Karnataka High Court
The National Small Industries ... vs M/S Mysore Lamp Works Limited on 10 December, 2025
Author: V Srishananda
Bench: V Srishananda
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NC: 2025:KHC:52234
CRP No. 30 of 2012
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 10TH DAY OF DECEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE V.SRISHANANDA
CIVIL REVISION PETITION NO.30 of 2012 (res)
BETWEEN:
1. THE NATIONAL SMALL INDUSTRIES
CORPORATION LTD
THE COMPANY REGISTERED UNDER
THE COMPANIES ACT 1956
HAVING ITS REGISTERED OFFICE AT
NSIC BHAVAN, OKHLA INDUSTRIAL ESTATE
NEW DELHI-110020 AND HAVING ONE
OF ITS BRANCH OFFICE AT NO.C-424
PEENYA 1ST STAGE, BEHIND PEENYA
POLICE STATION, BANGALORE 560 058
REP. BY ITS SENIOR BRANCH MANAGER
SRI M L PRAKASHA
...PETITIONER
(BY SRI. S KRISHNASWAMY., ADVOCATE)
AND:
Digitally signed by
HEMALATHA A 1. M/S MYSORE LAMP WORKS LIMITED
Location: HIGH OLD TUMKUR ROAD,MALLESHWARAM
COURTOF WEST BANGALORE 560055
KARNATAKA REP BY ITS CHAIRMAN AND
MANAGING DIRECTOR.
2. SRI RAM BHATIA
HINDU MAJOR
PROPRIETOR M/S.UNILUX
114, SIR VITHOLDAS CHAMBERS
16, BOMBAY SAMACHAR MARG FORT
BOMBAY 400 023
...RESPONDENTS
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NC: 2025:KHC:52234
CRP No. 30 of 2012
HC-KAR
(BY SRI. G KRSIHNA MURTHY, SENOR COUNSEL FOR SMT.
APARNA)
THIS CRP IS FILED UNDER SECTION 115 OF CPC.,
PRAYING TO SET ASIDE THE ORDER DATED: 15.09.2010
PASSED IN O.S. NO. 8468/2001 ON THE FILED OF XVI
ADDITIONAL CITY CIVIL JUDE AT BANGALORE (CCH-12)
DISMISSING THE SUIT OF PETITIONER/PLAINTIFF AS AGAINST
RESPONDENT NO,2 AND REMIT THE MATTER TO THE TRIAL AD
COURT FOR RECONSIDERATION IN ACCORDANCE WITH LAW
IN THE INTEREST OF JUSTICE AND EQUITY.
THIS PETITION, COMING ON FOR ADMISSION THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE V SRISHANANDA
ORAL ORDER
Heard S.Krishnaswamy, learned counsel for the petitioner and Sri G.Krishnamurthy, learned Senior Counsel for the respondent No. 2.
2. Plaintiff in OS No.8468/2001 is the revision petitioner, challenging the order on memo dated 05.02.2010.
3. The facts in the nutshell are as under:
Plaintiff filed the suit for recovery of money from the defendants. Plaintiff being the company registered under the Companies Act, wholly owned by the Government of India, had extended the facility of bill discounting to the -3- NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR first defendant for the supply of goods to be made by the second defendant in favour of the first defendant. As and when such materials are supplied by the second defendant, the bill discounting facility could be adjusted and bill discounting facility was for a fixed sum.
4. First defendant had agreed for the said facility and on account of non-payment of the amount by the first defendant in respect of the bill discounting facility, suit came to be filed.
5. During the pendency of the suit, a memo came to be filed on 05.02.2010. Contents of the memo is extracted, which reads as under:
"1) It is submitted that the Plaintiff-NSIC filed 14 civil suits against M/s Mysore Lamp Works Ltd and others for Rs. 1,60,88,558/ together with further interest @ 19.5% p.a (including additional interest@ 3% p.a) and service charges at 0.08% for every block of one week from the date of suit till realization with cost of the suit.
2) The following are the 14 suits - 1) O.S.7838/2001, 2) O.S.7869/2001, 3) O.S. -4- NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR 7870/2001, 4) O.S.7915/2001, 5) O.S.7924/2001,
6) O.S.8254/2001, 7) O.S.8257/2001, 8) O.S. 8279/2001, 9) O.S.8280/2001, 10) O.S.8325/2001,
11) O.S.8326/2001, 12) O.S. 8433/2001, 13) O.S. 8468/2001, 14) O.S 8444/2001.
3) That in the proposal submitted by the defendant-
M/s Mysore Lamp Works Ltd, the proposal which was considered by the Plaintiff-NSIC under the specific terms and conditions stipulated as under:
a) The Mysore Lamp Works Ltd shall pay Rs.1,07,00,000/- (Rupees One Crore Seven Lacs Only) towards full and final settlement of the liability of Mysore Lamp Works Ltd only and the other defendants shall be liable to pay the balance amount together with interest till realization.
4) In terms of the settlement, M/s Mysore Lamp Works Ltd has paid Rs. 1,07,00,000/- (Rupees One Crore Seven Lacs Only) towards full and final settlement against them with liberty to the Plaintiff-
NSIC to continue its suits against the remaining defendants for the balance outstanding and further interest accrued thereon till realization along with cost.
5) Since M/s Mysore Lamp Works Ltd has paid the settled dues in terms of settlement, they -5- NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR approached the Plaintiff to withdraw the suit against the defendant no-1, ie Mysore Lamp Works Ltd only and continue the suits against remaining defendants.
6) The proportionate amount received in this case is Rs. 18,55,109/-(Rupees Eighteen lakhs fifty-five thousand one hundred and nine only) and therefore the Plaintiff prays leave of this Hon'ble Court to continue the suit against the other defendant/s to recover the balance with cost of the suit.
It is therefore prayed that the Hon'ble Court be pleased to dismiss the suit against defendant No-1 and permit the plaintiff to continue the suit against defendant No-2 in the interest of equity and justice."
6. Learned trial judge, after hearing the parties, passed the order allowing the memo in part and rejected the same insofar as continuation of the suit as against defendant No.2. Operative portion of the trial Court's order reads as under:
"The Memo is accepted only to the extent of seeking dismissal of the suit as against defendant No.1 and it is partially rejected relating to the permission sought for -6- NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR continuing to prosecute the suit against defendant 2. Consequently, I hold that in view of the settlement arrived at by the plaintiff with the 1st defendant in respect of suit transaction and having extended the said benefit to the defendant 2 also who are co- borrowers and the sureties, the suit is also ordered to be dismissed as against defendant 2 also."
7. Being aggrieved by the same, plaintiff is before this Court in this Revision.
8. Sri S.Krishnaswamy, learned counsel for the revision petitioner, re-iterating the grounds urged in the petition, contended that in the memo, all that the plaintiff sought was to dismiss the suit of the plaintiff as against the defendant No. 1 and sought continuation of the suit as against defendant No. 2, in view of the letter written by defendant No. 2, agreeing to pay the liability under the 'Bill Discounting' as if he is a principal debtor.
9. Sri Krishnaswamy would further contend that, without appreciating the said aspect of the matter, trial -7- NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR judge wrongly dismissed the suit against defendant No. 2, resulting in miscarriage of justice and sought for allowing the revision. In that regard, he invited the attention of this Court to the letter dated 03.08.1999 written by Unilux and signed by Sri Ram Bhatia to National Small Industries Corporation, Bills Discounting Department. The said letter reads as under:
"Dear Sir.
We understand that the National Small Industries Corporation Ltd. (NSIC) has sanctioned a limit to M/s. The Mysore Lamp Works Ltd. under Bill Financing Scheme for covering purchase of supplies required for their use and the limit is to be availed of for making such purchases exclusively from small scale manufacturers. In this context, we have since sold Electrical ballast manufactured by us at a total cost of Rs.3,02,085/- (cost+ applicable taxes) to The Mysore Lamp Works Ltd. as have drawn a bill
(s) on M/s. The Mysore Lamp Works Ltd. as detailed below, which has been duly accepted by them. We have drawn/endorsed the above bill (s) in favour of NSIC. We hereby authorise M/s. The Mysore Lamp Works Ltd. to lodge the above bill (s) with you for discounting on our behalf. You may kindly discount -8- NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR the said bill (s) at the applicable rate of discount and credit the net proceeds thereof by demand draft payable to us at 114, Sir Vithaldas Chambers, 16, Bombay Samachar Marg, Mumbai - 400 023 after deducting your charges for remittance and postage.
2. As required under the Scheme, we hereby certify that the above said bill (s) endorsed by us in your favour for the purpose of discounting have arisen out of bonafide commercial transaction relating to sales of indigenous Electrical ballast manufactured by us and sold on Credit. We also certify that we are an industrial concern in the small scale sector. We further certify that the Supplies covered by the bill (s) have been despatched by us to the Purchaser on 13.02.99 and 22.02.99. Relative invoice (s) indicating the date(s) of delivery of the relative Bills & Delivery challans and also a certificate in the prescribed format as required under the Scheme are enclosed.
