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2012 DIGILAW 61 (JK)

Citizen Co-operative Bank Ltd. v. Sukant Garment

2012-02-21

Sanjay Gupta

body2012
1. Petitioner, bank has filed present revision petition against the order of Registrar Cooperative Societies Jammu, by virtue of which, court below has directed Respondent no. 1 to pay Rs 1,34,725/- along with interest as per NPA norms after 1-1-07 and it has also been held that in case bank fails to recover amount from respondent no.1, only then guarantors i.e. respondent 2 & 3 shall be held liable to pay amount. 2. Bank has challenged the impugned order on the grounds, that order of court below is not accordingly to law, because as per terms of guarantee deeds dated 4-3-02, borrower and guarantors are jointly and severely liable for re paying loan amount in case of default committed by barrower. That in operative part of order, a glaring error has thus been committed. 3. Respondents 1 & 3 have not appeared despite repeated summons issued to them and finally on 24-11-2011, a notice was published in daily news paper STATE TIMES, but despite notices respondent no. 1& 3 have not appeared, so both of them have been set exparte. Respondent no. 2 has also been set ex-parte on 2-12-2011. 4. Brief facts of the case are that, respondent no. 1 obtained loan of Rs. 100,000/- from branch office of bank situated at Moti Bazaar Jammu on 4-3-2002 for bussiness. This bank loan was to be re-paid by him in 48 equal installments. This loan was carrying interest @ 13% per annum. Respondent no 1 also executed promissory notes and respondent no. 2 and 3 stood as guarantors. That respondent no.1 thereafter became defaulter and on 2.6.2007, an arbitration petition for recovery of Rs 134725/- calculated up to 2006 along with interest @ 13% till realization, was filed before Joint Registrar Special. It was transferred to Additional Registrar Cooperative Societies, Jammu. Respondents did not appear and a publication was done in daily STATE TIMES on 24-1-09 for their appearance. Thereafter, petition was withdrawn by Registrar and tried by him. Respondent despite summons did not appear there also and accordingly petition was allowed on 11.4.2009. 5. The concluding Para of order of Registrar Cooperative Societies reads as under:- "An award of Rs 134725/- is passed in favour of the Bank which shall be paid by the Respondent no. 1 to the Bank. The interest after 1/1/2007 shall be regulated as per the NPA norms. 5. The concluding Para of order of Registrar Cooperative Societies reads as under:- "An award of Rs 134725/- is passed in favour of the Bank which shall be paid by the Respondent no. 1 to the Bank. The interest after 1/1/2007 shall be regulated as per the NPA norms. The petitioner bank is at liberty to recover the decreed amount from the Respondent no. 1 either in one lump or in installments not exceeding the three. The interest to be calculated shall also be paid along with the decreed amount as it stood against the Respondent n. 1 on 31/12/2006. In the event of failure to pay the amount to the petitioner bank. Respondent no. 2 and 3 being guarantors in light of the Guarantee Deed executed on 4/3/2002 shall be subjected to pay the amount which the respondent no 1 fails to pay. 6. Bare perusal of this order, it is evident that it is not in consonance with spirit of law as provided in contract of guarantee. 7. 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 are those 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. 8. 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 not accordingly to law as per contract of guarantee. 9. Accordingly this revision is allowed, order impugned is modified to the extent that all the respondents shall be jointly and severely liable to pay the decreed amount. 10. File of the court below is sent back along with a copy of this order. File of this court be consigned to record after due compilation.