The Supreme Court has dismissed the Special Leave Petition filed by Member of Parliament Rajeev Chandrasekhar challenging the order of the Karnataka High Court directing him to pay Rs 50 crore to IFCI Limited.
A bench led by the Chief Justice of India, S A Bobde, said "We see no reason to entertain this petition. Accordingly, the special leave petition is dismissed."
The amount pertains to the undertaking given by Chandrasekhar as the director of a company named India Paging Services Ltd.
The Karnataka High Court had, while upholding the order passed by the Debt Recovery Appellate Tribunal, noted that "There is no error or illegality in the said order."
The DRAT, in its order dated July 20, 2018, had arrived at a conclusion that at the time of availment of loan there had been two directors in the company India Paging Services Limited. It was the petitioner (Chandrasekhar, being the director) who had signed all the papers on behalf of the company for obtaining a loan. He had further signed a letter of undertaking that in the event of him resigning from the post of director of the company, his liability would not be absolved.
Arguing in the High Court, it was said 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 him to the loan borrowed by the company or the liability of the petitioner to be co-extensively that of second respondent as it is not a contract of guarantee."
The bank had argued that "On, June 13, 1997, a loan agreement came to be executed in favour of the company, 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 Chandrasekhar."
The high court had said "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."
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