Ajit Kumar Sengupta, J.
1. This appeal by two of the defendants is directed against the order dated 2nd May, 1983 allowing the application made by the plaintiff-first respondent, Grindlays Bank Ltd. (hereinafter referred to as 'the Bank') for a final judgment under Chap. XIIIA of the Original Side Rules. The facts are in a narrow compass which are stated briefly hereafter.
2. On or about 6th Nov. 1973, Cresswell Breweries Ltd. the second respondent (first defendant in the suit) made an application to the Bank for financial assistance by way of, inter alia, a Term Loan of Rs. 75,00,000/- for the purpose of financing the setting up of a brewery project at Chowk Bansberia in the District of Hooghly. The Bank by its letter dt. 21st Aug. 1974 informed the second respondent that the said application for a Term Loan of Rs. 75,00,000/- for the said project had been sanctioned by the Bank subject, inter alia, to the approval of the Reserve Bank of India to whom the application was being submitted by the Bank. In or about 1974 pending the consideration by the Reserve Bank of India of the said application for Term Loan, the Bank at the request of the second respondent and 7or the defendants in the suit agreed to grant and granted to the second respondent an overdraft facility up to the limit of Rs. 5,00,000/- in the current account of the second respondent repayable on demand. The Reserve Bank of India by its letter dt. 28th Nov. 1974 sanctioned the Term Loan of Rs. 25,00,000/- only as against Rs. 75,00,000/-, applied for by the second respondent. On or about 3rd Nov. 1976 the Bank at the request of the second respondent agreed to increase the said limit of overdraft facility by a further sum of Rs. 3,66,000/-. The Reserve Bank of India by its letter dated 19th August, 1976 informed the Bank regarding sanction by the Reserve Bank of India of a further Term Loan amounting to a total sum of Rs. 45/00,000/- to be disbursed by Allahabad Bank, Punjab & Sind Bank Ltd. and United Industrial Bank Ltd. The Bank by its letter dt. 9th Dec. 1976 informed the second respondent that a Term Loan of Rs. 25,00,000/- had been sanctioned to the second respondent subject to the terms and conditions mentioned in the said letter.
3. The case of the Bank is that the second respondent failed and neglected to comply with the conditions contained in the said letter dt. 19th Aug. 1976 of the Reserve Bank of India as well as the said letter dt. 9th Dec. 1976 written by the Bank. The Bank advanced diverse sums of money to the second respondent in the said current account. The Bank, it is stated, after negotiations with the second respondent and after due consideration of the matter informed the second respondent by its letter dt. 11th Jan. 1978 about its inability to finance the said project and requested the second respondent to send proposal for a programme of repayment of the outstandings in the said current account. Although the Bank is said to have reconsidered the position by its letter dt. 12th April, 1978 but the second respondent allegedly did not comply with the requisitions made from time to time. By a letter dt. 2nd May 1979 the Bank gave the second respondent time till 15th June 1979 for submission of proposal for liquidation of the outstandings in the said current account and also asked the second respondent to make remittance towards payment of accrued interest. The second respondent failed to pay the dues of the Bank and a sum of Rs. 13,08,535,10 p. inclusive of interest at the agreed rate calculated up to 31st Dec. 1979 became due and payable. The second respondent also created an equitable mortgage of immoveable property owned by the second respondent situate at Bansberia in the District of Hooghly. It may be mentioned that the said equitable mortgage was for securing loan not only of the plaintiff bank but also those other banks i.e. Allahabad Bank, United Industrial Bank Ltd. and Punjab & Sind Bank Ltd. Which had, along with the first respondent proposed to grant a consortium loan of Rs. 70,00,000/-including the said proposed term loan of Rs. 25,00,000/- by the first respondent. At the time of institution of the suit leave was obtained by the Bank under Order 2 Rule 2 of the Civil P.C. to institute the suit for enforcement of the said mortgage by a separate suit in the appropriate forum.
