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2009 DIGILAW 496 (CAL)

Arin Sanyal v. STATE OF WEST BENGAL

2009-07-10

Pranab Kumar Deb

body2009
JUDGMENT P.K. Deb, J. 1. THIS writ petition has been filed, challenging the order dated 02.11.2006 passed by the Assistant Registrar of Co-operative Society North 24-Parganas in connection with Dispute Case No. 20 of 2006 and also for an order directing the respondent No. 2 to take recourse to the provision of the law for having the loan amount recovered from the respondent No. 5 Gour Aich Mazumdar or through his employer being respondent No.6. 2. THE respondent No.5 herein Gour Aich Mazumdar, an employee of Eastern Railway, applied for loan to the respondent No. 2. THE writ petitioner herein stood as Guarantor for the repayment of the loan borrowed by the respondent No. 5 from respondent No.2. On completion of the formalities, as amount of Rs. 40000/- was sanctioned. THE aforesaid amount was to carry interested @ 16.5% per annum. THE principal amount with interest was required to be paid in 60 monthly instalments. In the wake of the failure on the part of the respondent No. 2 to repay the loan by instalments the bank raised a dispute case before the Assistant Registrar of Co-operative Society, impleading the loanee as defendant No. 1 and the writ petitioner as defendant No. 2. The employer of respondent No. 5 was impleaded as defendant No. 3. While the Divisional Manager, Eastern Railway (Account) was made defendant No. 4. The dispute case was referred to the learned Arbitrator. The dispute case was taken up for hearing after service of notice upon all the defendants. The principal debtor did not appear even after service of notice. The learned Arbitrator on hearing the parties passed an order on 02/11/2006, directed the defendant No. 1 to repay the principal with interest within a month. It was directed that in the event of failure on the part of the loanee to pay the outstanding amount, the entire outstanding amount would be required to be paid by Senior Section Engineer. It was further stipulated that in the event of payment not being paid by the loanee that is Gour Aich Mazumdar and the Senior Section Engineer, Eastern Railway, the entire amount along with interest would be realised from defendant No. 2. 3. IT was also stipulated that in the event of outstanding amount not being recovered from defendant Nos. It was further stipulated that in the event of payment not being paid by the loanee that is Gour Aich Mazumdar and the Senior Section Engineer, Eastern Railway, the entire amount along with interest would be realised from defendant No. 2. 3. IT was also stipulated that in the event of outstanding amount not being recovered from defendant Nos. 1, 2 and 3, the amount would not be realised from the members of the Bank for their casual approach in sanctioning the loan. 4. AGGRIEVED by the aforesaid order, the Bank preferred an appeal. In allowing the appeal in-part, the learned Tribunal passed the order to the extent that the principal loanee and the writ petitioner would have jointly and severely liable for the repayment of loan. Appearing on behalf of the writ petitioner, Mr. Soumitra Banerjee, learned Advocated, has submitted that the learned Co-operative Tribunal passed the order against the writ petitioner without affording any opportunity to the writ petitioner to make submission before it. It is submitted that the order was passed by the learned Tribunal in haste without really ascertaining as to whether the notice had been duly served on the writ petitioner. It is submitted that stunned by the aforesaid order passed by the learned Tribunal, the write petitioner sought for information by making a proper application for information. The information slip, it is submitted, has confirmed that on opportunity was extended to the writ petitioner to make submission before the learned Tribunal. 5. COMMENTING on the observation of the learned Tribunal that no agreement was signed on behalf of the respondent No.6 with regard to repayment of loan by the respondent No. 5, it is submitted that the learned Tribunal failed to appreciate the aspect that the respondent No. 6 issued a letter dated 15/11/2009 whereby he had given an undertaking that the loan amount payable by the respondent No. 5 would be recovered by him from the salary of the principal loanee. It is argued that in view of such positive undertaking given by the respondent No. 6, the Tribunal ought to have directed respondent No. 6 to make payment of the outstanding dues in view of his failure to have the loan amount recovered from the salary of the respondent No. 5. It is argued that in view of such positive undertaking given by the respondent No. 6, the Tribunal ought to have directed respondent No. 6 to make payment of the outstanding dues in view of his failure to have the loan amount recovered from the salary of the respondent No. 5. The provision of section 58 of the Act not having been followed and applied, the impugned order is liable to be set aside as urged by Mr. Banerjee. 