WANDOOR JUPITER CHITS Vs. MAYIN

JUDGEMENT

(1.) This is a claim by the Official Liquidator for the balance due from a prized subscriber of one of the kuries of the Wandoor Jupiter Chits (P) Ltd., now in liquidation. The 1st respondent is the subscriber, and respondents (2) and (3) are his sureties. All the three claim discharge under S.3 of the Kerala Debt Relief Act, 1977 (Act 17/77). The 1st respondent is undoubtedly a 'debtor' as defined in the Act, and there is not much of a dispute that he is entitled to discharge. Respondents (2) and (3), it is equally clear, do not come within the definition; but it is contended on their behalf that the discharge of the principal debtor would enure to their benefit also, though not directly under S.3 of Act 17/77. It is argued that the effect of S.3 is to wipe out the debt altogether, and that when the debt itself is gone, there is nothing a creditor could enforce against the sureties. The liability of the sureties depends on the existence of the debt and their guarantee vanishes when the debt disappears. The Full Bench decision of the Madras High Court in Subramania v. Narayanaswami (AIR 1961 Mad. 48) and the decision of this Court in Mani v. Kochouseph (1965 KLT 1266) are cited in support.

(2.) Counsel for the Liquidator understandably opposes the above formulation, because if accepted, it would sound the death knell of a large number of pending claims, involving a large number of other defaulted subscribers. According to him, the decision in Velappa Kumar v. Kosamattam Chit Fund and another (1978 KLT 10) supports his stand.

(3.) The real question is as to how the provisions of Act 17/77 operate on an existing contract of guarantee; and this can be answered by first referring to those provisions themselves.