4. After the institution of the suit the plaintiff bank took out an application under Chap. XIIIA of the Original Side Rules for obtaining a summary judgment for the sum of Rs. 13,08,535,10 both against M/s. Cresswell Breweries Ltd., the principal debtor as well as its Directors Sri Pradeep Chand Lal and Sri Santanu Chaudhury, the appellants and Syed Jabber one of the defendants in the suit. The said application was heard by Khastgir J. The learned Judge passed a decree on 2nd May 1983 against all the defendants. It appears that the Company as well as all the guarantors appeared and contested separately. This appeal has been preferred by two of the defendants guarantors against the said judgment and decree dt. 2nd May 1983.
5. Sri Sudipto Sarker, learned Advocate appearing for the guarantors, the appellants herein, has contended that the learned trial Judge failed to appreciate the arguments advanced on behalf of the guarantors. The contention is that the plaintiff Bank should not be allowed to proceed against the guarantors for realisation of its dues until the plaintiff Bank has exhausted all its securities against the principal debtor. It is his contention that the guarantors were entitled to each and every item of securities available to the plaintiff Bank. He has further contended that in substance the plaintiff Bank is the mortgagee and accordingly the Bank is not entitled to sue upon the debt ignoring the mortgage. Strong reliance has been placed by Mr. Sarker in the case of Sukhadakanta Bhattacharjya v. Jogineekanta Bhattacharjya reported in AIR 1934 Cal 73. The facts of that case are that defendants 1 and 2 Udayakanta and Hridaykanta as Kartas of their joint family executed a mortgage in favour of the plaintiff and his father for a sum of Rs. 12,000/- on account of certain dues and liabilities of the family to that extent, for which the members of the family stood indebted to them. Since then certain amounts were paid by the said defendants from time to time on behalf of the family and a sum of Rs. 10,000/- odd remained due and a part of the mortgaged properties has been sold away. The plaintiffs father having died, the properties left by him devolved on the plaintiff by inheritance. Treating the amount due as a joint debt of the defendants, the plaintiff instituted the suit praying, in the first instance, for money decree against all the defendants. In default thereof, he prayed for a mortgage decree against the mortgaged properties with the exception of those that have been sold away. The contesting defendant was defendant 5 who alleged that the two branches of the family were not joint at the time of the loan nor were the defendants 1 and 2 Kartas of any such family. The subordinate Judge made a decree in plaintiff's favour against all the defendants for the amount claimed together with the interest at the rate of 6% per annum till realisation and has ordered that such decree should be a personal decree against the defendants 1 and 2 and so far as it is against the other defendants their shares in the joint properties would be liable. The defendant 5 has appealed. The question which the court was concerned with in the said appeal is whether it is competent for the plaintiff to obtain a decree of the character which has been made in his favour. Udayakanta and Hridayakanta, the defendants 1 and 2 purported to execute the bond in their individual and personal capacity and not as Kartas, nor members of a joint family. As regards consideration, (a) Rs. 5,000/- was said to be on two heads Rs. 1,250/- being the consideration for the sale of the mortgagee's right in a certain decree in the property described in Schedule 1 and Rs. 3,750/- as nazar for a mirash settlement of their rights in the property described in Schedule 2; and (b) Rs. 8,000/- being due as the price of certain decrees and bonds. It was said that out of the aforesaid amount of Rs. 5,000/- and Rs. 8,000/- i.e. Rs. 13,000/-, Rs. 1,000/- was to go in discharge of a liability of the mortgagees under a decree. The balance Rs. 12,000/- was the consideration for the mortgage bond. The Court observed : 'The question therefore plainly is whether a mortgagee is entitled to sue upon the debt ignoring the mortgage.' Thereafter the Court observed as follows :