6. CHALLENGED the contention of the writ petitioner that he had not given semblance and opportunity of presenting his case before the learned Tribunal, Mr. Uddalak Bhattacharjee, learned Advocated representing the respondent Nos. 2 and 3, has submitted that the order of the Tribunal reveals that the writ petitioner was duly served with notice. Despite opportunity being extended to him, he decided not to challenge the appeal preferred by the Bank. Mr. Bhattacharjee has argued that the creditor has got all the options at his disposal for taking due action for the recovery of the loan amount. It is submitted that since the writ petitioner stands as Guarantor, he cannot be absolved from the liability of paying the principal amount with interest thereon in view of the failure on the part of the loanee to repay the loan. Referring to the case of the case of Bank of Bihar Ltd. vs. Damodar Prasad and Anr., reported in AIR 1969 SC 297 , it is argued that the liability of the surety is co-extensive with that of the principal debtor. The surety is liable to pay the entire amount. His liability is immediate. It is not deferred until the creditor exhausts his remedies against the principal debtor. 7. MR. Bhattacharjee has also relied on the case of State Bank of India vs. Messers Indexport Registered and Ors., reported in AIR 1992 SC 1740 , to vindicate his stand that the decree-holder cannot be forced to exhaust his remedy by way of mortgage decree against the principle debtor and then to proceed against guarantor. 8. THE grievance of the writ petitioner is that the Tribunal disposed of the appeal without affording any opportunity to him to controvert the contentions of the Bank. THE records of the Tribunal negate the contention that no opportunity was ever extended to the writ petitioner to controvert the stand of the Bank. 8. THE grievance of the writ petitioner is that the Tribunal disposed of the appeal without affording any opportunity to him to controvert the contentions of the Bank. THE records of the Tribunal negate the contention that no opportunity was ever extended to the writ petitioner to controvert the stand of the Bank. From the certified copy of the order it is evident that the present writ petitioner appeared as respondent No. 2 before the learned Co-operative Tribunal. His presence before the Tribunal shatters the myth that the appeal had been disposed of without giving him an opportunity to present his case. THE writ petition is liable to be dismissed on the sole ground of suppressions of material facts and distortion of the actual state of affairs. As highlighted in the case of Bank of Bihar Ltd. vs. Damodar Prasad and Anr. (supra), the liability of the surety is co-extensive with that of the principal debtor. His liability is immediate. It is not deferred until the creditor exhausts his remedies against the principal debtor. 9. IT has been underscored that when the creditor has obtained the decree against surety and the principal debtor, the surety has no right to restrain the execution of the decree against him. IT is the duty of the surety to pay the decretal amount. On such payment being made, he would be subrogated to the rights of the creditor under section 140 of the Indian Contract Act. As highlighted in the case of State Bank of India vs. Messers. Indexport Registered and Ors. (supra), the decree-holder would be entitled to proceed against the Guarantor first for the execution of the decree. As provided under section 128 of the Indian Contract Act. the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. A surety's liability to pay the debt is not obliterated simply because of the creditors omission to sue the principal debtor. The creditor is not bound to exhaust his remedy against the principal before suing the surety. IT is the right of the decree-holder to proceed with it in any way he likes. The surety may be hauled up without first proceeding against the principal debtor. 10. THE writ petitioner herein stood as Guarantor for the repayment of the loan. His liability is co-extensive with that of the principal debtor. IT is the right of the decree-holder to proceed with it in any way he likes. The surety may be hauled up without first proceeding against the principal debtor. 10. THE writ petitioner herein stood as Guarantor for the repayment of the loan. His liability is co-extensive with that of the principal debtor. He cannot insist on the creditor taking recourse to other procedure for recovery of the outstanding dues. THE loan amount not having been repaid, the writ petitioner as Guarantor cannot be absolved from his liability of paying the dues. THE Tribunal on appreciation of material came to the finding that there was no agreement between the respondent No. 6 and the Bank so far the repayment of the loan was concerned. THE finding so made on appreciation of evidence should not be originally scrutinized in the writ petition unless the finding is found to be perverse. THE right of the surety being co-extensive with that of the principal debtor and the creditor is not bound to exhaust his remedy against the principal debtor or anybody else before suing surety, proceeding may be launched against the Guarantor without even suing the principal debtor. As highlighted in Chitty on Contracts 24th Edition Volume 2 at page 1031 paragraph 4831: "Prima facie" the surety may be proceeded against without demand against him, and without first proceeding against the principal debtor." Judging all these facts, I do not find any ground whatsover in setting aside the order passed by the Tribunal and there is no earthly reason for directing the Bank to proceed against the respondent No. 6 for realisation of the outstanding dues. The liability of the surety being co-extensive with that of the principal debtor, he cannot disown his liability of paying the outstanding dues. 11. IN the result, the writ application is dismissed with costs.