STATE BANK OF INDIA Vs. PRAHLAD RAM

JUDGEMENT

(1.) Although the present appeal preferred by the State Bank of India is barred by two days of limitation, however, this Court has issued notice to the respondents on prayer for condonation of delay as also on the memo of appeal and a short question would arise in this appeal for consideration, therefore, we deem it expedient to dispose it of at the motion stage itself. The delay of two days in filing the appeal, having been explained properly, the same deserves to be and is hereby condoned.

(2.) The issue fallen for consideration is whether the Trial Court has committed an error of law by not fastening the liability for repayment of the loan amount on the guarantor, the respondent No. 2 herein, in view of the express statutory prescription contained in section 128 of the Indian Contract Act, 1872 (henceforth 'the Contract Act') and that too without observing in the decree that the suit is dismissed as against the guarantor, the respondent No. 2.

(3.) The borrower/respondent No. 1 having not appealed against the impugned decree, the facts stated by the learned Trial Judge in the impugned judgment are not disputed, we shall, therefore, advert to the bare minimum facts, as the appeal is required to be decided on the point of law. Suffice it would be to mention that the respondent No. 1 (henceforth 'the borrower') obtained term loan to the tune off 7.45 Lakhs on 3.5.2006 for construction of house on his land situated at Shikshak Nagar, Farid Nagar, Ward No. 8, Tehsil and District Durg. The respondent No. 2 (henceforth 'the guarantor') stood guarantor to the said loan transaction promising that in the event of default committed by the borrower in repayment of the loan amount, he shall be liable to satisfy the repayment. The borrower executed equitable mortgage of the said land, over which the house was to be built. When the borrower made default in repayment of loan, the Bank initially proceeded under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (henceforth 'the Act, 2002) and recovered Rs. 3,60,000/- by effecting sale of the mortgaged property. However, the borrower still owed Rs. 7,81,759/- to the Bank, therefore, the present suit was filed for recovery of the said amount. The suit was initially dismissed on 7.8.2012, against which the Bank preferred FA No. 24/2013 before this Court, which was allowed on 24.6.2014 and the matter was remitted back to the Trial Court for decision afresh. The present impugned judgment and decree has been rendered after fresh adjudication on merits by the Trial Court. In the impugned decree, the Trial Court has absolved the guarantor from the liability to satisfy the outstanding against the borrower on the ground that the guarantor had not executed any revival letter or balance confirmation letter in favour of the Bank.