'We have not been referred to any authority one way or the other directly bearing upon the question. But giving it all the consideration it deserves, we have come to the conclusion that the question must be answered in the negative. It is true that a creditor, who takes a security in the shape of a mortgage, cannot be regarded as having foregone such rights as a creditor has under the general law. But it seems sufficiently clear, from the provisions of the Transfer of Property Act, that these general rights are to some extent abrogated by that Act. For instance his right to ask for a money decree is very much restricted by the provisions of Section 68 of the Act and it is perfectly clear therefrom that an action for debt is hot the usual remedy of a mortgagee in India :'
'But the mortgagee is not bound to sue for both the remedies simultaneously : as notwithstanding Order 2 Rule 2 Civil P.C. he may bring his action on the covenant first and then sue for the sale of the mortgaged property (Order 34 Rule 14, Civil P.C.) Clause (a), Section 68 gives him the right ex contractu; Clause (b) gives him the right which the Courts have long recognised on equitable grounds because his security is lost or rendered insufficient due to nobody's fault, in which case the loss must fall on the owner and Clauses (c) and (d) make the owner liable ex delicto. In the case of a simple mortgage it is not necessary that the mortgagor should promise to pay and all that is required is that he must bind himself to pay, but it is not necessary that he should expressly do so. As observed by their Lordships of the Judicial Committee :
'A loan prima facie involves a personal liability; such liability is not displaced by the mere fact that security is given for the repayment of the loan with interest, but the nature and terms of the security may negative any personal liability on the part of the borrower; Ram Narayan Singh v. Adhindra Nath AIR 1916 PC 119' . 'And as held in the case of Benoy Krishna Deb v. Debendra Kishore Nandy (1911) 9 Ind Cas 660 (Cal) a stipulation such as we have in this mortgage, that if the debt be not paid off by the sale of the hypothecated properties the mortgagee would be able to sell other properties of the mortgagor, does not imply that the personal remedy is to be postponed to that against the mortgaged properties. But a mortgagee in respect of a simple mortgage, in view of the provisions of Section 68, T. P. Act, has in our opinion, no cause of action for a relief in the shape of a decree for money independently of the mortgage and apart from his rights as mortgagee. Where none of the Clauses (b)(c) or (d) of that section are satisfied, he can only sue on his rights ex contractu upon the covenant under Clause (a) and it is not open to him to ignore the mortgage and fall back on the debt.'
6. The above decision no doubt supports the contention of Mr. Sarker. It is therefore, necessary to consider whether the instant suit instituted by the Bank is a mortgage suit or not and whether Section 68 of the Transfer of Property Act has any application. This will necessarily depend on the construction of the pleadings. In this suit the plaintiff Bank has claimed a decree, inter alia, for Rs. 13,08,535,10 p. The said claim is in respect of the outstanding arising out of overdraft facilities granted by the Bank to the second respondent in the current account of the second respondent. In consideration of the Bank granting and/or continuing to grant the said overdraft facility and security for due repayment of the outstandings thereunder the defendants in the suit including the appellants executed the following documents : --
(a) A Promissory Note dt. 5th Nov. 1976 executed by the second respondent (first defendant) in favour of the bank for Rs. 10,00,000/- with interest at the rate of 16.5% per annum.
(b) (i) An agreement of guarantee dated 18th February 1977 entered into by the Second defendant (S. Jabber) with the bank.
(b) (ii) An agreement of guarantee dt. 18th Feb. 1977 entered into by the third defendant (the first appellant) with the bank.
(b) (iii) An agreement of guarantee dt. 18th Feb. 1977 entered into by the fourth defendant (second appellant) with the bank.
7. The said three several agreements of guarantee the defendants 2, 3 and 4 guaranteed to the bank the payment and satisfaction on demand of, inter alia, any sum or sums of money which were then or should at any time be owing to the bank from the second respondent anywhere or on any account. The second respondent executed the said promissory note as security for due repayment of the outstanding in the current account.
7A. The case of the bank in the plaint is that pursuant to the aforesaid agreements the bank at the request of the defendants in the suit duly advanced diverse sums of money to the second respondent in the said current account and the second respondent fully availed of the same. It is thus evident that the present suit is on a promissory note and for enforcement of the agreements of guarantee.
