The Karnataka High Court has dismissed a petition filed by Bharatiya Janata Party (BJP),Member of Parliament, Rajeev Chandrasekhar, challenging the orders of the Debt Recovery Appellate Tribunal, (Chennai), directing him to pay Rs 50 crore, to IFCI Limited.
A divison bench of Justice Arvind Kumar and Justice E S Indiresh while dismissing the petition said "There is no error or illegality in the said order."
As per the DRAT order dated July 20, 2018, it arrived at a conclusion that at the time of availment of loan there had been two directors, in the second respondent-company, (India Paging Services Limited), and it was the petitioner (Chandrasekhar) being the director who had signed all the papers on behalf of the second respondent –company for obtaining loan and in addition to it he further signed a letter of undertaking and in the background the resignation tendered by the petitioner to the post of director of second respondent –company on 10.01.2001, his liability would not be absolve.
Lawyer for the petitioner contented that "Petitioner, (Chandrasekhar) cannot be fastened with any liability, that too, based on an undertaking, inasmuch as, the said conditions stipulated in the undertaking does not fasten any liability on the petitioner to the loan borrowed by the second respondent-company or the liability of the petitioner to be co-extensively that of second respondent as it is not a contract of guarantee. That recovery certificate issued by the DRT as affirmed by the DRAT is erroneous and petitioner is liable to be absolved of his liability.
It was also added that "When he tendered resignation it came to be approved by the Board of Directors of India Paging Services Limited, on June 29, 2001, in which meeting the representative of the secured creditor (IFCL) was present and as such there is deemed consent to have been given by the secured creditor accepting the resignation.
On, June 13, 1997, a loan agreement came to be executed by the second respondent-firm in favour of the first respondent for a sum of Rs.42 Crores and same was signed and executed by the petitioner herein as director of said company. On July, 2, 1997, respondent Nos.3 (BPL Engineering Limited) and 4 ( have executed corporate guarantees for the said loan which was accompanied by a letter of undertaking given by the by the petitioner. It has been agreed that that in consideration of the facilities granted to respondent No.2 and in pursuance of the provisions contend in Section 7.5 of Article VII of General Conditions which forms part of the loan agreement that he would undertake to abide by the condition stipulated in the said undertaking.
Mere presence of the representative of the first respondent in the meeting of the board of directors of the second respondent-company held on 23.03.2001 wherein resignation letter of the petitioner came to be accepted would not partake the character of the first respondent-Bank having given consent to the resignation letter of petitioner or same. having been accepted by the secured creditor. The consent to permit the petitioner to resign from Board of Directors of the second respondent-company ought to have been a written permission or written consent from first respondent herein and it is this undertaking which was given by the petitioner to first respondent-Bank having not been complied, first respondent- bank as rightly contended before the tribunal as well as the DRAT liability of the petitioner would be co-extensive with that of the liability of the principal borrower as well as guarantors. It also said that "it is specifically undertaken by the petitioner that breach of the terms of the conditions namely, condition Nos.(i) to (v) therein would be deemed to be breach of conditions contained in the rupee loan agreement dated 13.06.1997 and by virtue of same first respondent –Bank was at liberty to take such action against petitioner and/or the company as may be deemed fit. It is in this background secured creditor had initiated the proceedings against petitioner for recovery of debt due to it against respondent Nos.2 to 4 and petitioner herein.
Advocate Mrinal Shankar appeared for petitioner