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Satwant Singh Kochhar and Co. and ors. Vs. Punjab National Bank and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberRegular Appeal Nos. 65 and 72 of 1984 and First Appeal No. 20 of 1975
Judge
Reported in27(1985)DLT441
ActsIndian Contract Act, 1872 - Sections 128; Code of Civil Procedure (CPC), 1908 - Order 34, Rule 5(3)
AppellantSatwant Singh Kochhar and Co. and ors.
RespondentPunjab National Bank and ors.
Advocates: G.S. Vohra,; J.P. Chopra,; S.C. Singh,;
Cases ReferredBank of Bihar Ltd. v. Dr. Damodar Prasad and
Excerpt:
.....that by virtue of the provisions contained in order 34 rule 5(3) of the civil procedure code, 1908, the court was competent enough to direct that a part of mortgaged property be sold - - he prayed that half share of jaswant singh in the said property may be sold and if the decree still remained unsatisfied the remaining half of the property may then be sold......singh, kulwant singh, manohar singh and miss mohinder kaur. the loan was guaranteed by darshan singh, jaswant singh, asa singh and mrs. veeran vali. the title deeds of two properties no. 71 and 144, sunder nagar were deposited with the bank by way of equitable mortgage to secure the amount advanced by the bank. (2) disputes between the parties arising under these transactions were referred for decision to madan gopal malhotra, the sole arbitrator. he made his award on june 15, 1968. he held that the bank was entitled to recover rs. 5,60,709.40 by sale of the above mentioned mortgaged properties and from the properties of partnership and personal pr (3) on an application by the bank under sections 14 and 17 of the arbitration act the award was filed in court. satwant singh, mohinder.....
Judgment:

G.C. Jain, J.

(1) Punjab National Bank advanced loan to M/s. Satwant Singh Kochar and Company, a partnership concern consisting of five partners Satwant Singh ; Gurmukh Singh, Kulwant Singh, Manohar Singh and Miss Mohinder Kaur. The loan was guaranteed by Darshan Singh, Jaswant Singh, Asa Singh and Mrs. Veeran Vali. The title deeds of two properties no. 71 and 144, Sunder Nagar were deposited with the Bank by way of equitable mortgage to secure the amount advanced by the Bank.

(2) Disputes between the parties arising under these transactions were referred for decision to Madan Gopal Malhotra, the sole arbitrator. He made his award on June 15, 1968. He held that the Bank was entitled to recover Rs. 5,60,709.40 by sale of the above mentioned mortgaged properties and from the properties of partnership and personal pr

(3) On an application by the Bank under sections 14 and 17 of the Arbitration Act the award was filed in Court. Satwant Singh, Mohinder Kaur and Kulwant Singh filed objections. The objections were dismissed and a decree was passed in terms of the award by a learned single judge of this court on November 7, 1974.

(4) The firm, its two partners Satwant Singh and Gurmukh Singh and the two guarantors Darshan Singh and Smt. Veeran Vali filed-an appeal against the order of the Single Judge. This appeal came for hearing on August 22, 1984, Mr. G.S. Vohra, counsel for the appellants pointed out that property no. 144, Sunder Nagar was owned by Darshan Singh and Jaswant Singh in equal shares. The decree against Jaswant Singh has become final, inasmuch as he has not filed any appeal. He prayed that half share of Jaswant Singh in the said property may be sold and if the decree still remained unsatisfied the remaining half of the property may then be sold. He stated that the appeal may be dismissed as withdrawn and his request may be accepted. Mr. Chopra, learned counsel for the Bank opposed this request. He urged that the bank should be left free to realise the decretal amount from the sale of the entire property.

(5) After hearing the counsel the request of Mr. Vohra was accepted. The bank was directed first to proceed to sell the half share of Jaswant Singh in property no. 144, Sunder Nagar. If the sale proceeds realised from the sale of the said half share were found insufficient the Bank had the right to proceed to sell the remaining half share of the mortgaged property or any other property of the judgment debtors. The appeal was dismissed as withdrawn The order also provided that it would not prejudice the right of Jaswant Singh to claim contributions from other judgment debtors in accordance with law.

