ORISSA STATE FINANCIAL Vs. SAILENDRA NARAYAN PATNAIK

JUDGEMENT

(1.) Orissa State Financial Corporation (hereinafter referred to as the 'Corporation') has filed this appeal under Section 32(9) of the State Financial Corporation Act (hereinafter referred Jo as the 'Act.') against the Judgment and order passed by the learned District Judge, Cuttack dismissing an application filed by the Corporation under Section 31(aa) of the Act.

(2.) THE relevant facts as pleaded by the appellant -plaintiff are stated herein below : a) Respondent No. 1 Sailendra Narayan Patnaik, took a total loan of Rs. 1,55,800/ - for purchase of a truck. His father Kailash Chandra Patnaik respondent No.2 stood surety and executed necessary deed of guarantee. The vehicle was also hypothecated to the Corporation under deeds of hypothecation. As the borrower defaulted in payment of the debt. Corporation invoked its power under Section 29 of the Act and seized the hypothecated vehicle. After seizure of the vehicle advertisements were published in News Papers for sale of the said vehicle and ultimately on March 11, 1983 the vehicle was sold to one Sisir Kumar Rout for a total consideration of Rs. 1,40,000/ -. After adjustment of accounts, it was found that principal amount of Rs. 67,277.82 Paise still remained outstanding. By a letter dated April 18, 1983 (Ext. 6) respondent No.1 was informed about the sale of the vehicle and terms and conditions thereof. On November 16, 1989 respondent No.1 was informed that as on June 20, 1989 outstanding amount including interest was Rs. 1,26,999.94 P. and he was asked to pay the said amount by November 15, 1989. A copy of the said notice was also sent to respondent No.2. Subsequently another notice dated November 19, 1990 was issued to respondent No.1 with a copy to respondent No.2 calling upon them to pay the dues as stood on November 20,1990, (Rs. 1,48,645.66 P.). As no amount was paid, the Corporation on January 22, 1991 filed an application under Section 31(1)(aa) of the Act in the Court of the District Judge. Cuttack for enforcement of personal liability against respondents 1 and 2 for an amount of Rs.1,50,783.18 P. and interest thereon.

(3.) THE trial Court upheld contention of the respondents that the surety stood discharged because of Corporation's action of selling the vehicle without giving any notice to the surety. The trial Court also made certain comments about the delay in raising the demand due to which the outstanding amount became more than double. The trial Court dismissed the application of the Corporation.