3. We further certify that the Supplies covered by the undernoted bill (s) have not been financed under any other schemes of financial institutions/ banks.
4. We confirm that NSIC will be under no obligation to present the bills for payment on due -9- NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR dates and notwithstanding the non-presentation in case the payment is not made by M/s. The Mysore Lamp Works Ltd. on due dates, we will remain liable on the said bills as principal debtors.
5. We also agree that we shall have no objection to NSIC advising our bankers of sanction of the above mentioned Bills financing facility.
Yours faithfully For UNILUX RAM BHATIA Karta Ram Bhatia (H.U.F.) Proprietor"
10. Per contra, Sri G.Krishnamurthy, learned Senior Counsel representing respondent No.2, supports the impugned order by contending that, in the case on hand, the principal liability was on the defendant No.1 and any compromise entered into by the plaintiff with defendant No.1 without recourse to defendant No.2 would result in extinguishing the liability of a guarantor as contemplated under the provisions of Contract Act and therefore, despite the letter that has been referred to by the counsel for
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR petitioner, suit cannot be proceeded as against the defendant No.2 which has been rightly considered by the learned trial judge in the impugned order and dismissed the suit of the plaintiff in toto. Thus the revision petition needs to be dismissed.
11. In support of variation of contract, Sri Krishnamurthy placed on record the decision rendered by the Hon'ble Apex Court in the case of RAJA BAHADUR DHANRAJ GIRJI vs. RAJA P. PARTHASARATHY RAYANIMVARU AND OTHERS reported in MANU/SC/ 0041/1962. In the said decision, he invited the attention of this Court to para 4, wherein it is held as under:
"4. This controversy raises the question as to whether s. 135 of the Indian Contract Act or principles underlying it apply to surety bonds executed in favour of the court. Section 135 provides that a contract between the creditor and the principal debtor, by which the creditor makes a composition with or promises to give time to, or not to sue, the principal debtor discharges the surety, unless the surety assents to such contract. There can thus be no doubt that a
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR contract of suretyship to which s. 135 applies would be unenforceable if the debt in question is compromised between the debtor and the creditor without the assent of the surety. But this provision in terms cannot apply to a surety who has executed a bond in favour of the court, because such a contract of guarantee of suretyship does not fall within the scope of s. 126 of the Contract Act. A contract of guarantee under the said section postulates the existence of the surety, the principal debtor and the creditor, and this requirement is not satisfied the case of a bond executed in favour of the court. Such a bond is given to the court and not to the creditor and it is in the discretion of the court to enforce the bond or not. Therefore, there cannot be any doubt that in terms, the provisions of s. 135 cannot apply to a court bond."
12. In support of his contentions, he drew the attention of this Court to Section 140 of the Indian Contract Act, 1872, which reads as under:
"140.Rights of surety on payment or performance.--Where a guaranteed debt has become due, or default of the principal debtor to
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor."
13. Further, to buttress his arguments, he placed on record a Division Bench ruling of this Court in the case of T.RAJU SETTY vs. BANK OF BARODA reported in AIR 1992 Kar.108, wherein the Division Bench has held as under:
"........ In the instant case, no doubt, the suit is not only against the sureties but it is also against the principal debtor. The subject-matter of the suit being one and the same even though all the three are liable under different grounds inasmuch as, as already pointed out, defendant No.1 was liable under the pronote and the hypothecation deed and whereas defendants Nos. 2 and 5 are liable under the surety bonds but all of them are liable for only one claim, viz., the debt advanced to defendant No. 1 and that was the subject matter of the suit in which the decree against all the three defendants was sought jointly and severally. Thus, the relief sought for was only one and it was common to all. In such a case, it is not the right of the plaintiff to make an independent claims against the sureties
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR under the surety bond that will be the deciding factor. It is the law embodied in Order 22, rules 4 and 5 of the Civil Procedure Code as enunciated by the Supreme Court in all the aforesaid three decisions which will govern the proceedings because, in the same proceeding, there will be two conflicting decrees, one dismissing the claim of the plaintiff in respect of the very subject-matter as against the first defendant and decreeing the same claim of the plaintiff against defendants Nos. 2 and
3. No doubt the surety bond is very widely worded and defendants Nos. 2 and 3, as already pointed out, have given up their rights under sections 133, 154, 135, 139 and 141 of the Contract Act. But nevertheless, the proceeding being one, the court in the same proceeding in respect of the same subject-matter cannot pass two conflicting decrees. We are also of the view that as the liability of the sureties is in relation to the liability of the first defendant, which arose out of the loan advanced to him and the liability of the first defendant came to be extinguished on the failure of the plaintiff to bring the legal representatives of the deceased defendant No. 1 on record. ............ In the event of the sureties making the payment, in law, they are entitled to have it reimbursed from the principal debtor or his legal representatives. But by reason of the filing of the suit by the creditor (plaintiff)
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR against the principal debtor and his sureties (defendants Nos. 1, 2 and 3), the plaintiff by allowing the suit to abate as against defendant No. 1 by its negligence, has made it impossible for the sureties to have the amount they would be required to pay if the decree were to be passed against them reimbursed from the legal representatives.
