Karnataka High Court
Syndicate Bank vs T. Basappa And Ors. on 17 April, 1986
Equivalent citations: [1987]62COMPCAS68(KAR), ILR1986KAR3015
JUDGMENT P.A. Kulkarni, J.
1. Civil Revision Petition No. 2986 of 1985 is directed against the judgment and decree dated March 28, 1985, passed by the Additional Civil Judge, Shimoga, in R.A.No. 158 of 1980 affirming the judgment and decree dated September 9, 1980, passed by the Principal Munsiff, Shimoga, in O.S. No. 517 of 1979, dismissing the suit against defendant No. 2.
2. Regular Second Appeal No. 563 of 1985 by the plaintiff-bank is directed against the judgment and decree dated March 25, 1985, passed by the Additional Civil Judge, Shimoga, in R.A. No. 170 of 1980 reversing the judgment and decree dated October 31, 1980, passed by the Additional Munsiff, Shimoga, in O.S. No. 516 of 1979, decreeing the suit against all the defendants.
3. It is undisputed that the principal debtor in both the cases had borrowed the money and he and one surety have signed the acknowledgment on the suit documents. It is undisputed that the surety, Ananthapadmanabha ,in both the cases has not signed the acknowledgment. Therefore, the main question that arises in both the cases is that whether the acknowledgment given by the principal debtor and another surety would bind the surety, Ananthapadmanabha, who has not joined them in signing the acknowledgments.
4. The lower appellate court has taken the view that a decree cannot be passed against the surety, Ananthapadmanabha, as he has not joined the principal debtor and the other surety in passing the acknowledgment and in signing the acknowledgment . The learned author, Sri Mitra, in his Law of Limitation and Prescription., 8th edition , volume I, at page 334, has stated , as :
" Payment of interest by either principal or surety may (if not affected by the provisions of section 20) take the case out of the stature as against both of them. But acknowledgment by either cannot bind both. If the claim is against the principal , the acknowledgment will be inoperative if it signed by the surety, and vice versa."
5. In Hazara Singh Gujjar Singh v. Bakhshish Singh Mula Singh , , it is stated (headnote):
" Under section 19, the acknowledgment has to be by a party or person against whom the right is claimed. Where the debt is sought to be recovered both against the principal debtor as well as the surety,the acknowledgment by the surety does not save the period of limitation as against the principal debtor. The right will only be saved qua the surety and not qua the principal debtor by whom there is no acknowledgment."
6. The Punjab High Court has relied on Gopal Daji v. Gopal Sonu [1904] ILR 28 Bom 248, Brojendra Kishore v. Hindustan Co-operative Insurance Society Ltd., AIR 1918 Cal 707, Raghavendra Gururqo v. Mahipal Krishna, AIR 1925 Bom 244, Abde Ali v, Askaran, AIR 1924 Nagpur 411, Babu Jainarain Singh v. Parmeshar Murao , AIR 1931 Oudh 310, and U Ba Pe v. Ma Lay, AIR 1932 Rang 88. This dictum laid down by the Punjab High Court is in consonance with the use of the wording in section 19 of the Limitation Act. The wordings used in section 19 of the Limitation Act suggest that the acknowledgment will bind the party who has signed the acknowlegment. If the surety is not a party to that acknowledgment, section 19 will not come to the rescue of the learned of the plaintiff and the plaintiff would not be entitled to get a decree against the surety who has not joined the principal debtor in passing the acknowledgment.
7. The Madras High Court in Gopilal J. Nichani v. Trac Industries and Companies Ltd., , has interpreted section 128 of the Contract Act, which reads as follows (at page 137) :
" The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by contract."
8. The word " co-extensive ", according to the Madras High Court, denotes extent and can relate only to the quantum of the principal debt. It is further held in the said decision that even though the debt is suspended so far as regards the principal debtor is concerned, there will not be suspension of the liability of the surety. Therefore, under these circumstances, the principal laid down by the Madras High Court supports the view of the Punjab High Court.
9. In a way, the ruling in Hukumchand Insurance Co. Ltd. v. Bank of Baroda lends support to the view taken by the Punjab High Court .
10. The learned author, U.N. Mitra, in his Law of Limitation and Prescription , 8th edition, volume I, has said at page 652, as follows :
" On the question whether a creditor's right of suit against the principal debtor, if barred by limitation, necessarily involves a bar as against the surety also , there is difference of opinion among the High Courts. Madras, Calcutta and Bombay High Courts hold that the surety is not discharged in such circumstances from his liability to the creditor unless there is a contract to the contrary. The Allahabad High Court holds that the surety is discharged. In Jwala Prasad v. Maharaja Pratap Udainath, [1916] 1 Pat LJ 497; 37 IC 184, though there is no decision on the point , the learned judges expressed an opinion in favour of the Allahabad view."
11. Therefore, in view of the rulings of the Punjab High Court , this court and the Madras High Court , I am inclined to hod that if the surety does not join the principal debtor in passing the acknowledgment, the debt cannot be enforce against the surety, though it can be enforced against the principal debtor.
12. Learned counsel, Sri Aswathram, placed before me the ruling in Wandoor Jupiter Chits (P.) Ltd. v. K.P. Mathew , . The said decision appears to take the view that though the surety had not joined the principal debtor in signing the acknowledgment, the liability can still be enforced against the surety. With all due respect to the judges who have decided the case, I am not inclined to fall in line with the said decision, that too, especially in view of the clear principal laid down by the Punjab High Court, this court and the Madras High Court.
13. Learned counsel, Sri Aswathram , appearing for the bank submitted that the guarantee bond normally contains the following ground :
" If the guarantee obligation hereby undertaken by him/them becomes inoperative or unenforceable for any reasons whatsoever the amount due under these present shall be paid by him/ them (surety/lies) as principal debtor and bank shall be at liberty to recover the same accordingly."
14. This point was not canvassed in both the courts below, It has been taken orally for the first time in this court. Therefore, under these circumstances, there is no merit in the revision or the second appeal. The view taken by the lower appellate court is correct and it does not need any interference.
15. Therefore, under these circumstances, the revision as well as the second appeal are dismissed. No costs in both the cases.