Allowing an appeal in Rohini Kanoi & Anr v Allahabad Bank & Ors, Delhi High Court quashed an order for impleading the grandchildren of a guarantor of a loan in a case where recovery proceedings had been going on since 2004.
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Allahabad Bank began recovery proceedings before a debt recovery tribunal against M/s East India Syntax. The loan in question had been guaranteed by person who had since died and his son, Arun Garodia, who was impleaded both as a guarantor and as the legal heir of his father. During the proceedings the bank impleaded Kanoi and another grandchild of the deceased guarantor, arguing that they were also his legal heirs.
The grandchildren unsuccessfully argued before the debt recovery tribunal and the debt recovery appellate tribunal that they be deleted as respondents in the case as they were not class I (immediate) heirs of the deceased guarantor under the Hindu Succession Act, 1956, and there had been no bequest in their favour from his will. They said the bank had merely stated that the estate of the deceased had devolved upon them and had not justified its contention.
Allowing the writ petition, Delhi High Court observed that “it is trite” that when a guarantee is invoked upon the death of a guarantor the guarantor’s legal representative, who in law represents the estate of the deceased, has to be brought on record to defend the action. If succession is intestate, this would be all the legal heirs, but if succession is testamentary, it would be the beneficiaries under the will. The bank had to make a specific assertion and provide documentary evidence to show that the petitioners were the legal representatives of the estate of the deceased.
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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
