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About two years after the dismissal of the insolvency petition, the petitioners herein filed I.A.No.883 of 2005 to release the bank guarantee. Through the impugned order, the Insolvency Court dismissed the same. The petitioners contend that the bank guarantee is liable to be released and that the impugned order is liable to be set aside. when the insolvency petition was dismissed and when the bank guarantee was expired earlier to it, the petitioner can be released from bank guarantee to continue their business.

                        IN THE HIGH COURT OF JUDICATURE, ANDHRA

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PRADESH
AT HYDERABAD

                        (Special Original Jurisdiction)

PRESENT

THE HON’BLE SRI JUSTICE K.G.SHANKAR

C.R.P.NO.5131 OF 2006

 

20-12-2010

Between:-

R.Srinivas and others

.. Petitioners

And

Pulamati Bai and others

..Respondents


ORDER:-

The learned III Additional District Judge, Warangal, through the impugned order, declined to release the bank guarantee offered by the petitioners therein.  Aggrieved by the same, the petitioners preferred the present revision.

2.       The respondents were served with notices.  None other respondents appeared.  The case is proceeded in the absence of the respondents.

3.       One Bajjuri Nagaraj, who is the second respondent herein, laid I.P.No.7 of 2001 on the file of the III Additional District Judge, Warangal to adjudicate the first respondent and perhaps the petitioners also as insolvents.  The petitioners and the first respondent were partners in M/s.Manikanta Modern Rice Mills.  The second respondent sought for appointment of an Advocate Commissioner before the Insolvency Court.  I.A.No.153 of 2002 in I.P.No.7 of 2001 was allowed.  An Advocate Commissioner was appointed.  The learned Advocate Commissioner visited the premises, took inventory of the premises in question and locked the same.  The petitioners, as already pointed out, are the partners along with the first respondent in the mill.  The petitioners, who wanted to continue the business, would appear to have sought for the intervention of the Insolvency Court to permit them to conduct business.

4.       It is the case of the petitioners that the Insolvency Court permitted the petitioners to prosecute the business on a bank guarantee of Rs.1,75,000/- for a period of one year.  The bank guarantee was given by the petitioners with effect from                       04-07-2002.  The bank guarantee would stand expired on                   03-07-2003.  It would appear that the petitioners were permitted to conduct business after furnishing of the bank guarantee.

5.       While things stood thus, on 19-10-2003, the insolvency petition was dismissed for non-prosecution.  Neither the second respondent-creditor, nor the first respondent-primary debtor nor the petitioner for that matter filed any petitions or appeals questioning the order of dismissal of the insolvency petition for default dated 19-10-2003.

6.       About two years after the dismissal of the insolvency petition, the petitioners herein filed I.A.No.883 of 2005 to release the bank guarantee.  Through the impugned order, the Insolvency Court dismissed the same.  The petitioners contend that the bank guarantee is liable to be released and that the impugned order is liable to be set aside.

7.       As pointed out by Sri Ghanshyamdas Mandhani, learned counsel for the petitioners, the bank guarantee expired on            03-07-2003.  The releasing of the petitioners from the bank guarantee, in fact, is automatic when the bank guarantee was not encashed on or before 03-07-2003.  The learned trial Judge held that there was collusion between the insolvency petitioner, namely the second respondent herein, and the petitioners and that the petitioners are not entitled to seek further release of the bank guarantee as they failed to show that they are the partners.  It may be pointed out that when the petitioners claim that they are  the partners and also have furnished bank guarantee, the second respondent cannot now claim that the petitioners are not the partners of the mill where he did not oppose the furnishing of the bank guarantee by the petitioners.  I am satisfied with the contention of the petitioners that they are the partners of M/s.Manikanta Modern Rice Mills.

8.       At any rate, the primary question is whether the petitioners can be released from the bank guarantee?

9.       As already pointed out, the bank guarantee, in fact, stood expired on 03-07-2003.  This petition more would appear to be for the purpose of clarity.  The learned counsel for the petitioners submitted that the bank has not been releasing the money deposited by the petitioners on the ground that the bank guarantee has still been in force. I, therefore, consider it appropriate to release the petitioners from the bank guarantee where in fact, the bank guarantee stood expired on 03-07-2003 and also where the main insolvency petition stood dismissed on             19-10-2003 itself.

10.          Accordingly, this Civil Revision Petition is ordered.  The petitioners are released from the bank guarantee.  No costs.

                    _______________

               K.G.SHANKAR,J

20th December 2010

AMD

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