CANARA BANK Vs. VIRA ESTEBEIRO AND ANR

JUDGEMENT

(1.) The first respondent succeeded in Special Civil Suit No. 290 of 1978 and by the decree dated 23rd April, 1983 the second respondent was directed to pay a sum of Rs. 15,524.61 with interest thereon at the rate of 8% per annum from the date of the filing of the suit. The second respondent preferred Civil Appeal No. 84 of 1983 against the decree made to the District Court On filing this appeal he prayed for stay of the execution of the decree. Stay was however opposed by the first respondent on the ground that being a money decree there ought not to be a stay of the execution. On finding that no stay would be granted, the second respondent, the appellant before the District Court, came with a Bank guarantee guaranteeing to the District Court an amount not exceeding Rs. 17,000/-. The guarantee was furnished by the Canara Bank, Aldona Branch, Goa, dated 27th July, 1983. Based on this Bank guarantee on the same date, that is to say, 27th July, 1983, the District Court passed an order staying the execution of judgment and decree impugned in the appeal. It is common ground that Civil Appeal No. 84 of 1983 was disposed of by the District Court on 27th February, 1985 and appeal was dismissed.

(2.) The first respondent instituted execution proceedings No. 46 of 1988 before the trial Court In the application for execution it was mentioned that the Canara Bank, Aldona Branch, be directed to forthwith pay the decretal amount in view of the Bank guarantee No. 1/83 dated 27th July, 1983 filed in the District Court in Civil Appeal No. 84 of 1983. On notice being directed to the Bank, the direction calling upon Bank to pay the amount was objected to on the grounds firstly that the Bank guarantee issued was limited for the period of one year from 27th July, 1983 to 26th July, 1984 and that in any case the Bank stands discharged as no claim or demand was made whatsoever by the Court before 27th July, 1984

(3.) To enforce the Bank guarantee against the Bank, the first respondent for short the decree holder, produced in the execution proceedings an Order dated 29th September, 1985 made by the District Court to the same Civil Appeal No. 84 of 1983 by which it was held that unless and until the second respondent, for short the judgment debtor, furnished a fresh bond within 15 days from the date of the order or failing to deposit the decretal amount to the Court the Bank guarantee No. 1/83 dated 27th July, 1983 shall continue to be in force or the liability of the Bank thereunder shall continue. On the production of this order and on hearing the parties the executing Court on 16th June, 1989 made an order as follows:-