Whether a person can take defence that he had signed on blank forms while taking loan from bank?

 In para 13 of the cross-examination, defendant No. 3 has also given number of admissions, which read as under:

It is true that I signed all the loan documents alongwith defendant nos. 2 and 4. It is true that all loan documents were signed by me as a Guarantor and Director of the company. I did not make any complaint to the bank and/or its higher official for having obtained my signatures on the blank forms including form of guarantee letter.

(emphasis supplied) 

40. Perusal of the aforesaid evidence would unequivocally go to show that defendant No. 3 has admitted to have signed all loan documents alongwith defendant Nos. 2 and 4. He has also admitted that loan documents were signed by him as guarantor as also in the capacity of Director of the defendant No. 1-Company. He has also admitted that he did not make any complaint to the bank or its higher authority for obtaining his signatures on the blank forms including form of guarantee letter. It is, thus, clear that execution of the loan documents has been admitted and the execution of the agreement of guarantee has also been admitted. The defendant No. 3 has failed to prove that the said documents were blank documents. Had it been so, he would not have remained silent. He is an educated person. He would have definitely complained to the higher authorities of the bank against the Branch Manager for having obtained blank loan documents from him. Apart from his own bare statement, there is no other evidence on record. Defendant No. 3 was running Industrial Unit. He has seen ups and downs of the life. Such a person is not expected to sign blank documents. Apart from this assuming to be so, once having acted upon those documents having taken advantage of those documents; having taken advantage of the money borrowed from the bank and having used it for years together for its Industrial unit; the defendant No. 3 cannot be allowed to take such somersault and contend that the documents were blank though he has borrowed money, though he had taken guarantee.

Bombay High Court

Central Bank Of India, A Body ... vs The Sion Bakers And Confectioners ... on 11 April, 2008

Equivalent citations: 2008 (110) Bom L R 1363

Bench: V Daga

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Whether banking company is exempt from insolvency proceeding?

 In IV (2001) CLT 284(cited Supra) the question, whether the bank can claim exception from Insolvency proceedings under Section 8 of the Provincial Insolvency Act 1920 came up for consideration before the Allahabad High Court. The Allahabad High Court after consideringSection 8 of the Provincial Insolvency Act 1920, Section 5(c) of the Banking Regulation Act 1949 and Section 2(d) of the Banking Companies (Regulation and transfer of Undertakings) Act 1970, held that Punjab National Bank is a Govt. Company under Section 617 of the Companies Act 1956 and therefore it is exempted from Insolvency proceedings.

Madras High Court

Tmt. Lalitha vs State Bank Of Hydrabad on 9 March, 2007

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Duties of board of directors while making decision of retirement/compulsory retirement of employee of company

In pursuance to the directions of the Single Bench, record pertaining to the retirement/compulsory retirement was produced by the counsel for the appellant bank wherein it was evident that the impugned orders had been passed by the Board of Directors on the advise of the Legal Advisers and the Banking Experts. In terms of Rule 15, it was incumbent upon the Board of Directors to have independently applied their mind and taken decision based on specific grounds. The specific grounds which have been spelt out in Rule 15 include doubtful integrity or incompetence to discharge official duties or inefficiency in due performance of official duties which would have the effect of the employees losing their utility.        It was, therefore, necessary for the Board of Directors to have independently considered the entire service record of the employees so as to form opinion with regard to their utility to the Bank. The requirement of recording specific grounds to arrive at the decision in the rules is intended to ensure that the Board of Directors does not act arbitrarily while compulsorily retiring the employees. There does not seem to be any independent and due application of mind on the part of the Board of Directors while arriving at the decision which has the effect of bringing the services of the employees to a premature end. The function which had been entrusted upon the Board of Directors by the rule could not have been outsourced to the legal advisers. 
The Single Bench has also held that the record which had been produced had not been contemporaneously maintained inasmuch as that the proceedings of the Board of Directors in the meeting held on 31.03.2010 was not made available and instead only an office note dated 31.03.2010 had been produced. This office note refers to the meeting of the Board of Directors held on 22.03.2010 wherein it was decided to compulsorily retire the officials. The proceedings of the meeting of the Board of Directors held on 22.03.2010 indicate that the decision had been arrived in view of the earlier meetings held on 24.02.2010 and 10.03.2010. However, in the proceedings of the meetings held on 24.02.2010 and 10.03.2010 there is no mention of any consideration of the matter as contemplated under Rule 14 and 15 of the Rules of 2006 regarding superannuation and retirement/ compulsory retirement of the officials. 
It has also been held by the Single Bench that the record which had been produced included the attendance register of the meetings of the Board of Directors from 01.07.2009 onwards as well as the register containing details of the proceedings of the Board of Directors from 01.07.2009 to 27.04.2011 which were serially paginated. However, the office note dated 31.03.2010 and the report on the analysis of the service record of the employees alongwith annexures had been prepared in separate sheets. Even in the legal opinion which had been tendered by the legal Advisers, there was no mention of any reference number and date of any document in response to which the legal opinion had been furnished. It has been held that these documents along with the fact sheet reflecting consideration of the service record of the respondents by the committee of four senior and experienced staff and banking expert (on contract) which examined the individual records of the employees on 20th March appear to be documents which were subsequently generated to fill the lacuna. Therefore, the Single Bench has expressed serious doubts about the contemporaneity of the record. We find that there is no basis for us to take a different view in the matter.

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JAIPUR BENCH, JAIPUR

(1) D.B. Special Appeal (Writ) No.529/2015
Rajasthan Urban Co-operative Bank Ltd. vs. Ajay Kumar Katewa & Ors.


Date of Judgment : 12th January, 2016

HON'BLE THE ACTING CHIEF JUSTICE MR.AJIT SINGH
HON'BLE MR. JUSTICE ANUPINDER SINGH GREWAL



Reportable

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