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2012 DIGILAW 289 (JK)

Citizen Co-operative Bank Ltd. v. Sanjay Sethi

2012-05-25

Sanjay Gupta

body2012
1. This revision petition has been directed against the order of Registrar cooperative Societies, Jammu dated 11.4.2009, by virtue of which, Court below has ordered that petitioner bank is at liberty to recover the decreed amount from respondent no. 1 and in the event of non recovery, the bank shall proceed against respondent no. 2 and 3. 2. Petitioner has challenged the impugned order on the ground that, the court below while passing the order has overlooked class IV of letter of guarantee deed dated19.1.2002, wherein guarantors can be proceeded without proceeding against original borrower. 3. Respondent no. 1 did not appear despite registered notice, so he was placed ex-parte on 6.4.2010. The services of other respondents were not possible by ordinary mode, so notice were published in daily paper news paper state times dt.7.2.2012. Despite that they did not appear, so they were also placed exparte on 4. I have heard the counsel for petitioner and gone through the records. 5. From the perusal of records, it appears that C.C. bank Moti bazaar granted loan to petitioner No. 1 in 2002 for Rupee one lac for purchase of computer. That while granting the loan, interest at the rate of 13% per annum with quarterly rest was agreed vide sanction letter dt. 19.1.2002. That respondent no. 2 and 3 stood as guarantors and they executed deeds of guarantee in favour of bank. That thereafter principle borrowers committed default in repayment of loan and an amount of Rs. 1, 95,290/- became due up to 31.3.2007. That despite service of legal notice respondents did not pay the amount. 6. Accordingly arbitration petition u/s 70 of Cooperative Societies Act, for recovery of RS. 1, 95,290/- was filed before Addl. Registrar Cooperative Society Jammu. This petition was subsequently withdrawn by Registrar for further proceedings. Respondents despite service through notices published in daily News paper The Himalayan Times dt. 26.11.2008,did not appear and accordingly they were set exparte. Court below after that, pronounced the order on 11.4.2009. The concluding Para of order is reads as under: "In the above back drop, this Court upholds the request of the petitioner Bank to pass a decree amounting to Rs. 195290/- against the respondent No. 1. 26.11.2008,did not appear and accordingly they were set exparte. Court below after that, pronounced the order on 11.4.2009. The concluding Para of order is reads as under: "In the above back drop, this Court upholds the request of the petitioner Bank to pass a decree amounting to Rs. 195290/- against the respondent No. 1. The interest having accrued after 1.4.2007 shall be recovered by bank from the respondent on such rates as have been in vogue for calculating the interest during the period viz from 1.4.2007 to the date of actual realization of the amount. The petitioner bank is at liberty to recovered the decreed amount either in one lump or in monthly installments not exceeding the there. In the event of non- recovery/non payment, the Bank shall also proceed against the respondent no. 2 and 3 besides the collateral security. The petition is disposed off with the above orders. From the perusal of concluding Para, it is apparent that, Court below while passing the order held that, firstly the bank shall proceed against principle borrower- respondent no.1 and in case of non recovery bank shall proceed against the respondent No. 2 and 3.- guarantors. 7. I have given my thought consideration to whole aspects of matter. 8. Contract of Guarantee means to perform the promise or discharge the liabilities of third person in case of default. Principle debtor/ borrower is a person in whose favour guarantee is given and creditor is that person to whom guarantee is given. The liability of surety/guarantor is co-extensive with that of principle debtor and thus principle debtor/borrower and guarantor are jointly and severely liable to creditor. 9. Chapter VIII of Contract Act deals with indemnity and guarantee. Section 128 of Contract Act reads as under. Section 128 -- Surety Liability: The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by contract. A plain reading of 128 of Contract Act, it is apparent that liability of surety /guarantor is co-extensive with that of principle debtor. 10. In the present case, direction of court below, that bank shall recover the decreed amount from respondent no. 1 at first instance and in the event of his failure, the guarantors shall be subject to pay the amount, which respondent no 1 fails to pay, is thus not according to law, as per contract of guarantee. 11. 10. In the present case, direction of court below, that bank shall recover the decreed amount from respondent no. 1 at first instance and in the event of his failure, the guarantors shall be subject to pay the amount, which respondent no 1 fails to pay, is thus not according to law, as per contract of guarantee. 11. It has become a trend nowadays for dishonest and trickster person, to avail lone from bank or financial institution, with very intention not to repay it. If it is not curbed, than banks or financial institutions will be ruined and public money will be swallowed. 12. Accordingly, this revision petition is allowed and impugned order is modified to the extent that all respondents I to 3 shall jointly and severely liable to pay the award. Bank has option to proceed against all respondents simultaneously or against any one, from whom recovery can easily be effected. Already much time has expired, so Bank shall take coercive steps in recovering the amount. File of court below is sent back along with order. Present file be consigned to record.