USHA RANI Vs. DELHI FINANCIAL CORPORATION

JUDGEMENT

(1.) The respondent No.1 Delhi Financial Corporation sanctioned a loan of Rs.14,58,000/- to respondent No.2 Shyam Lal for purchase of a CNG bus. A Term Loan Agreement-cum-Hypothecation Deed was executed in favour of respondent No.1. The petitioners had stood as guarantors for the loan taken by respondent No.2 from respondent No.1. Since respondent No.2 defaulted in payment of the loan taken from respondent No.1, the bus which was purchased from the funds provided by respondent No.1, was seized by respondent No.1 and was sold for recovery of its dues. The respondent No.1 filed an application under Section 32(G) of State Financial Corporations Act for issuance of recovery certificate against the petitioners as well the principal borrower for recovery of Rs.1720507/- along with pendent lite and future interest in terms of Loan Agreement-cum-Hypothecation Deed executed by them in favour of respondent No.1 on 9.9.2002. The authority under Section 32(G) of the aforesaid Act, after issuing notice to the petitioners and considering their reply dated 2.1.2008, inter alia, passed the following order:-

(2.) The petitioners do not dispute that they had stood as guarantors for the loan taken by respondent No.2 from respondent No.1. The grievance of the petitioners, as articulated by their counsel is that respondent No.1 is not taking steps for recovering the balance amount from respondent No.2. He further submits that a cheque of Rs.50,000/- was issued by respondent No.2 to respondent No.1 towards payment of the loan taken by him and the said cheque, when presented to the bank, got dishonoured but despite that, proceedings under Section 138 of the Negotiable Instruments Act were not initiated against him. The learned counsel for the petitioner states that another bus belonging to respondent No.2 was also seized by respondent No.1 and was sold towards recovery of its dues. The learned counsel for the petitioner submits that this was done only when the matter was brought to the notice of this Court. This, to my mind, would make no difference since it only shows that respondent No.1 does not hesitate in recovering the amount due to it from respondent No.2, he being the principal borrower.

(3.) The legal position with respect to obligation of a guarantor to pay the amount guaranteed by him to the lender was upheld by the Apex Court in Industrial Investment Bank of India Ltd. v. Biswanath Jhunjhunwala, 2009 10 JT 533 where the Apex Court, after considering its earlier decision on the subject, inter alia, held as under:-