TaxTMI 
TaxTMI 
TaxTMI 
2001 (7) TMI 1316
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...., 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 here....
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....n 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 failitng to recover and realis....
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..... 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 trial Court. 9. In this context, we may refer to a Supreme Court Judgment in Margaret Lalita Samuel v. Indo Commercial Bank Ltd. , wherein the Apex Court had negatived the contention of bar by law of limitation in a continuing guarantee, and para 10 of the said judgment reads as under: We may first consid....
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....Poona, We, C.B. Samuel and M.L. Samuel, the undersigned do hereby jointly and severally guarantee to you, the Indo Commercial Bank Limited the repayment of all money, which shall at any time be due to you from the said Modern Hindustan Food Products Ltd., on the general balance of their accounts with you or on any account whatever such balances to include all interest, charges, commission and other expenses which you may charge as banker and also the due payment at maturity of any promissory note or other negotiable instrument on the security or in respect of which any credit or advance shall be made. And we hereby declare that this guarante shall be a continuing guarantee to the extent at any one time for ₹ 10,00,000/- (Rupees Ten ....
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....tion for the amount repayable by the Company to the bank. We are concerned with the period of limitation of enforcing the liability of the defendant under the surety bond.... We hold that the suit to enforce the liability is governed by Article 115 and the cause of action arises when the contract of continuing guarantee is broken, and in the present case we are of the view that so long as the account remained live account, and there was no refusal on the part of defendant to carry out her obligation, the period of limitation did not commence to run. We agree with the view expressed by Shah J. The intention and effect of a continuing guarantee such as the one with which we are concerned in this case was considered by the Judicial Committee....
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....g the continuance of the guarantee, by the excess of the total debits over the total credits. It that be the true construction of this document, as their Lordships think it is, the number of years which have expired since any individual debit was incurred is immaterial. The question of limitation could only arise in regard to the time which had elapsed since the balance guaranteed and sued for had been constituted. That document, in their opinion, clearly guarantees the repayment of each debit balance as constituted from time to time, during the continuance of the guarantee, by the surplus of the total debit over the total credits, and accordingly at the date of the counterclaim the Association's claim against the plaintiff for paymen....