JOSE INACIO LOURENCE Vs. SYNDICATE BANK

JUDGEMENT

(1.) The Syndicate Bank granted a loan of Rs. 13,000 on July 9, 1975, to Krishna Chandu Naik for which Jose Inacio Lourence stood as a guarantor. Krishna Naik purchased a chassis of Ashok Leyland make bearing Chassis No. AL-7569520 at Panaji and he as well as Jose Lourence executed an agreement on July 9, 1975, in favour of the bank.

(2.) The loanee made some payments but as further payments were not forthcoming, the Syndicate Bank filed Special Civil Suit No. 43 of 1984 in the Court of the Civil Judge, Senior Division at Margao, against the principal loanee, Krishna Naik, as well as the surety, Jose Lourence. The lower court decreed the suit with a joint and several liability for the principal loanee and the surety against which the surety, Jose Lourence, appeals.

(3.) Mr. Alvares, learned counsel for the appellant, relies on sections 139 and 141 of the Contract Act, 1872, for the proposition, firstly, that the surety is entitled to the benefit of every security which the creditor has against the principal debtor and that if the creditor omits to do any act which his duty to the surety requires him to do, the surety is discharged. According to counsel, even though the bank cannot be expected to depute one of its servants to accompany the truck wherever if moves throughout India, the least that the bank could have done in its normal business practice was to register a charge with the Regional Transport Officer, so that any further transfer of the vehicle could have been prevented or, at any rate, the purchaser of that vehicle would have known about the charge. Even on the admission of the witness for the bank, the vehicle has now left Goa and has been registered in Andhra Pradesh with a new number. Counsel argues that the surety was not expected to follow the vehicle in the hands of the new purchaser in Andhra Pradesh and be faced with the defence that he is a bona fide purchaser without notice of any charge of the bank or the surety on the vehicle.