(6) The Bank and Jaswant Singh have now filed the review application (RA 65 of 1984 and Ra 72 of 1984). The Bank has prayed that the directions to the Bank first proceed to sell the half share of Jaswant Singh be struck down. Jaswant Singh prayed that the matter be renewed and heard again. During the course of the argument his counsel submitted that the Bank be directed to proceed to sell property no. 71, Sunder Nagar or both the properties no. 144 and 71, Sunder Nagar or the matter be left to the discretion of the executing court or lastly the entire property no. 144, Sunder Nagar be sold.

(7) Both these applications were opposed. This order would govern both the applications.

(8) Mr. Arun Mohan learned counsel for Jaswant Singh contended that the court had no power to direct the bank to first proceed to sell the half share of Jaswant Singh and thereforee this part of the order was liable to be struck down,

(9) Jaswant Siagh, petitioner was admittedly a guarantor. However the liability of the principal debtor or and the guarantor was co-extensive. It was Joint and several.

(10) Section 128 of the Indian Contract Act says 'the liability of the surety in co-extensive with that of the principal debtor unless it is otherwise provided by the contract.' As held by the Supreme Court in Bank of Bihar Ltd. v. Dr. Damodar Prasad and another : [1969]1SCR620 his liability was immediate. It was not deferred until the creditor exhausts his remedies against the principal debtor. In the absence of some special equity the surety has no right to restrain an action against him by the creditor on the ground that the principal is solvent or that the creditor may have relief against principal in some other proceedings. This principle would equally apply to a principal debtor. He also has no right or restrain an action against him on the ground that the surety was solvent or had not filed any appeal or the decree against him had become final. There is no quarrel so far as these principles are concerned.

(11) We have also no doubt that the court while passing a simple money decree is not competent to direct that the money would be first recovered from the principal debtor or the surety. However, in a mortgage suit the court by virtue of the provisions contained in Order 34 rule 5(3), Code of Civil Procedure is competent while passing a final decree to direct that the mortgaged property or a sufficient part thereof be sold. The present case was for all purposes a mortgage claim. The arbitrator in terms has provided in the award that the amount found due by him was recoverable by sale of mortgaged property. The court passing a decree on the basis of such an award, in our opinion, was competent to direct that a part of the mortgaged property may be sold first.

(12) Mr. Arun Mohan then contended that on the facts and circumstances of the case it was neither just nor equitable to make the directions for the sale of his client's share in property no. 144, Sunder Nagar. The liability of Jaswant Singh as a surety being co-extensive he could have no grievance against the directions made in the order under review. He cannot insist that some other property be sold first or the entire property no. 144 Sunder Nagar be sold. He cannot say that the creditor should first proceed to sell the property of the principal debtor or other guarantors.

(13) It was urged that there was a special equity in favor of Jaswant Singh and thereforee, he was entitled to directions that principal debtor should bear the burden first. No special equity has been alleged in the application. In his affidavit filed later on Jaswant Singh said that Prabhjot Singh has set up a false claim of tenancy against him. Darshan Singh was colluding Prabhjot Singh and intending to usurp his share for no price. These allegations do not make. out any special equity in favor of Jaswant Singh. Such a situation may arise even when the entire property in put to sale.

(14) On behalf of the bank it was pointed out that property No. 144, Sunder Nagar was on a lease hold plot of land. Under the lease deed it could not sub-divided without the prior permission of the Lesser. The permission may be given on payment of additional premium or enhanced lease rent. Moreover there was some litigation going on about this property and in all the circumstances sale of half share would bs illusory and waste of time and money.

(15) In our view the contention has no merit. A lessee under the terms of the lease deed, admittedly, could not sell the property without the permission of the Lesser. It, however, does not mean that such a property when put to sale would not fetch any price. The bank has no objection to the sale of the entire property. How can it object to the sale of half share in the same circumstances It may be pointed out that in reply the opposite party stated that they had a customer who was prepared to after Rs. 10 lakhs for half share. thereforee, it cannot be said that the sale of half share would bring no fruits.

(16) The offer made by Vohra to withdraw the appeal, without any doubt, was conditional. He agreed to withdraw the appeal if half share of Jaswant Singh was first put to sale. By the impugned direction the bank got rid of the appeal which had been admitted for hearing. The rights of the bank have not at all been jeopardised. Instead of taking steps to execute the decree, the bank was wasting time in unnecessary quibblings. It is really surprising to note that inspire of the fact that the two guarantors and two partners had filed no appeal against the decree passed as far back as 1974, the bank took no effective step to realise the decretal amount.

(17) For all these reasons we find no merit in any of the applications and dismiss the same.


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