Bank Of Baroda vs Sardar Harbans Singh And Ors.

S.N.H. Zaidi, J

This appeal has been directed against the judgment and order dated 4.2.2010 passed by the Presiding Officer of the DRT Jaipur whereby the application (O.A. No. 183/2002) filed under Section 31-A of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act) and application for substitution of the legal representatives of the deceased defendant have been dismissed. The facts giving rise to this appeal, in brief, are that the appellant Bank had sanctioned on 1.10.1984 a loan to Sardar Harbans Singh for the purchase of a new Tata Diesel Chassis on the personal guarantee of Sardar Bakhtawar Singh and Sardar Harbhajan Singh (respondent Nos. 2 and 3 respectively herein). As the borrower failed to repay the loan despite demands, the Bank filed Civil Suit No. 65/1993 for its recovery before the Additional District and Sessions Judge No. 3, Jaipur City, Jaipur against the borrower and guarantors. The said suit proceeded ex parte and by judgment and order dated 7.8.1997 it was decreed as such against all the defendants for the recovery of the claimed amount together with pendente lite and future interest with the direction that the decree amount could be recovered by auction of the hypothecated goods and movable and immovable properties of the defendants. Since the defendant/JDs did not make any payment of the decretal amount, which had exceeded Rs. 10 lacs, therefore, the DH Bank filed application (O.A. No. 183/2002) under Section 31-A of the RDDBFI Act before the DRT, Jaipur for the issuance of Recovery Certificate (RC) in accordance with the decree. Upon service of the notice of O.A. one of the guarantors, namely. Sardar Harbhajan Singh respondent No. 2 herein, filed an application before the Additional District and Sessions Judge. Jaipur on 18.9.2002 for setting aside the ex parte decree on the ground that the borrower Sardar Singh had died on 3.11.1995, i.e., during the pendency of the suit. The Bank thereafter moved an application before the DRT 5.12.2002 for substitution of the legal representatives of deceased Harbans Singh. The learned Tribunal below after hearing the parties and observing that since Harbans Singh had died during the pendency of the suit and his legal representatives were not brought on record, therefore, the decree passed against the dead person is a nullity, dismissed he O.A. and the substitution application both by the order impugned. Feeling aggrieved with that order the applicant Bank has filed the instant appeal.

Mr. R.K. Salecha, learned Counsel appearing for the appellant has contended that despite sufficient service of summons none of the defendants had appeared before the Civil Court and the Bank could also not know about the death of Sardar Harbans Singh during the pendency of the suit as such substitution application could not be filed. He further contented that the amount of debt due was claimed not only from the borrower but also from the guarantors and since the right to sue against the guarantors had survived on the death of the borrower, therefore, the suit had not abated as per Order 22 Rule 1, CPC. He also contended that as the right to sue for the recovery of debt had survived against other defendants despite the death of one defendant-the application for substitution filed by the appellant under Order 22 Rule 4. CPC was entitled to be allowed and the learned Tribunal below has not applied the law correctly and has erred in dismissing that application.

Mr. Salecha has further contended that as the liability of the guarantors, being sureties qua the repayment of loan amount, is co-extensive with the principal borrower as per Section 128 of the Contract Act, therefore, the decree against the guarantors stands as it is divisible against them and the DRT has committed error in dismissing the O.A. only on the ground that the decree against a dead person is a nullity. He pointed out that as soon as the Bank came to know about the death of Sardar Harbans Singh in September 2002, it had filed the application for substitution of his legal representatives and as such the Bank was not at fault at any point of time.

Mr. Yashpal Garg, learned Counsel for respondent No. 2, on the other hard, pointed out that the civil suit which was filed in 1992 was dismissed in default in 1994 and was later restored in 1998 and thereafter the summons were got served upon the defendants through substituted service, but before the restoration of the suit defendant No. 1 Sardar Harbans Singh had already died in 1995 and as such the ex parte decree passed by the Civil Court against a dead person is a nullity and the learned Tribunal below had rightly dismissed the O.A. filed under Section 31-A of the RDDBFI Act as well as the substitution application. In support of his contention Mr. Garg has relied upon the judgments of the Supreme Court in Kiran Singh and Ors. v. Chaman Paswan and Ors., AIR 1954 SC 340. Amba Bai & Ors. v. Gopal & Ors., IV (2001) SLT 213 : AIR 2001 SC 2003 and Kishun alias Ram Kishun v. Bihari, VI (2005) SLT 417: AIR 2005 SC 3799.

I have given my anxious thoughts to the submissions of the parties Counsel and gone through the record of the case. There is nothing on record to show that the Bank had come to know about the death of Sardar Harbans Singh at any time during the pendency of the suit, as such there was no occasion for the Bank to file the application for substitution of his legal representatives. So far as the contention of Mr. Salecha that since the suit was filed against the borrower and guarantors and the liability of the guarantors being sureties is coextensive with the borrower, therefore, on the death of the borrower, the suit would not abate and the right to sue would survive against the guarantors is concerned, Rule 1 of Order 22, CPC provides that:

No abatement by party's death, if right to sue survives--The death of a plaintiff on defendant shall not cause the suit to abate if the night to sue survives.

