that alternative remedy is not an exclusive
bar and in the present case, the petitioner cannot be thrown out on the basis
of availability of alternative remedy as the Bank is proceeding against the petitioner
and has marked lien on the account of the petitioner even though the guarantee
provided by the petitioner has come to an end on account of commencement of
commercial production. This Court does not find any reason to deny relief to
the petitioner on the ground of availability of alternative remedy. The apex
Court in the case of Harbanslal Sahnia Vs. Indian Oil Corporation Ltd., reported
in (2003) 2 SCC 107 has held as under :
7.
So far as the view taken by the High Court that the remedy by way of recourse
to arbitration clause was available to the appellants and therefore the writ
petition filed by the appellants was liable to be dismissed, suffice it to
observe that the rule of exclusion of writ jurisdiction by availability of an alternative
remedy is a rule of discretion and not one of compulsion. In an appropriate
case in spite of availability of the alternative remedy, the High Court may
still exercise its writ jurisdiction in at least three contingencies: (i) where
the writ petition seeks enforcement of any of the Fundamental Rights; (ii) where
there is failure of principles of natural justice or, (iii) where the orders or
proceedings are wholly without jurisdiction or the vires of an Act and is
challenged [See Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and
Ors., (1998) 8 SCC 11. The
present case attracts applicability of first two contingencies. Moreover,
as noted, the petitioners' dealership, which is their bread and butter came to
be terminated for an irrelevant and nonexistent cause. In such circumstances,
we feel that the appellants should have been allowed relief by the High Court itself
instead of driving them to the need of initiating arbitration proceedings.
In
the light of the aforesaid judgment, alternative remedy cannot be a bar and,
therefore, this Court is of the considered opinion that as the commercial
production started on 23/3/2012, the action of the Bank to treat the account of
the petitioner Company as 'General Lien' is void, illegal and opposed to law.
This
Court is of the considered opinion that as the commercial production started on
23/3/2012, the petitioner was justified in raising a claim that his guarantee
is no longer in existence and, therefore, the action of the Bank in marking the
petitioner Company's account as 'General Lien' which is not in consonance with
the sanction letter dated 13/7/2010 and the deed of guarantee dated 15/11/2010,
deserves to be set aside. The respondents are directed to release the Bank Account
of the petitioner which has been marked as 'General Lien' within a period of
two weeks from the date of receipt of certified copy of this order.
With
the aforesaid, the present petition stands disposed of.