V VELAYUDHAN Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) What is the position of a guarantor (or even a surety) vis a vis the creditor-has he any obligation ia a fiduciary capacity to account to the creditor If he has, he is not entitled to advance a plea of "no means", when the decree holder takes out execution proceedings for his arrest and detention. The petitioner is one of the judgment debtors. The court below spurned down his plea that he has no means to pay the decree debt on the reasoning that he, being the guarantor, is in a fiduciary capacity to account to the decree holder.

(2.) The State Bank of India ('the Bank' for short) advanced a loan to one Krishnan on a guarantee given by the petitioner for the due repayment of the loan. The bank filed a suit and obtained a decree against Krishnan as well as the petitioner. Krishnan died in the meanwhile and the bank proceeded against the petitioner in execution. The decree holder prayed for issuance of a warrant of arrest against the petitioner. It was resisted by the petitioner contending that he has no means to pay the decree debt. The court below, by the impugned order, held that such a plea is not available to him. The short order of the lower court is extracted below:-

(3.) Learned counsel contended that the Sub Judge was obviously wrong since a guarantor (or even a surety) has no fiduciary obligation. The liability of such person is not different from any other judgment debtor and hence execution of the decree by arrest and detention in prison cannot be ordered unless the court is satisfied that he has the means to pay atleast some substantial portion of the decree debt, according to counsel. It was confessed, during the time of arguments, that despite best efforts a decision or authority could not be traced in support of the view that a guarantor has no obligation in a fiduciary capacity. So, the question has to be considered unaided by any case law as such.