For the reasons stated above, it is held that the courts below are not justified in law in holding that there will not be any conflicting decrees 3. in the event the suit is decreed against defendants Nos. 2 and 3. Accordingly points Nos. 2 and 3 are answered in the negative and in T favour of the defendants and against the plaintiff.
There is also one more aspect of the case which also deserves to be considered. In the earlier portion of this judgment, we have pointed out that defendant No. 2 remained ex parte and the suit was decreed against him. Defendant No. 2 did not go up in appeal. Therefore, the decree passed against defendant No. 2 has become final. We do not consider that this is a case in which we will be justified in exercising our power under Order 41, rule 33 of the Civil Procedure Code. The second defendant himself has accepted the decree and acquiesced in it and has not preferred any appeal against that decree. Therefore, the decree of the
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR lower appellate court in so far it confirms the decree of the trial court as against defendant No. 2 shall have to be retained.
For the reasons stated above, the appeal is allowed. The judgment and decree of the courts below in so far they relate to appellant-defendant No. 3 are set aside. The judgment and decree of the courts below as against defendant No. 2 are not disturbed. The suit of the plaintiff as against defendant No. 3 is dismissed. In view of this, it is unnecessary to consider I.A. No. II seeking amendment to the written statement filed by the appellant."
14. Sri G. Krishnamurthy would also place on record the decision of the Punjab and Haryana High Court in the case of KUNDANMAL DABRIWALA vs. HARYANA FINANCIAL CORPORATION AND OTHERS reported in MANU/PH/3320/2011 and invited the attention of the Court to paras 9 and 10, which reads as under:
"9. We have heard learned Counsel for the parties and with their assistance gone through the provisions of Statute and the law applicable. We find that the question requires to be examined is:
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR Whether the revival scheme submitted by the Petitioner under Section 391 and 394 of the Companies Act, 1956 and accepted by court amounts to compounding with the principal debtor leading to the discharge of the surety within the meaning of Section 134 and 135 of the Contract Act, 1872?
10. To consider the above question, the following are the relevant provisions of the Indian Contract Act, 1872 (for short "the Act"):-
126. 'Contract of guarantee', 'surety', 'principal debtor' and 'creditor'-A 'contract of guarantee' is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the 'surety', the person in respect of whose default the guarantee is given is called the 'principal debtor', and the person to whom the guarantee is given is called for 'creditor'. A guarantee may be either oral or written.
128. Surety's liability The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.
134. Discharge of surety by release or discharge of Principal Debtor -The surety is
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR discharged by any contract between the creditor and the principal Debtor, by which the principal Debtor is released or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.
135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor. A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract."
15. Sri Krishnamurthy also placed on record reliance on the principles of law enunciated by the High Court of Rajasthan in the case of RAMSWAROOP AND ANOTHER vs. STATE BANK OF BIKANER, JAIPUR AND ANOTHER reported in 2002 SCC Online Raj 661. He invited the attention of this Court to paras 17 to 19, which reads as under:
"17. Now, the point remains is that what is the effect of the compromise in this case in view of the legal proposition laid down by the Hon'ble the Apex Court in the case of Raja Bahadur Dhanraj Girji
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR (supra). Opening para of the compromise clearly reveals that both the parties mentioned in the compromise submitted that the matter has been settled between the parties and decree in favour of the plaintiff, against the defendant, be passed. In first para of the compromise it is prayed that suit is to be decreed in toto including the costs of the suit In para No. 2 of the compromise the plaintiff-Bank accepted that defendant No. 1 will make payment of the entire amount of the decree in installments.
