BANK OF BARODA Vs. THAKKAR CHANDULAL ISHWARBHAI

JUDGEMENT

(1.) The petitioner -original plaintiff Bank of Baroda had filed Regular Civil Suit No. 41 of 1978 before the Civil Judge, Junior Division, Sankheda for recovering Rs. 6,955/ - with interest for the amount lent and advanced by the Bank to Defendant -Respondent No. 1. It is the contention of the petitioner that cash credit facility was given to Defendant No. 1 for carrying on business to the extent of Rs. 5,000/ -. Defendants 2 and 3 stood as guarantors. In pursuance of the said cash credit facility, Demand Promissory Note was executed by Defendant No. 1 on November 14, 1975. Defendants 2 and 3 had executed deed of guarantee on November 15, 1975. As the defendants failed to pay the aforesaid amount, the suit was filed for recovering the said amount.

(2.) DEFENDANT No. 1 filed an application, Ex. 45, on 24th September, 1979 contending that in view of the provisions of Section 7 of the Gujarat Public Moneys (Recovery of Dues) Act, 1979 (hereinafter referred to as 'the Act'), the suit filed by the Bank abates. The learned Judge, by his judgment and order dated 29th September, 1979 upheld the contention of defendant No. 1 and held that as the suit was filed for recovery of loan given by way of cash credit and the purpose of the loan was development of the business, under the provisions of Section 3 read with Section 7 of the Act, the suit abates. Against the said judgment and order, the Bank has filed the present revision application.

(3.) FROM the order passed by the learned Judge it is apparent that the learned Judge has not considered the provisions of Section 3 at all nor has he applied his mind to the fact that the suit would not abate against the guarantors in any set of circumstances. He also ought to have considered that suit would abate only if the loan, advance or credit given is of specified nature as provided under Section 3(1) of the Act such as "financial assistance" or under "State sponsored scheme" or guarantee given by the State Government or a Corporation in respect of loan raised by an industrial concern or for any agreement providing that money payable to the State Government or the Corporation shall be recoverable as arrears of land revenue. Section 3(1) of the Act reads as under :