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1992 DIGILAW 298 (ORI)

RAMDAS GUPTA v. STATE BANK OF INDIA

1992-10-30

S.C.MOHAPATRA

body1992
JUDGMENT : S.C. Mohapatra, J. - Defendant No. 2 (guarantor of the debtor) is appellant. 2. Plaintiff-Bank advanced medium term loan of Rs. 1,00,000/- to defendant No. 1 on the basis of a written agreement executed by defendant No. 1 on hypothecation of vehicle where the rate of interest was stipulated as follows ; "3. The Borrower shall also pay interest at the rate of 2 per cent below the State Bank Advance Rate minimum 11 percent per annum rising and falling therewith calculated respectively on the daily balance of the amount due subject to enhancement as hereinafter provided." Appellant guaranteed the loan by executing a document' where it was stated amongst others. "We the undersigned Ram Das Gupta S/o. late Seth Amilal hereby guarantee to the said Bank the payment on demand of all moneys at any time and from time to time hereafter due to the said Bank by the Borrower in respect of the said accommodation with interest thereon at the rate of Eleven per cent per annum from the date of demand and the due performance and observance by the Borrower of all the terms pertaining to the accommodation and the payment of all costs and expenses incurred by the said Bank in relation to the premises and we also agree to pay and make good to the said Bank on demand all losses, costs, damages and expenses occasioned to the said Bank by reason of non-payment of the said moneys costs and expenses or any part thereof or the breach, non-performance or non-observance of any of the terms aforesaid." 3. On the plaintiff filing the suit, defendant No. 1 remained exparte while defendant No. 2 contested the same. Defendant No. 2 contested the suit alleging that he is not liable for the amount. 4. In order to prove the case, plaintiff proved amongst others the agreement with defendant No. 1 which was marked Ext. 3 and the letter of guarantee of defendant No. 2 which was marked Ext, 5. Trial Court on consideration of the materials on record held that both defendant Nos. 1 and 2 are liable jointly and severally. 5. An application for additional evidence has been filed in this Court by defendant No. 2, the appellant that the amount payable to him towards house rent is to be adjusted as per the agreement. Trial Court on consideration of the materials on record held that both defendant Nos. 1 and 2 are liable jointly and severally. 5. An application for additional evidence has been filed in this Court by defendant No. 2, the appellant that the amount payable to him towards house rent is to be adjusted as per the agreement. Such a case was not made out in the written statement. There is no explanation why the documents were not filed in the trial Court. Even if the same would have been filed in the trial Court without pleading in that support, the same would not have been entertained. In this view of the matter, I am not inclined to permit defendant No. 2 to addue additional evidence which would amount to re-opening the suit afresh. Purpose of receiving additional evidence is not to give benefit to party who has lost in the suit to avoid the decree. Wishout such documents, there can be proper adjudication of this appeal. Accordingly, the application for additional evidence is rejected. 6. Mr. Ananga Patnaik, learned counsel for appellant, is correct in his submission that the liability of defendant No. 2 would be co-extensive with the liability of the principal debtor only to the extent reflected in the letter of guarantee (Ext. 5) Mr. P. V. Ramdas, learned counsel for respondent, also does not dispute the proposition. Section 123 of the Contract Act is to the said effect. That the liability of the guarantor is co extensive with the debtor is now settled by the Supreme Court in the decision reported in State Bank of India Vs. Messrs. Indexport Registered and others, as well as by the decision of this Court reported in State Bank of India Vs. Sajita Engineering Works and Others. Dispute arises only where the contract is stated to have provided otherwise. 7. Contract in Section 128 would obviously mean the contract with the guarantor and not with the principal debtor. If in the contract with the principal debtor there is a clear stipulation that the surety would have limited liability or something different then the liability of the debtor, that would prevail so far as the guarantor is concerned since the same is provided otherwise, in the present case, Mr. If in the contract with the principal debtor there is a clear stipulation that the surety would have limited liability or something different then the liability of the debtor, that would prevail so far as the guarantor is concerned since the same is provided otherwise, in the present case, Mr. Patnaik submits that defendant No.2 would be liable to pay interest at the rate of 11 per cent only and not otherwise since the letter of guarantee issued by him which was accepted by the plaintiff is that the rate of interest would be 11 per cent only. Mr. Ramdas on the other hand submitted that the liability being co-extensive, the rate of interest is ancillary to the liability and accordingly, the guarantor is to pay whatever interest the principal debtor is liable to pay. He submitted that the illustration to Section 128 of the Contract Act makes the position clear. Submission of Mr. Ramdas would have been correct had there been no stipulated rate of interest in the letter of guarantee, A simple letter of guarantee would cover the rate of interest payable by the debtor. Where, however, the rate of interest has been stipulated in the letter of guarantee otherwise which is accepted by the plaintiff-Bank, the same would prevail. To this extent submission of Mr. Ramdas cannot be accepted as illustration to Section 128 of the Contract Act relates to a case where there is no stipulation of interest. 8. From the aforesaid discussion, it is clear that the appellant would be liable to pay interest as stipulated in the letter of guarantee and not in accordance with the interest payable by the principal debtor (defendant No. 1) as per Ext. 3. 9. In result, appeal is allowed in part. The decree of the trial Court is modified to the extent indicated above. There shall be no order as to costs in this appeal.