J&K BANK LTD Vs. CHAMAN LAL

JUDGEMENT

(1.) A loan of Rs. 1, 74,000 was sanctioned by the plaintiff -bank in favour of defendant No.l for the purchase of a truck on execution of the promissory note, deed of hypothecation, letter of undertaking, trust receipt, irrevocable power of attorney etc. Defendant No.l agreed to pay interest on the aforesaid loan amount at the rate of 2.50%per annum above the Reserve Bank of India rate with a minimum rate of 12.50%per annum with quarterly rests. Dafendants 2&3 stood surety and executed deed of guarantee in favour of the plaintiff -bank on 16 -2 -1982 agreeing to make the payment of the amount, if not paid, and be responsible jointly and severally along with defendant No.l. Defendant No -1 purchased the vehicle which was registered as JKQ 5211 - Defendant No.l made certain payment but thereafter stopped paying the regular installments with the result that the suit amount was found payable by the plaintiff -bank at the time of filing of the suit. It is prayed that the decree for the suit amount be passed against the defendants The suit was resisted by defendant No -2 only. Defendants 1&3 have been set exparte.

(2.) UPON the pleadings of the parties the following issues were framed by this Court on 14 -2 -1990 1) Whether the present suit has been filed and the plaint verified by an authorised person?O.P.P. 2) Whether the defendant No.2 stood guarantor of defendant No 1 and executed a deed of guarantee in favour of the plaintiff -bank? O.P.P. 3) Whether the plaintiff bank failed intentionally in their duties to seize the hypothecated vehicle and sell the same? If so what is its effect on the suit? O.PD.2

(3.) ISSUE NO: 2 In order to prove this issue, the plaintiff -batik has produced S/Shri Girdhari Gopal Sawhney and Vipin Aggarwal PWs PW Vipin Aggarwal has stated that defendants 2&3 executed the deed of guarantee, Ex. VA/6 in favour of the plaintiff -bank, and signed the same in his presence. The deed of guarantee E.x VA/6 was duly proved arid admitted in evidence, Learned counsel ict the defendant has urged that as this " witness has static* that he does not remember the age of defendant No 2, no reliance be placed upon his statement. The argument of the learned counsel cannot be accepted in view of the lapse of time between the date when the deed of guarantee was executed and the statement recorded in the Court. The defendant himself has admitted his .signatures on the deed of guarantee and be feebly tried to urge that his signatures had been obtained in token of having identified the signatures of Bananas Dass, the other guarantor. No reliance can be placed open the statement of Bibari Lal Gupta in view of the documentary evidence in the form of Ex VA/6 The plaintiff -bank has, therefore, proved the execitopm of the deed of guarantee by defendant 2&3. The issue is accordingly decided in favour of the plaintiff; and against the defendants ISSUE NO: 3 PW Girdhar Gopal Sawhney, in his statement, has proved the statement of accounts Ex. GG and stated that the defendants have not paid the suit amount. Mr. Sharma, learned counsel for defendant No.2 has stated that even though issue No 2 is proved in favour of the plaintiff, his client is not liable to pay any amount on account of the failure of the plaintiff -bank to seize the hypothecated vehicle and sell the same immediately after defendant No.1 became a defaulter Rights and liabilities of the surety are governed by Chapter -VllI of the Contract Act. Sec. 139 of the Contract Act provides that if the creditor does any act which is inconsistent with the rights of the surety or omits to do any act which his duty to the surety requires him to do and the eventual remedy of the himself against the principal debtor is thereby impaired, the surety is discharged. It is submitted that under the terms of the hypothecation -deed the plaintiff -bank did not take steps for the realization of the amount, the surety of defendant No.1 stood discharged and no decree can be passed against them. This section embodies a rule that it is the duty of the person who has secured a guarantee to do every act necessary for the protection of the rights of the surety. It is established that the creditors cannot call upon the guarantor to pay any sum under the guarantee when they themselves have failed to carry out the terms of the contract, the basis upon which the loan was advanced. It is, however, established that mere leaches or acquiesance on the part of the creditor is not enough unless positive acts to the prejudice of the surety are proved by the surety for Ms discharge. It is, however, necessary that in order to attract the provisions of Sec 139 not only an act inconsistent with the right of the surety or an omission to do an act which is its creditors or employers duty to do, is proved, but, it is also to be established that eventual remedy of the surety against the principal debtor has been impaired Toe impairment of the suretys eventual remedy against principal debtor is the very crucial factor under this section. If the suretys eventual remedy is not impaired then the surety is not discharged under. Sec. 139.Under Sec. 141 of the Contract Act a surety is entitled to the benefit of every security which creditor has against the principal debtor at the time when the contract of suretiships was entered into whether the surety known of the existence of such security or not; and if the crditor looses or without the consent of the surety, parts with such security, the surely is discharge to the extent of the value of the security.