Delhi District Court
Delhi Sc/St/Obc/Minorities vs Sh. Inder Singh on 2 September, 2014
IN THE COURT OF SH. RAVINDER SINGH1. ADDL. DISTRICT JUDGE08
(CENTRAL): TIS HAZARI COURTS: DELHI
SUIT NO. 255/14
(Old Suit No. 04/04)
Delhi SC/ST/OBC/Minorities
& Handicapped Financial and
Development Corporation Ltd.
2, Battery Lane, Rajpur Road,
Delhi110054. .............. Plaintiff
Versus
1 Sh. Inder Singh
S/o Sh. Harish Chandra
R/o B248, Gali No. 11,
Bhajan Pura, Delhi110053. (suit abated vide order dated 17.11.2004)
2 Sh. Dilawar Singh
S/o Sh. Karam Singh
R/o B99, Sadatpur,
P/O Gokalpuri, Delhi.
Also at
Working as clerk
C/o Manager
Punjab National Bank.
Gokhale Market, Near
Tis Hazari Court, Delhi.
Suit no. 255/14 1 / 10
3 Sh. Khem Singh
S/o Sh. Kure Ram
R/o 3248, Arya Pura, Sabzi Mandi,
Delhi110007.
4 Sh. Rajbir Singh
S/o Sh. Shiv Charan
R/o Village Zittka, P.O. Pavasara,
Aurangabad, District Bulandshahar, UP.
5 Amar Singh (through LR's)
5.1 Smt. Shakuntala Devi (wife)
5.2 Sanjeev Kumar (son)
5.3 Deepak (son)
5.4 Neetu (daughter)
5.5 Bharti (daughter)
All R/o B210, Gali No. 11,
Bhajan Pura, Delhi110053. .............Defendants
Date of Institution : 07.01.2004
Date on which judgment was reserved : 27.08.2014
Date of Pronouncing judgment : 02.09.2014
SUIT FOR RECOVERY OF SUM OF RS.3,74,380/ ALONG WITH
PENDENTELITE AND FUTURE INTEREST @ 18% P.A.
Suit no. 255/14 2 / 10
JUDGMENT:
1. Vide this judgment, I shall dispose of suit of Delhi SC/ST/OBC/Minorities & Handicapped Financial and Development Corporation Ltd. (hereinafter called plaintiff) which it filed against Inder Singh, Dilawar Singh, Khem Singh, Rajbir Singh and Amar Singh (hereinafter called defendant no.1, 2, 3, 4 & 5 respectively) for recovery of sum of Rs.3,74,380/ along with pendentelite and future interest @ 18% p.a.
2. Briefly stated, facts of the suit are that plaintiff is a government undertaking controlled and financed by National Capital Territory of Delhi and duly incorporated under Companies Act and it has filed instant suit through Sh. Sandeep Sharma, Deputy General Manager (Law), Constitute Attorney. It is stated that defendant no. 1 had applied for financial assistance for purchase of bus and a loan for a sum of Rs. 4,20,000/ was sanctioned on 10.06.94 under STA Scheme for plying the bus. It is further stated that defendant no. 2 to 5 stood guarantors for defendant no. 1 and duly filled their bond of guarantee. Defendant no. 1 also executed a hypothecation deed in favour of plaintiff. It is further stated that aforesaid loan was to Suit no. 255/14 3 / 10 be repaid in 60 monthly installments but the defendants have not made the payment of all dues of plaintiff so as on 31.03.2003 a sum of Rs. 3,74,380/ is due and outstanding towards the defendant.
3. Summons of suit were served upon defendants and except defendant no. 1, all other defendants filed their written statement.
4. Plaintiff was failed to appear before Court, hence his suit was dismissed in default vide order dated 04.05.2004. Thereafter plaintiff filed an application U/O IX Rule 4 CPC on 07.05.2004. Vide order dated 16.10.2004, it came on record that defendant no. 1 and 5 have expired. Ld. Counsel for plaintiff reported on 17.11.2004 that the detail of LR's of defendant no. 1 could not be traced out hence proceedings against defendant no. 1 has been abated vide order dated 17.11.2004 and subsequently on 04.02.2005.
5. It is further pertinent that plaintiff was again failed to appear before Court hence his application U/O IX Rule 4 CPC was Suit no. 255/14 4 / 10 dismissed vide order dated 13.04.2006. Thereafter plaintiff again filed an application U/O IX Rule 4 & 9 CPC for recalling of order dated 13.04.2006 and for restoration of suit. Notice of this application was again issued to the defendants and application of plaintiff U/O IX Rule 9 CPC was disposed of as allowed vide order dated 17.01.2009. It is also pertinent that application of plaintiff U/O 22 Rule 4 CPC to take LR's of defendant no. 5 on record is also disposed of as allowed vide order dated 20.10.2009. Thereafter matter was fixed for admission denial and for framing of issues.
6. Ld. Counsel for the defendants contended vide order dated 08.09.2011 that suit has already been abated against defendant no. 1 the principal borrower, hence, instant suit is not maintainable against the rest of the defendants who are the guarantor/sureties of defendant no. 1. So Ld. Predecessor vide its order dated 16.12.2011 settled following preliminary issue:
(a)Whether suit against defendants is maintainable in law?
(OPP) Suit no. 255/14 5 / 10
7. I have heard the arguments of Ld. counsel for plaintiff and defendants as well as LR's of defendant no. 5 and perused the case file.
