Telangana High Court
Kodimela Pranith Kumar vs Sri Maniram Chit Funds Pvt. Ltd on 21 April, 2026
Author: N.Tukaramji
Bench: N.Tukaramji
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
THE HONOURABLE SRI JUSTICE N.TUKARAMJI
CIVIL REVISION PETITION No.73 OF 2026
DATE : 21.04.2026
Between :
Kodimela Pranith Kumar
... Petitioner
AND
Sri Maniram Chit Funds Pvt.LTD,
Office at H.No.8-7-244/1,1st Floor,
Hyderabad Road, Kothirampur,
Rep.by its Foreman, P.Ramesh, S/o.Swamy,
Aged about 42 years, R/o. Karimnagar and Others
... Respondents.
O R D E R:
This Civil Revision Petition is filed assailing the propriety, legality, and correctness of the order dated 22.03.2025 passed in E.P. No. 488 of 2023 in ARB No. 162 of 2022 on the file of the learned IV Additional Junior Civil Judge, Karimnagar.
2. The petitioner herein is the judgment debtor in Arbitration Application No. 162 of 2022, which was initiated by respondent No. 1 before the Chit Arbitrator/Deputy Registrar of Chits, Karimnagar.
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3. Heard Mr. Bathula Rajesh, learned counsel appearing for the petitioner. Despite due service of notice on respondent No. 1, there is no representation on its behalf.
4.1. Learned counsel for the petitioner contends that the arbitral proceedings initiated by respondent No. 1/chit fund are vitiated by abuse of process of law. It is submitted that there exists a material inconsistency in the respondent's claim, inasmuch as the legal notice dated 19.07.2021 quantified the alleged liability at Rs. 4,95,741/-, whereas the amount ultimately claimed and adjudicated is Rs. 2,85,494/- with interest. According to the petitioner, such discrepancy casts serious doubt on the genuineness and bona fides of the claim.
4.2. It is further contended that there was an inordinate and unexplained delay of approximately 695 days in initiating arbitral proceedings after issuance of the legal notice, which, according to the petitioner, undermines the validity of the proceedings.
4.3. It is also urged that the arbitral award dated 14.06.2023 was passed in violation of the principles of natural justice. It is alleged that the learned Arbitrator proceeded ex-parte despite the petitioner's purported presence and failed to consider his objections regarding coercive recovery practices. The Arbitrator is stated to have mechanically accepted the version of respondent No. 1 without proper adjudication. On these grounds, the petitioner seeks setting aside of the award.
34.4. It is further contended that the decree-holder, without first exhausting remedies against the principal borrower, has proceeded against the guarantors for recovery of the entire decretal amount. Such action, it is argued, is contrary to law, particularly in light of Section 146 of the Indian Contract Act, 1872.
5. Per contra, the record reveals that the arbitral award is based on cogent documentary evidence, including the chit agreement, promissory notes, account statements, and guarantee agreements. It is not disputed that the petitioner subscribed to the chit, received the prized amount, and thereafter committed default in payment of installments. The guarantors have expressly undertaken joint and several liability. The alleged discrepancy in amounts is stated to be immaterial, as the claim adjudicated is supported by proper accounts. The delay in initiating proceedings is within the permissible legal framework, and summons were duly served. It is contended that the petitioner failed to participate in the proceedings despite due notice, and therefore, no violation of natural justice arises.
6. I have carefully perused the material on record and considered the submissions advanced.
7. At the outset, it is undisputed that the petitioner subscribed to the chit, received the prize amount, and thereafter defaulted in repayment. The execution of guarantee agreements by the co-petitioners has also not been seriously disputed. The arbitral award is founded on documentary evidence, 4 including the chit agreement, ledger accounts, and supporting records, which clearly establish the liability of the petitioner.
8. It is a settled principle that minor discrepancies between a pre-litigation demand and the final quantified claim in arbitral proceedings do not, by themselves, vitiate the proceedings unless such inconsistency results in demonstrable prejudice. In the present case, the adjudicated claim is duly supported by documentary evidence and has been considered by the arbitral tribunal. Hence, the alleged discrepancy is neither material nor fatal to the validity of the award.
9. The contention regarding delay in initiation of arbitral proceedings is equally untenable. Mere delay, so long as the claim is within the prescribed period of limitation under the Limitation Act, 1963, does not invalidate arbitral proceedings. The enforceability of the claim, rather than the timing of initiation per-se, is determinative.
10. With regard to the alleged violation of principles of natural justice, the record indicates that summons were duly issued to the petitioner at the address furnished in the chit agreement. In the absence of any evidence demonstrating that the petitioner had communicated a change of address, service is deemed valid. Section 27 of the General Clauses Act, 1897 raises a presumption of due service when a document is properly addressed, prepaid, and sent by registered post. The petitioner has failed to rebut this statutory 5 presumption. Consequently, his non-participation cannot be construed as denial of opportunity, and the ex-parte award cannot be faulted on this ground.
11. Turning to the issue of liability of the surety, the contention based on Section 146 of the Indian Contract Act, 1872 is misconceived. The liability of a surety is governed by Section 128 of the Act, which unequivocally provides that such liability is co-extensive with that of the principal debtor, unless otherwise provided by contract.
12. The legal position stands conclusively settled by the Hon'ble Supreme Court in Bank of Bihar Ltd. v. Damodar Prasad, AIR 1969 SC 297, wherein it was held that the liability of the surety is immediate and co-extensive, and that the creditor is not bound to exhaust remedies against the principal debtor before proceeding against the surety. This principle was reiterated in State Bank of India v. Indexport Registered, (1992) 3 SCC 159 wherein it was held that the decree-holder is entitled to proceed directly against the guarantor for recovery of the entire decretal amount.
13. Section 146 of the Act, relied upon by the petitioner, pertains only to the inter se liabilities among co-sureties and does not restrict the creditor's right of recovery. In State of Madhya Pradesh v. Kaluram, 1967 AIR SC 1105, the Hon'ble Supreme Court clarified that a surety, upon discharging the debt, is entitled to subrogation under Section 140 and the benefit of securities under Section 141 of the Act. Similarly, in Amrit Lal Goverdhan Lalan v. State Bank of Travancore, 1968 INSC 100, it was held that each surety is liable for the 6 entire debt vis-à-vis the creditor, and the right of contribution arises only after payment.
14. The aforesaid position has been consistently reaffirmed in Industrial Investment Bank of India Ltd. v. Biswanath Jhunjhunwala, (2009) 9 SCC 478, wherein the Hon'ble Supreme Court held that the liability of the guarantor is independent, immediate, and co-extensive, and that the creditor cannot be compelled to first proceed against the principal borrower or secured assets.
15. In view of the settled legal position, the decree-holder is fully entitled to recover the entire decretal amount from the guarantor. The surety may, if so advised, seek contribution from co-sureties in independent proceedings, but cannot resist execution on that ground.
16. Accordingly, the contention that the creditor must first proceed against the principal borrower, or that the liability of the surety is limited under Section 146 of the Indian Contract Act, is legally untenable. The arbitral award fastening joint and several liability is consistent with settled principles of contract law.
17. Upon a comprehensive consideration of the material on record, this Court finds that the arbitral award does not suffer from any jurisdictional error, patent illegality, perversity, or violation of statutory provisions warranting interference. The execution proceedings are also in accordance with law. Therefore, no ground is made out for interference under Article 227 of the Constitution of India.
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18. Accordingly, the Civil Revision Petition is dismissed. There shall be no order as to costs.
Pending miscellaneous applications, if any, shall stand closed.
_______________ N.TUKARAMJI, J Date: 21.04.2026 CHS