SATISH MINOCHA Vs. PUNJAB NATIONAL BANK

JUDGEMENT

(1.) The non-applicant No. 1 Punjab National Bank, Branch Bilaspur, obtained a money-decree against the principal debtor non-applicant No. 2 and applicant the guarantor. The non-applicant, Punjab National Bank advanced certain loan to the non-applicant No. 2 who in turn hypothecated his tempo with it. The applicant was the guarantor. The loan could not be paid. The non-applicant No. 1, the Bank, had to file a suit for recovery of that loan joining the applicant also as one of the defendants. That suit was decreed against both of them. The decree makes the applicant and the non-applicant No. 2 jointly and severally liable and also creates a charge upon the tempo. The relevant term of the decree is as follows: "Ordered and decreed that the defendants do pay to the plaintiff - the sum of Rs. 165319.90 paise with interest thereon at the rate of 11 per cent per annum from 5-7-76 to the date of realization of the said sum and do also pay Rs 2677.00 on account of costs of this suit, with interest thereon at the........................ Given under my hand and the seal of the Court 4th day of April, 1977." - The decree was not satisfied by the judgment-debtor and therefore, was put into execution. Instead of proceeding against the property charged, the decree- holder sought to proceed personally against the applicant. The applicant, therefore, raised two-fold objection to the execution of the decree. His first contention was that the decree-holder Bank allowed the property charged, namely, the tempo, to be lost and, therefore, claimed a discharge. His second contention was that the decree-holder should first realise the decretal debt from the property charged and then alone can proceed against the applicant for the balance, if any. Both these contentions have been rejected by the executing court and the objections have been dismissed. Hence this revision.

(2.) The executing court has on the basis of evidence found that the tempo is now not available and that the decree-holder is not to blame for it. On the basis of this finding, the first contention/ objection, mostly that the applicant/ guarantor stands discharged because of the loss of tempo, cannot be accepted.

(3.) The main argument in support of the revision advanced by Shri Ravish Agarwal, learned counsel for the applicant, before me that as the decree created a charge upon the tempo, the decree-holder cannot proceed to recover the decretal amount from the guarantor before proceeding against the property charged. Decisions of a Division Bench of the court of Judicial Commissioner, Nagpur in Fatehchand v. Indian Cotton Ltd., Bombay, AIR 1935 Nag 129 and that of the Pull Bench of the Bombay High Court in Gurappa v. Amarangji, AIR 1941 Bom 90 directly support this contention. In the above Nagpur decision, it was held that by creating a charge the parties evidently intended it to be primary remedy and the judgment-debtor was entitled to act on this belief with regard to the rest of his property. It was, therefore, held that the decree-holder should be required to exhaust his remedy against the charged property first and then, if necessary, may proceed in the ordinary way in execution as in a money decree. The contention that by creating charge HO personal liability is imposed was negatived and it was held that in the event of the charge proving insufficient, there is nothing to prevent the decree-holder from proceeding against other property. This decision considered by A. P. Sen, Chief Justice (as he then was) in Central Bank of India v. Santosh Kumar Awasthy, 1980 MPLJ 351. Of course, the learned Chief Justice was dealing with a case where certain property was pledged against the loan. Even so, on consideration of certain decisions, and particularly a decision of the Bombay High Court in Ramchandrarao v. Vithal Keshav, AIR 1948 Bom 143, it was held that the object of the charge being primarily for the benefit of the creditor, the decree- holder was at liberty to execute the decree in any order he pleases. The Full Bench decision of the Bombay High Court in Gurappa's case (AIR 1941 Bom 90) (supra) has been differently read by the same High Court in two subsequent decisions. In Ramabai Balkrishna v. Janardan Eknath, AIR 1943 Bom 158 the view taken is that where a money decree is made payable by instalments and a charge is created on certain property, the decree-holder must first proceed against the property charged and then alone can proceed personally against the judgment-debtor. But, in Ramchandrarao v. Vithal Keshav AIR 1948 Bom 143, the ratio of the Full Bench decision in Gurappa's case (AIR 1941 Bom 90) (supra) is said to be that the object of charge is primarily for the benefit of the creditor. For this conclusion, the-following observations of the Full Bench have been relied upon: