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Popatlal Ratilal Vs. State Bank of India and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking;Civil
CourtGujarat High Court
Decided On
Judge
Reported in(1986)1GLR148
AppellantPopatlal Ratilal
RespondentState Bank of India and ors.
Excerpt:
- - but the appellant when asked either to give an undertaking that be will not dispose of the said trucks or that if he disposes of one of them, he will pay the dues of the bank in respect of other truck so as to release the guarantors from their liability, he has refused lo give any such undertaking which clearly indicates that he does not want to discharge his liability towards the bank or to relieve the guarantors. desai has urged that in this case the trial court was satisfied that the borrower was bent upon harming the guarantors and the creditor bank by disposing of one truck and utilising the surplus amount for some other purpose and not re-pay the loan amount outstanding against the truck for which they are guarantors......no. gtp-5580. the respondent nos. 2 and 3 (hereafter-guarnators) stood sureties for the aforesaid loan. the borrower defaulted in payment instalments of the loan. the respondent bank further advanced loan to the present appellant for purchasing another truck no. gtp-5662. the borrower paid different sums towards second loan committing several defaults in the earlier loan for which the respondent nos. 2 and 3 had stood sureties. the defendant bank filed suit against the present appellant and respondent nos. 2 and 3 for the recovery of the remaining part of the loan amounting to rs. 1,75,000/-. the present appellant is said to have negotiated sale of the second truck gtp-5662 to a third party for a sum of rs. 3,25,000/-. the guarantors filed application ex. 13 before the trial court.....
Judgment:

A.S. Qureshi, J.

1. In this appeal, the appellant has challenged the order dated 25th April 1985 passed by the learned 3rd Joint Civil Judge (S.D.) Jamnagar below Ex. 13 in Special Civil Suit No. 148/84. The learned Counsel for the parties have argued all the questions of law arising in this appeal at considerable length and therefore at the request of the learned Counsel of all the parties, this appeal is treated as having been admitted and finally heard and disposed of by this judgment.

2. The brief facts of the case may be stated here:

The present appellant (original defendant No. 1) (hereafter-borrower) had taken a loan from the respondent No. 1 bank for purchasing a truck bearing registration No. GTP-5580. The Respondent Nos. 2 and 3 (hereafter-guarnators) stood sureties for the aforesaid loan. The borrower defaulted in payment instalments of the loan. The respondent bank further advanced loan to the present appellant for purchasing another truck No. GTP-5662. The borrower paid different sums towards second loan committing several defaults in the earlier loan for which the respondent Nos. 2 and 3 had stood sureties. The defendant bank filed suit against the present appellant and respondent Nos. 2 and 3 for the recovery of the remaining part of the loan amounting to Rs. 1,75,000/-. The present appellant is said to have negotiated sale of the second truck GTP-5662 to a third party for a sum of Rs. 3,25,000/-. The guarantors filed application Ex. 13 before the trial court stating that the borrower is planning to utilise the sale proceeds of the second truck for some other purpose leaving the outstanding debt on the earlier purchased truck (GTP-5580) unpaid. It was also stated that the borrower has no other property to pay the balance of ths outstanding loan and hence the guarantors may have to pay that amount. Hence by the said application, they prayed that both the trucks may be attached so as to prevent the borrower from disposing of the second truck (GTP-5662) until the outstanding amount on the first truck was paid out and the guarantors released from their liability. In reply to the said application of the guarantors, the respondent bank requested the court to order attachment before judgment and the auction sale of the two trucks to pay the outstanding amounts of loan to the bank. The borrower did not file any reply to the said application.

3. The learned trial Judge by his order dated 25-4-1985 directed that the said two trucks be attached for the purpose of auction sale by the court so as to prevent the borrower from transferring the same in favour of anybody with a view to defeat the plaintiff bank's dues and with a view to cause harm and financial loss to the guarantors. Against the said order of the trial court, the debtor has come in appeal to this Court challenging the legality and propriety of the aforesaid order.

4. Mr. K.G. Vakharia, the learned Counsel for the appellant has urged that the impugned order is contrary to law and therefore unsustainable. According to him, the learned trial Judge was not justified in ordering the attachment and sale of the two trucks belonging to the present appellant. Mr. Vakharia, has urged that under Order 38 Rule 5 Sub-rule (1) of the Code of Civil Procedure, it is imperative that the court must ask the defendant to furnish the security before the attachment order could be passed. He further states that in this case, the court had not asked the defendant No. 1 to furnish security nor was be called upon to show cause why he should not be called upon to furnish security. Mr. Vakharia's grievence is that the impugned order of attachment and sale has been passed behind the back of the defendant No. 1 and therefore it is void under Sub-rule (4) of Rule 5.

5. Mr. G.N. Desai the learned Counsel for the respondent No. 1 creditor bank has urged that on plain reading of Rule 5 Sub-rule (1), it is discretionary for the court to direct the defendant No. 1 either to furnish security or to appear and show cause why he should not furnish security because according to him, the words used are 'the court may direct'. He therefore urges that it is a discretion with the court and not a mandatory requirement. Alternatively, Mr. Desai submits that in the present case, the application Ex. 13 was filed as far back as on 25-1-1985. Thereafter the hearing of the said application was adjourned on several occasions. The advocates of the parties were present on some of these dates. But the advocate for the defendant No. 1 i.e. present appellant did not remain present on several dates Mr. Desai relies on the Rojnama, a copy of which is attached to the affidavit of the bank on the record of this case and points out that although the said application was called out for hearing and the name of the advocate of defendant No. 1 was also called out on several dates prior to passing of the impugned order. But on none of those dates either the defendant No. 1 (borrower) or his advocate remained present. Mr. Desai has also pointed out that the advocates for defendant Nos. 2 and 3 (guarantors) filed their written arguments but the defendant No. 1 (borrower) did not file a reply to Ex. 13 nor did he submit any written arguments. Hence, Mr. Desai submits that in this situation, the court was justified in assuming that defendant No. I did not have anything to say in the matter.