8. The Division Bench of this Court in the case of W. Wood & Sons Ltd. v. Bengal Corporation reported in : AIR1959Cal8 held 'It appears that, in English law, a bill of exchange is regarded either as a payment in cash or as amounting to an independent contract, quite apart from the main contract to which the bill relates. The cause of action is that the defendant accepted the bill and thereby accepted what was an equivalent of a payment in cash or he entered into a contract evidenced by the bill itself to pay the amount mentioned in it. A suit on a bill of exchange is therefore, not a suit on the main contract but it is a suit for recovery of what is an equivalent of cash had and received or a suit on a subsidiary contract.'
9. A Promissory Note is a distinct cause of action independent of and apart from the mortgage. Similarly the cause of action based on the agreements for guarantee is independent of and apart from the mortgage. Thus the personal liability to repay the loan in the instant case arises independently of any existing mortgage and the suit is not by the mortgagee for mortgage money. Accordingly section 68 cannot have any application.
In this connection reference may also be made to the judgment of this Court in the case of Nityananda Ghose v. Rajpur Chhaya Beni Cinema Ltd. reported in : AIR1953Cal208 . In that case the suit was instituted by the plaintiff on or about 9th Jan. 1952. In para 1 of the plaint the claim against the defendant company was made only on the basis of its alleged liability as drawer of a Promissory Note dated 11th January 1949 for the sum of Rs. 40,000/- carrying interest at the rate of 6% per annum payable on demand to the plaintiff or order. That was the only claim made in the plaint. In para 3 of the plaint the plaintiff pleaded that the defendant also created an equitable mortgage by deposit of title deeds in respect of a cinema house situate at Rajpur outside the jurisdiction of this Court but that is only pleaded to ask for leave under Order 2 Rule 2 Civil P.C. to file a separate suit to enforce the mortgage if and when necessary. In the suit the plaintiff asked for a decree for a sum of Rs. 47,200/-inclusive of interest due on the Promissory Note. That is the only decree claimed by the plaintiff on that plaint. An application was made by the defendants to stay the suit and all proceedings therein until the plaintiff had exhausted all his available remedies against the mortgaged property or until he abandons his mortgage security. The said application was made under Section 68(2) of the Transfer of Property Act read with Sub-section (1) and Clause (a) thereof. The Court observed that the order to stay the proceedings in a suit under Section 68(2) Transfer of Property Act, the suit must be a suit by the mortgagee for the mortgage money. The Court upon construction of the plaint observed :
'Reverting now to the nature of the plaint in this suit before me I find that this is a suit on the promissory note and not on the mortgage at all. The promissory note is a distinct cause of action, independent of and apart from the mortgage. No doubt the equitable mortgage in the case carries with it a personal liability of the mortgagor to repay the mortgage money. Had it therefore been a suit to recover money due on that equitable mortgage then the argument made on behalf of the applicant for stay might have prevailed. But the position here is entirely different. The suit before me is not a suit where the mortgagee is suing qua mortgagee for his mortgage money. In this suit the plaintiff is suing only as a payee of the promissory note and nothing else. Such a suit in my opinion and on the construction that I have arrived at is not within Section 68(1)(a), T. P. Act. If the personal liability to repay a loan arises independently of any existing mortgage and the suit is not by the mortgagee for mortgage money, then in my view Section 68(1)(a) T. P. Act is not attracted.'
