Punjab And Sind Bank vs Bharpur Singh and Another

J.V. Gupta, J.—This revision petition is directed against the order of the executing Court dated November 22, 1985, whereby the objection petition filed on behalf of the judgment-debtors (guarantors) was accepted and they were discharged of their liabilities to the extent of the entire cost of the ear. It was also directed that the decree-holder (Bank) can recover the amount from hypothecated goods from Bharpur Singh, if so advised.

The Punjab & Sind Bank, filed the suit for the recovery of Rs. 34,525.77 with future interest at the rate of 15 per cent, per annum from the date of the institution of the suit till realisation of the decretal amount by the sale of hypothcated goods i.e., the Ambassador Car, purchased by Defendant Bharpur Singh and also a personal decree for the amount against both the Defendants, that is, the principal debtor and the guarantors jointly and severally recoverable by sale of their other properties. The trial Court decreed the Plaintiff''s suit against both the Defendants and made them liable jointly and ser verally for the payment of the decretal amount. Bharpur Singh did not challenge the decree of the trial Court, but the guarantors filed the appeal against the said decree. In appeal, the learned District Judge modified the decree of the trial Court to the extent that the guarantors'' liability extended only to the amount of Rs. 25,000/- plus interest on that amount at the rate of 15 per cent, per annum from the date of demand till payment. It was further made clear that the liability was joint and several with the principal debtor. When the execution of the decree was sought by the decree-holder, objections were filed on behalf of the guarantors for the discharge of their liability in view of the hypothecated goods on the ground that u/s 141 of the Contract Act, the liability of the guarantor was discharged to the extent of the hypothecated goods whether it was in the knowledge of the Plaintiff or not. It was contested on behalf of the decree-holder on the plea that the guarantors were not discharged to the extent of the hypothecated goods. Besides, the suit had been decreed by both the Courts below and the liability of the surety to the extent of Rs. 25,000/- was along with interest. However, after framing the issue and allowing the parties to lead evidence the executing Court found that on the basis of the judgment of this Court in State Bank of India Vs. Quality Bread Factory and Others, the guarantors were discharged to the extent of the entire cost of the car which was hypothecated by the principal debtor with the decree-holder Bank. According to the executing Court, the Bank could recover the amount from hypothcated goods or from Bharpur Singh and that to that extent, the guarantors were discharged. Dissatisfied with the same, the decree-holder Bank has filed this revision petition in this Court.

At the time of the motion hearing, the learned Counsel for the Petitioner cited Sunder Dass Vs. Ram Prakash, to contend that the executing Court could not go behind the decree.

3-A. The learned Counsel for the Petitioner contended that since the decree has been passed against the principal debtor as well as the guarantors, in view of the aforesaid Supreme Court decision, their liability is joint and several. The decree-holder is entitled to execute the decree against all or any one of them. Of course, argued the learned Counsel, the liability of the guarantors has been limited to the extent of Rs. 25,000/- plus interest and in view of the same, the executing Court has erred in discharging the guarantors and directing the decree-holder Bank to recover the amount from hypothecated goods in the first instance.

There is no quarrel with the proposition of law that the decree-holder Bank can proceed against either the principal detor or the guarantors in view of the joint and several decree passed against both of them. It could not be disputed that the Bank must first proceed to recover the amount from the hypothecated goods so that the liability of the guarantors to that extent may be lessened. It may also be necessary to avoid the multiplicity of proceedings. In that situation, the guarantors will not have to take proceedings to recover tint amount from the principal debtor. In any case, there is nothing wrong or illegal directing the Bank to recover the amount from the hypothecated goods in the first instance.

On the last date of hearing, the case was adjourned to find out the position from the Bank as to why the Bank was not proceeding to recover the amount from the hypothecated goods, i.e., the Ambasador Car. Today, it has been stated at the bar on behalf of the Bank that the principal debtor has disposed of the said car, i.e., the hypothecated goods to somebody else without the permission of the Bank and, therefore, the amount could not be recovered from the said goods. In these circumstances, it will be for the executing Court to find out as to what is the exact position. The Bank will have to proceed to realise to decretal amount from the hypothecated goods in the first instance and in case it could not be recovered from the said goods, then the liability of the guarantors to the extent fixed in the decree will be always there. The Bank in order to show its bona fides must proceed against the principal debtor and the property hypothecated. In case the executing Court feels satisfied that the recovery of the decretal amount cannot be made from the hypothecated goods, in that situation, the proceedings against the guarantors will be taken.

With these observations, this revision petition is dismissed with no order as to costs.

R. M. S. Petition dismissed.