6. The defendant No. 1 (borrower) appears to have taken a strange attitude in this matter. He does not seem to have taken the application Ex. 13 quite seriously. Neither did he file his reply nor remain present in court at the hearing inspite of several adjournments granted to enable him and his advocate to present his case. Moreover the present appellant has entered into an agreement with a third party to sell one of the two trucks and is not prepared to deposit the amount realised therefrom towords the re-payment of the loan of the second truck for which the present respondent Nos. 2 and 3 are the guarantors. Consequently, the said respondents are justified in having an apprehension that the borrower wants to defraud them and make them liable for the amount of loan advanced by the bank. The appellant has no other property and the truck for which they are the guarantors, is of a value much less than the amount due and payable to the bank. It would have been proper for the borrower to agree to pay the balance of the amount recovered by selling one truck to re-pay the loan remaining outstanding against the other truck. But the appellant when asked either to give an undertaking that be will not dispose of the said trucks or that if he disposes of one of them, he will pay the dues of the bank in respect of other truck so as to release the guarantors from their liability, he has refused lo give any such undertaking which clearly indicates that he does not want to discharge his liability towards the bank or to relieve the guarantors. In these circumstances, it must be held that it was not necessary to call upon the borrower to furnish security as required under Order 38 Rule 5 Sub-rule (1). It is a discretionary power of the court to call upon the defendant to furnish security. It does not create a right in favour of the defendant. In appropriate case, the court may not call upon the defendant to furnish security and straightaway pass an order to attach the property, especially when the evil design of the defendant to defraud the creditor and the guarantor becomes evident as in this case. Hence it cannot be said that the impugned order of attachment passed by the trial court is illegal or unreasonable.

7. The next argument advanced (by Mr. Vakharia) is that even if the impugned order of attachment passed by the trial court can be justified, (according to him), the order regarding auction sale of the two trucks is illegal and unjustified. Mr. Vakharia has urged that there is no provision empowering the court to order the sale of the two trucks. Mr. Desai has met with this argument of Mr. Vakharia by stating that the court has ample power to order interim sale in an appropriate case both under Order 39 Rule 6 and under Section 151 of the Code of Civil Procedure. Mr. Desai has pointed out that under Order 39 Rule 6, the court may order the sale or attach it before judgment if the property in question is movable and is subject to speedy and natural decay or for any other just and sufficient cause which the court may consider proper. Mr. Desai has urged that in this case the trial court was satisfied that the borrower was bent upon harming the guarantors and the creditor bank by disposing of one truck and utilising the surplus amount for some other purpose and not re-pay the loan amount outstanding against the truck for which they are guarantors. Apparently the truck is in such a condition that on sale, the amount realised would not be sufficient to pay the balance of loan outstanding on that truck. Therefore, according to Mr. Desai, this was just and sufficient cause for the trial court to order not only the attachment but also the sale of two trucks. Mr. Vakharia, has on the other hand contended that the court was not justified in passing the impugned order of interim sale because such an order could bs passed only on the application of a party to a suit. According to Mr. Vakharia, there was no such application before the court. Mr. Desai has however pointed out that there was such an application by the plaintiff bank. In its reply to application Ex. 13 of the borrower the bank had stated that it supported the application Ex. 13 and that ihe trucks in question after attachment may be sold and the amount realised there from may be adjusted towards the bank's outstanding amounts in respect of the two loans for the trucks. The said reply of the plaintiff is at Ex. 15 in this case. Mr. Vakharia has argued that Ex. 15 cannot be regarded as an application for an order of interim sale. Here again Mr. Vakharia's contention is too technical and is not sustainable because any of the parties to a suit may either by an independent application, or by a reply to another application pray for such a relief. What is important is that the question must be brought by the parties before the court for decision and the court is under a duty to decide it. Justice cannot be allowed to be sacrificed at the altar of mere form or technicalities. In this case, the present appellant must be held to know the contents of Ex. 13 and Ex. 15 and yet if he chose neither to file his reply nor to remain present before the court either personally or through his advocate. Therefore on this point also the contention of Mr. Vakharia fails and must be rejected.

In the peculiar circumstances of this case, it cannot be held that the impugned order passed by the trial court is erroneous in law or that it is unjust or unduly oppressive. Oa the contrary, taking the overall view of the matter, it seems that the impugned order is fair and just. It is the present appellant who is being unfair and unjust. He who seeks equity must be prepared to do equity and must come with clean hands.

8. In the result, the appeal fails and is dismissed. In this circumstances of the case, there shall be no order as to costs. At this stage Mr. Vakharia prays that the operation of this order may be stayed for a period of three weeks to enable him to carry this matter further. The request is granted. The operation of this judgment and order is stayed for a period of three weeks from today on condition that the appellant shall not dispose of or encumber either of the suit trucks. Mr. Vakharia has made a statement at the bar that the present appellant is in possession of the said two trucks at present.


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