'The argument that the consideration of the promissory note is the same as the consideration for the mortgage cannot in my view, make a difference in the construction of Section 68(1)(a), T. P. Act or in the result of this application. Every mortgage represents both a loan and a security. The nature and terms of the security must be considered in each case in order to find out whether they support or negative the personal liability for repayment of the loan. In my view as I hare already expressed, the personal liability referred to in Section 68(1)(a); T. P. Act is a personal liability inherent in the mortgage and not dehors the mortgage or independent of the mortgage. The principle behind this statutory provision, as I understand it, is the law's reluctance to make the mortgagor personally liable so long as his security is there to answer for the debt. But if the mortgagor chooses to create a personal liability by independent transaction like a promissory note, a cheque or other independent engagement completely dissociated from the mortgage, then he is not within the meaning of Section 68(1)(a), T. P. Act as I construe it nor within the principle that security should be called up first before personal liability is enforced. The reason is that by engaging into an independent contract for a debt as evidenced by a promissory note the debtor indicates to the creditors by such a contract that he brings an independent personal liability to answer the loan apart from what inheres in a mortgage with personal liability. To repeat what I have already said the promissory note in this case on which alone the suit is based is an independent and distinct cause of action apart from the mortgage. The juristic difference in this respect is as similar as the difference between a suit on the promissory note and a suit on the original consideration. Although the consideration is the same for the promissory note and the original loan they are regarded in law as distinct and separate causes of action so that although a suit on the promissory note has failed a suit on the original loan may be competent as pointed out by the Privy Council in 'Pavana Reena v. Pana Lana' (1913) 41 Ind App 142 (PC). The English Court of Appeal decided the same principle in 'Wegg Prosser v. Evans' (1895) 1 QB 108 in respect of a cheque & a guarantee, although the consideration for both was the same. Therefore although the consideration is the same both for the promissory note as well as the mortgage the debtor in such a suit on the note, cannot turn round and say that creditor must exhaust the security first before enforcing the personal liability which he has created independently of the terms of the security. To allow him to do that will be to confound one cause of action with another independent and distinct cause of action.'
10. On behalf of the respondents reliance was placed on a decision of the Division Bench of this Court in the case of Sm. Manoda Sundari Saha v. Mercantile Bank Ltd. reported in (1979) 1 Cal LJ 580. In that case an application was made by the appellant for stay of the suit. There the appellant maintained several accounts with the respondent bank with overdraft facilities and executed Promissory notes and deeds of hypothecation and deposited title deeds as collateral security. This plaintiff Bank instituted a suit for recovery of the debt due from her. The appellant made an application to the court for stay of the suit under Section 68(2) of the T. P. Act, 1888 (1882?) on the ground that it was a suit for recovery of mortgage money under Section 68(1)(a) of the said Act and Section 68 of the Act was attracted. The learned Judge dismissed the application. On an appeal the Division Bench upheld the order of the learned Trial Judge. In that case two decisions in Sukhadakanta Bhattacharjee (AIR 1934 Cal 73) (supra) and Nitya Nanda Ghose : AIR1953Cal208 (supra) were relied on. The Division Bench quoted in extenso the various passages from those two decisions although some of such passages are not known within quotations, obviously due to the printing errors. In that case the Court was more concerned with the exercise of the discretion by the learned Judge in refusing to stay the suit under Section 68(2) of the said Act but the court impliedly accepted the contention that Section 68(1)(a) had no application on the facts of that case. The Court observed in paragraph 16 (at p. 591) as follows.
'The suit in the instant case is for recovery of the sum alleged to be due and payable by the appellant No. 1 the principal debtor to the bank for realisation of the securities furnished by the deeds of hypothecation and also enforcement of the guarantee. The present suit is also for adjudication of the right of the bank to the various securities created by the deeds of hypothecation vis-a-vis the claim made by the Firm, the 5th defendant in the suit and the 2nd respondent in the appeal, who is threatening to interfere with the right of the bank to the said securities. The firm has been impleaded as a party for adjudication of the question of the bank's right to the security and the determination of the question of priority if necessary. The facts and circumstances of the case go to indicate that the various securities of the bank created by the appellant No. 1 by the deeds of hypothecation executed by the said appellant are in jeopardy and the Bank for proper preservation, protection and realisation of the securities has to take necessary steps. For the said purpose the bank has instituted this suit impleading the Firm as a defendant and the Bank has also made an application for appointment of a Receiver and for other reliefs in the suit filed by the bank. The refusal to stay the suit by the learned judge in exercise of the discretion conferred on her in the facts and circumstance of this case cannot therefore be said to be unjustified. The nature and the scope of the suit and the facts and circumstance of the case clearly justify the order of the learned Trial Judge refusing to exercise the discretion in favour of the stay of the suit and the further proceedings even if the suit is held to be a suit to which Section 68(1)(a) of the Act is attracted.'
