SYNDICATE BANK Vs. SWARANSINGH BACHANSINGH LAL

JUDGEMENT

(1.) SYNDICATE Bank has preferred this appeal to challenge part of judgment and decree dated April 30, 1983 passed by Joint Civil Judge, Senior Division, Thane in special Civil Suit No.170 of 1981 dismissing the claim of the bank against original Defendant No.2. the claim was decreed against Defendant No.1 who was the principal borrower. The Defendant No.2 was the guarantor.

(2.) MR . Parekh, learned Counsel appearing on behalf of the bank submitted that the suit was dismissed by the trial Court against the guarantor only on the ground that the claim against the guarantor was barred by limitation. The learned Counsel submitted that the finding of the trial Judge is entirely erroneous. The submission is correct and deserves acceptance. The continuing Deed of Guarantee was executed by Defendant No.2 on December 20, 1977. The continuing Deed of Guarantee (Exh.38) makes it clear that the liability shall be a continuing guarantee for a sum not exceeding Rs.80,000.00 notwithstanding any payments from time to time or any settlement of accounts between the bank and the borrower. The trial Judge held that the loan was sanctioned on October 27, 1975 in favour of Defendant No.1 and the borrower acknowledged the liability on December 20, 1977. The suit was instituted by the bank on October 22, 1981 after the guarantee was invoked on June 22, 1981. The finding of the trial Judge that the suit ought to have been filed against the guarantor within three years from the date of execution of the guarantee i.e. December 20, 1977 is clearly erroneous and cannot be sustained. The Trial Judge overlooked that the guarantee was a continuing one and it was not necessary for the bank to secure any acknowledgement from the guarantor and it was suffice that the loan against the principal borrower was outstanding. In these circumstances the dismissal of the suit against Defendant No.2 cannot be sustained and appeal must succeed.