Guarantor Can Claim Discharge Under Sections 133, 134, 135 And 139

Guarantor Can Claim Discharge Under Sections 133, 134, 135 And 139, And Can Also Claim Other Rights Under Sections 140 And 141 Of The Indian Contract AcT

Guarantor Can Claim Discharge Under Sections 133, 134, 135 and 139, And Can Also Claim Other Rights Under Sections 140 And 141 Of The Indian Contract Act

The Guarantor can claim discharge under Sections 133, 134, 135 and 139, and can also claim his other rights under Sections 140 and 141 of the Indian Contract Act. To decide jurisdiction of DRT, vide Bombay High Court in State Bank of India vs Sagar & Others {Civil Revision Application No.33 of 2010, Nagpur Bench, Decided on 11 February, 2011} the real test would be to find out whether the DRT under Section 17 of the DRT Act is empowered to hold an enquiry regarding liability of a guarantor for payment of dues and further to grant the relief of his discharge from liability as provided in Sections 133, 134, 135 and 139 of the Contract Act, if a case is made out.

Further, hon’ble Supreme Court in Nahar Industrial Enterprises Ltd vs Hongkong & Shanghai Banking Corp. {2009 (8) SCC 646; 2009 (2) DRTC 273 (SC); Decided on 29 July, 2009} observed that:

"Further, Section 22 of the DRT Act provides that the Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908, therefore, DRT is not obliged to undertake a full-fledged trial in terms of the provisions of the Code of Civil Procedure and/or the Evidence Act. Therefore, the Guarantor would be deprived of his right in relation to the procedural mechanism as contained in the Code as also the Evidence Act. Also, before the Tribunal no declaratory relief of discharge from liability can be sought for by the Guarantor.""(emphasis supplied)

As aforesaid, vide Supreme Court in Nahar Industrial Enterprises Ltd vs Hongkong & Shanghai Banking Corp. {2009 (8) SCC 646; 2009 (2) DRTC 273 (SC); Decided on 29 July, 2009}, admittedly no such declaratory relief of discharge of the Guarantor from liability can be granted by the Tribunal, because as detailed elsewhere, DRT is not a court having appropriate jurisdiction. By necessary implication, the logical conclusion is that the DRT shall have no jurisdiction to proceed for enforcement of the personal guarantee agreement against the Guarantor.

Narendra has around 26 years of rich experience in the domain of Companies Act, Arbitration and Conciliation Act, Consumer Protection Act, Sica, 1985, Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Securitization Act, 2002 etc.