By this compromise, further concession was granted by creditor to defendant No. 1 by making payment in installments. It is true that in each and every case of compromise surety cannot claim discharge of the liability under the surety bond but when the creditor accepted that the decree be passed against all the defendants and this decree is to be satisfied by defendant No. 1 and when the creditor himself agrees to accept entire decretal amount from only the borrower defendant, then it amounts to voluntarily entering into new contract by the creditor with the debtor. This new compromise (agreement), by necessary implication, discharges the guarantor.
18. So far as controversy of consent to the compromise dated 27.11.1980 is concerned, first of all it can safely be held that this was a compromise
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR between creditor and the debtor by which creditor sought relief of entire suit to be decreed with specific term that entire decretal amount is to be paid only by the borrower then if mere presence of advocate at the time of filing of compromise and remaining present at the time of passing of the decree even if taken as assent of the guarantor then also assent can be presumed to the extent of facts mentioned in the compromise only. By this implied consent, the borrower gave consent of passing of decree for entire suit amount fully understanding that the entire suit amount will be paid by the only defendant No. 1 and as per this compromise the defendant Nos. 2 and 3 will not have to pay a single penny. Therefore, it is held that in the facts of this case even the consent of the guarantor to the compromise only absolves the guarantor from its liability under the guarantee, even if it is held that the guarantor never gave consent for the compromise dated 27.11.1980 even then in view of substantial variation in contract the guarantors stand discharged from their liability.
19. Now, the decree dated 5.12.1980 is also on record. By this decree, the trial court decreed the suit of the plaintiff for the entire sum of Rs. 13156.15 and by the impugned decree dated 28.4.1981, the trial court passed the additional decree of Rs. 7808.37 against defendant Nos. 2 and
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR 3 (appellants). It appears that the trial court failed to appreciate the nature of the liability of the guarantors. As per the law governing the case of guarantee, a guarantor is liable to make payment of the amount received by the borrower. At the same time, the guarantor also has an option to make payment of the debt and has a right to recover the amount from the borrower, but the guarantor himself is not responsible for any money decree independently as a borrower. He merely promises to make the payment in the happening mentioned in the agreement for advancement of the loan to third party- borrower. If decree dated 5.12.1980 passed in this very suit against defendant No. 1 will be allowed to stand and the decree dated 28.4.1981 will also be allowed to stand, then there will be two decrees in the same suit; one for the entire suit against defendant No. 1 and in the decree dated 5.12.1980 it has not been held that since the borrower is liable to make payment of the decretal amount in installments, therefore, the guarantor is also liable along with the borrower. This decree against defendant No. 1 is final and for the plaintiff is also final. This decree dated 5.12.1980 gives right to the plaintiff-Bank to recover the entire decretal amount from the defendant No. 1 and by decree dated 28.4.1981, the plaintiff Bank is further entitled to recover Rs.
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR 7808.37. This decree is also executable. In this decree dated 28.4.1981, it is also nowhere provided that in case defendant No. 1 will fail to make payment of the decretal amount as decreed on 5.12.1980 then the amount will be recoverable from defendant Nos. 2 and 3 in pursuance of the decree dated 28.4.1981. Therefore, the trial court has passed the decree for the amount which is not even the claim of the plaintiff in the suit and, in a suit for Rs. 13156.15, two decrees for total Rs. 20,964.52 has been passed by the trial court, therefore, the decree dated 28.4.1981 cannot be allowed to stand."
16. In sum and substance, the argument of Sri G. Krishnamurthy is that, in the absence of any liability of the principal debtor, guarantor cannot be held responsible and if the plaintiff had settled the claim with the principal borrower, automatically the liability of the guarantor gets extinguished.
17. In the light of the arguments put forth on behalf of the parties, this Court perused the material on record meticulously.
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR
18. On such perusal of the material on record, it is crystal clear that the suit was based on bill discounting facility. What was contracted between the parties is available on record and issues have already been framed.
The matter could have been proceeded on merits unless the memo is filed by the plaintiff.
19. The contents of the memo as referred to supra would indicate that the matter between the plaintiff and defendant No.1 got resolved and by virtue of the letter written by defendant No. 2 referred to supra, the plaintiff wanted the suit to continue.
20. Unfortunately, the learned trial judge while considering the memo, has not properly appreciated the fact that whether at all, by virtue of the settlement of the first defendant, the liability of the second defendant also gets extinguished or not, placed reliance on the judgment passed by the Hon'ble Apex Court in the case of BHARAT SANCHAR NIGAM LIMITED AND ANOTHER vs. BPL
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR MOBILE CELLULAR LIMITED AND OTHERS reported in (2008) 13 SCC 597 and allowed the memo in part and rejected the memo in so far as continuation of the suit as against the second defendant is concerned.