As per the above rule, if on the death of the plaintiff or the defendant the right to sue survives then the suit would not abate. Since the liability of a guarantor is coextensive with the principal borrower and the guarantor of a loan is jointly and severally liable with the borrower for its repayment, therefore the above contention of Mr. Salecha is acceptable and it is held that upon the death of the borrower. Sardar Harbans Singh the right to sue for the recovery of the due amount of debt had survived against defendant/respondent Nos. 2 and 3 and the civil suit filed against them had not abated despite the fact that the legal representatives of the deceased defendant No. 1 were not brought on record. In my opinion, the decree passed by the Civil Court can be said to be a nullity only against deceased defendant Sardar Harbans Singh and not against the remaining defendants. The decree in question passed by the 3rd Additional District and Sessions Judge Jaipur, being joint and several, can very well be executed against the surviving defendant/judgment debtors as Section 128 of the Contract Act provides that unless otherwise provided by the contract, the liability of a surety is co-extensive with that of the principal debtor. Though respondent No. 2 is disputing his alleged status of guarantor for the loan availed by Sardar Harbans Singh and contends that he had signed the documents as a witness thereof, but this contention is devoid of any force in view of the documentary evidence of loan documents showing him as a guarantor. The defendant/respondent No. 2 is a guarantor and surety for the repayment of loan taken by the principal borrower and since his liability being co-extensive with the principal borrower, he cannot take the benefit of the death of the borrower on the ground that the decree against him is a nullity.

There is no dispute to the legal proposition that the decree against a dead person is a nullity, but defendant/respondents 2 and 3 being alive, the decree in question qua them cannot be said to be a nullity. In Amba Bai and Ors. v. Gopal and Ors. (supra), where the second appeal was preferred against the decree granting specific performance and the second appellant had died during the pendency of the appeal and the judgment in the second appeal was passed without the knowledge of his death and his legal heirs had not taken steps for their substitution, the Hon'ble Supreme Court has held that the doctrine of merger does not apply and the decree passed by the first appellate Court does not get merged into the order passed in second appeal and the judgment in the second appeal being against a dead person is a nullity and the decree passed by the first appellate Court must be deemed to have become final and is an executable decree. The facts and circumstances of the case being entirely different, the ratio of the case does not seem to have any application to the present case.

In Kishun alias Ram Kishun (died) through LRs. v. Bihari (dead) through LRs. (supra), where in the second appeal the legal representatives of both the deceased parties were not brought on record and judgment was passed the Hon'ble-Apex Court has held that the decree passed would be a nullity since it was passed in favour of a deceased appellant and against a deceased respondent. Again the facts and circumstances of the case being entirely different from the present case, the judgment does not apply to this case. The case of Kiran Singh and Ors. v. Chaman Paswan and Ors. (supra), being on the point that a decree passed without jurisdiction is a nullity, is not relevant for the purposes of this case.

Since there is nothing on record to show that the Bank had the knowledge of the death of Sardar Harbans Singh during the pendency of the civil suit and it appears to have come to know of that fact when respondent No. 2 had filed the application under Order 9 Rule 13, CPC before the 3rd Additional District and Sessions Judge, Jaipur for setting aside the ex parte decree. I find no reason to reject the contention of the appellant that as soon as the Bank came to know about the death of the borrower Sardar Harbans Singh it moved an application under Order 22 Rule 4, CPC for substitution of his legal representatives. From Paragraph 7 of the reply filed by the respondent No. 2 to the appeal it, however, appears that the application for setting aside the ex parte decree filed before the Court of 3rd Additional District and Sessions Judge, Jaipur had also been dismissed for want of prosecution.

In view of the discussion made above and looking to the circumstance that the Tribunal below had dismissed the OA and the substitution application only on the ground that the decree against a dead person is a nullity and had neither issued notices to the proposal LRs. of deceased defendant/respondent No. 1 nor considered the circumstances under which the substitution application could not be filed in time. I am of the view that the order impugned cannot be allowed to sustain and is liable to be set aside and the substitution application is entitled to be remitted back to the Tribunal below for its disposal afresh after issuing notices thereof to the proposed L.Rs.

The appeal is allowed and the order impugned is accordingly set aside and the matter is remitted back to the Tribunal below for disposal of the substitution application afresh on merit after issuance of notice to the processed LRs and to other respondents and after giving them an opportunity of hearing and then for disposal of the OA in accordance with lay. It is, however, clarified that the Tribunal below shall not be influenced by any observations made herein by this Tribunal, which have been made for the purposes of this appeal only.

With the above observation, the appeal stands disposed of. Parties shall bear their own cost of the appeal and shall appear before the DRT, Jaipur on 1.11.2012. Let the record of the Tribunal below be sent back to it. Copy of this order be furnished to the parties as per law and one copy be sent to the concerned DRT forthwith.