8. Ld. counsel for plaintiff contended that the defendant no. 2 to 5 stood the guarantors of defendant no. 1, hence, their liability are coextensive with that of defendant no. 1 the principal debtor. He further contended that creditor is not bound to exhaust his remedy against principal and suit may be maintained against the guarantors/sureties i.e. defendant no. 2 to 5 though the principal has not be sued. In support of his arguments, he relied upon:
(a)Ram Kishan & Ors. vs. State of UP & Ors., (2012) 11 SCC 511
(b)I.I.B.I. Ltd. vs. Biswanath Jhunjhunuwala, (2009) 9 SCC 478
9. On the contrary, Ld. Counsel for defendants contended that suit against principal borrower i.e. defendant no. 1 has already been abated vide order dated 17.11.2004 so where the creditor choose to proceed against principal debtor and sureties jointly and severally and suit abate against principal debtor, the suit cannot be decreed against guarantors/sureties because in respect of same subject matter there will be two conflicting Suit no. 255/14 6 / 10 decree, hence, debt against rest of the defendants also stands discharged and therefore the present suit is not maintainable against defendants. In support of their arguments, ld. counsel for defendants relied upon:
(a)Syndicate Bank vs. Pamidi Somaiah, AIR 2002 AP 12
(b)T. Raju Shetty vs. Bank of Baroda, AIR 1992 KARNT 108
10.Admittedly plaintiff filed instant suit against both principal debtor and four guarantors impleading them as defendant no.
1 and defendant no. 2 to 5 respectively as it sanctioned a loan for a sum of Rs. 4,20,000/ in favour of defendant no. 1 for purchase of bus plying under STA scheme. It is also not disputed that during pendency of the suit, defendant no. 1 the principal borrower died on 13.07.2004 and instant suit against him had been abated vide order dated 17.11.2004 and subsequently on 04.02.2005 as his legal representatives could not be traced out.
11. There is no dispute that liability of guarantor and principal debtor are coextensive and not in alternate. However the ratio of both the cases relied by ld. counsel for plaintiff is not applicable in the present facts and circumstances of the case as in IIBI case (Supra) defendant issued cheques in favour of Suit no. 255/14 7 / 10 plaintiff on behalf of borrower company but the said cheque dishonoured consequently plaintiff initiated the proceedings against the defendant u/s. 138 N.I. Act and not against principal borrower whereas in Ram Kishan case (Supra) one Ganga Prasad the principal borrower took a loan on 20.03.1982 and Chunni Lal, father of appellants stood his guarantor. Principal borrower died in 1985 whereas Chunni Lal died in 1986. The Board of Revenue and other Revenue official passed judgment and order in respect of recovery of banks dues from the appellants as their predecessor in interest was guarantor of bank loan.
12.In Syndicate Bank (Supra) Hon'ble High Court has held as under:
In the light of above judgment, the suit abates and no decree could be passed and even if a decree is passed it is only a nullity.
In the present case also though the principal debtor did not claim the relief under the Act 7 of 1977, but due to his death the suit had abated and the debt against him stands discharged. When once the debt stands discharged against the principal debtor, more so, as a result of an omission on the part of the creditor, I do not find that there is any case for the creditor to proceed against the surety. The liability of the surety is always to make good the loss that was caused as a result of the default of the principal debtor and if the surety Suit no. 255/14 8 / 10 discharges the liability of the creditor he can have a right to proceed against the principal debtor. In the present case as a result of the omission of the creditor, the surety is denied of such a right. In such a case, it would not be proper to hold that the surety is still liable for the creditor even after the discharge of the principal debtor, as a result of the omission on the part of the creditor.
13.Further in T.Raju Shetty (Supra), Hon'ble High Court has held that:
This and the further observations contained in the latter portion of that para are not correctly appreciated. We have held that even though several options are open to the creditor for recovering the debt either proceeding against the principal debtor or proceeding against sureties or proceeding against principal debtor and the sureties; but in a case where the creditor chooses to proceed against the principal debtor and the sureties; jointly and severely and the suit abates against the principal debtor, the suit cannot be decreed against the sureties because in respect of the same subject matter of the suit, there will be two conflicting decrees.
14.Admittedly plaintiff filed the instant suit against principal borrower defendant no. 1 and his guarantors/sureties defendant no. 2 to 5 for recovery of Rs. 3,74,380/ along with pendentelite & future interest @ 18% p.a. The plaintiff in para 14 of plaint categorically stated that as per terms and conditions Suit no. 255/14 9 / 10 between the parties, all the defendants are jointly and severely are liable to repay the loan amount to the plaintiff. It is not disputed that due to the death of defendant no. 1, suit had abated and debt against him stands discharged. So under the given facts and circumstances of the case in hand, the ratio of the judgment Syndicate Bank (Supra) and T. Raju Shetty (Supra) clearly applied to the fact of the present case. Accordingly, there is no case for plaintiff to proceed against defendant no. 2 to 5.
15.In view of aforesaid discussion, I am of considered opinion that after suit stands abated against defendant no. 1 the principal borrower, the instant is not maintainable against the sureties of principal borrower i.e. defendant no. 2 to 5. Accordingly, the aforesaid issue is decided against the plaintiff.
16.In view of aforesaid discussion, suit is dismissed. No order as to cost.
Announced in the open court (Ravinder Singh1) on 02.09.2014 Addl. District Judge08(Central), Tis Hazari Courts/Delhi Suit no. 255/14 10 / 10