21. The only paragraph that may be of some use for the trial Court in arriving said decision is para No. 51, which reads as under:
"51. In the instant case, the resources to be leased out were subject to agreement. The terms were to be mutually agreed upon. The terms of contract, in terms of Section 8 of the Contract Act, fructified into a concluded contract. Once a concluded contract was arrived at, the parties were bound thereby. If they were to alter or modify the terms thereof, it was required to be done either by express agreement or by necessary implication which would negate the application of the doctrine of "acceptance sub silentio". But, there is nothing on record to show that such a course of action was taken. The respondents at no point of time were made known either about the internal circulars or about the letters issued from time to time not only changing the tariff but also the basis thereof.
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR
22. Whether at all, the compromise or the settlement that has been arrived at between the defendant No. 1 and the plaintiff would automatically extinguish the liability of the defendant No. 2 also in the suit claim was a subject matter that was to be decided by assigning cogent and convincing reasons. Discussion as to the facts of the case was also necessary especially in view of the letter written by the defendant No. 2 referred to supra.
23. Without considering the said aspect of the matter, passing the impugned order in the considered opinion of this Court is thus, has resulted in miscarriage of justice and needs to be set aside.
24. However, the grounds that has been urged on behalf of defendant No. 2 in this revision in the light of the aforesaid decisions cannot be lost sight of by this Court while setting aside the impugned order.
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR
25. Since those grounds were not urged before the trial Court and the impugned order does not indicate that the parties have joined the issue with regard to the automatic extinction of the liability of the second defendant in the settlement of the plaintiff with the first defendant, an opportunity is to be provided for the parties to put forth their case afresh insofar as the continuation of the suit as against the second defendant is concerned.
26. Expressing any opinion on merits of the matter by this Court would definitely hamper the rights of the parties one way or the other; more so, having regard to the fact that there is an argument on behalf of the defendant No. 2 that in view of the settlement of the claim suit claim by the plaintiff with defendant No.1, there is automatic extinction of the liability of defendant No. 2.
27. Hence, it is just and necessary for this Court to set aside the impugned order and remit the matter for
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR fresh consideration with regard to the points that has been raised by the second defendant, in accordance with law.
28.No doubt, the trial court in the impugned order has expressed in para 6(a) as under, "6(a). Therefore, it is clear that accepting the said sum, the plaintiff had agreed to withdraw the suit and there is nothing on record even to indicate that the 1st defendant had ever agreed to continue the suits as against the other defendants. It is an undisputed fact that the 1st defendant assumes the character of principal borrower and the 2nd and 3rd defendants are sureties, co-obligants and guarantors and when the claim is settled as against the principal borrower namely the 1st defendant, it has to be held that the suit as against the other co-borrowers or the guarantors also deemed to have been settled and the suit cannot be made continued as against them for the remaining suit claim amount because the plaintiff has accepted the amount in full and final settlement of his claim relating to the said transactions. The learned counsel for the 2nd defendant relied on the decision reported in (2008) 13 SCC 597 in case of Bharat Sanchar Nigam Limited and another vs. BPL Mobile Cellular Limited and others'. Wherein it is
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR laid down that 'once a concluded contract was arrived at between the parties concerned, they are bound thereby. If the parties were to alter or modify the terms thereof, it is required to be done either by express agreement or by necessary implication which would negate the application of the doctrine of "acceptance of sub silentio". Any novation in contract was to be done on the same terms as are required for entering into a valid and concluded contract. No change in contract could be made unilaterally'.
Doctrine of sub silentio is per se not applicable in the case on hand in view of the letter referred to supra written by second Defendant (subject to proof).
27. Therefore, matter needs to be re-considered in the light of the letter written by the second defendant to the plaintiff referred to supra.
28.Hence, the following order:
(i) Revision petition allowed.
(ii) The impugned order dated 15.09.2010 passed
in O.S.No.8468/2001 is set aside.
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NC: 2025:KHC:52234 CRP No. 30 of 2012 HC-KAR
(iii) Matter is remitted for fresh consideration, in accordance with law, on the memo with regard to the continuation of the suit as against defendant No.2.
(iv) The parties shall appear before the trial Court, without further notice, on 06.01.2026.
(v) All contentions are kept open to be urged in the trial, in accordance with law.
Sd/-
(V SRISHANANDA) JUDGE SNC,CM List No.: 1 Sl No.: 32