11. To attract the provisions of Section 68 of the Transfer of property Act it is necessary that there should be a suit for recovery of mortgage money and the suit must be by a mortgagee against the mortgagor for the mortgage money on the basis of the mortgagor's personal covenant. The instant suit has not been instituted by the plaintiff Bank in the capacity as mortgagee, for mortgage money. The claim of the Bank is for a money decree which was advanced in the overdraft account, and realisation of its securities mentioned in the Deeds of Hypothecation, for enforcement of the guarantee given by the appellants and for due preservation of the bank's securities. The personal liability of the appellants in the instant case arises not on the mortgage and the personal liability has been created by independent transactions like the execution of the deeds of hypothecation, Promissory Notes, acknowledgments of liability and also by giving personal guarantee which are not connected with the mortgage. It may be mentioned that in the case of Sukhadakanta v. Jogineekanta (AIR 1934 Cal 73) (supra) the Court also noted the fact that there was difficulty in the plaintiffs way in that case because no cash money was advanced and the consideration money of Rs. 12,000/- was made up of the items mentioned earlier in this judgment. The Court observed :
'If the debt was to be sued upon, it was the different items in respect of which the liability was to be pleaded and proved and the mortgage could only be pleaded as evidence of admission or acknowledgment of the said liability. The plaint has not been framed in that way. On the plaint, as framed, the suit could not possibly be treated as a suit for recovery of the said items.'
12. It is therefore evident that the Court has to examine the frame of the suit and come to the conclusion whether, or not the suit is on the mortgage for realisation of the mortgage money. As indicated earlier the present suit, on a proper construction of the pleadings, is not and cannot be a suit by the creditor qua mortgagee. It is a suit essentially to enforce the promissory note and the agreements of guarantee.
13. The contention of Mr. Sarkar, learned Advocate for the appellants can be tested in the light of another well-settled principle. A creditor is not bound to exhaust his remedies against the principal debtor before suing the surety and that when a decree is obtained against the surety it may be enforced in the same manner as a decree for any other debt. In this case the appellants are the sureties. The principal debtor has not preferred any appeal. The plaintiff has proceeded against the guarantors on the basis of the agreements of guarantee. A creditor can sue the surety even before exhausting the remedies against the principal debtor. The equitable mortgage in this case was created by the principal debtor and not by the appellants, the guarantors. On behalf of the respondents reliance has been placed on a judgment of the Supreme Court in the case of Bank of Bihar Ltd. v. Dr. Damodar Prasad reported in : 1SCR620 . In that case the plaintiff bank lent moneys to the defendant 1 Dr. Damodar Prosad on the guarantee of the defendant 2. On the date of the suit Damodar Prasad was indebted to the plaintiff for diverse amounts. In spite of demands neither he nor the guarantor paid the dues. The plaintiff filed a suit against them in the Court of the Subordinate Judge 1st Court, Patna, claiming a decree for the amount due. The Trial Court decreed that suit against both the defendants. While passing the decree, the Trial Court directed that the plaintiff bank shall be at liberty to enforce its dues in question against defendant No. 2 only after having exhausted its remedies against defendant 1. The plaintiff filed an appeal challenging the legality and propriety of this direction. The High Court dismissed the appeal. The plaintiff has filed the appeal after obtaining a certificate. From the judgment of the Supreme Court it appears that the guarantee bond in favour of the plaintiff bank is dt. June 15, 1951. The surety agreed to pay and satisfy the liabilities of the principal debtor up to Rs. 12000 and interest thereon two days after demand. The bond provided that the plaintiff would be at liberty to enforce and to recover upon the guarantee notwithstanding any other guarantee, security or remedy which the bank might hold or be entitled to in respect of the amount secured. Supreme Court observed :
'The demand for payment of the liability of the principal debtor was the only condition for the enforcement of the bond. That condition was fulfilled. Neither the principal debtor nor the surety discharged the admitted liability of the principal debtor in spile of demands. Under Section 128 of the Contract Act, save as provided in the contract, the liability of the surety is coextensive with that of the principal debtor. The surety became thus liable to pay the entire amount. His liability was immediate. It was not deferred until the creditor exhausted his remedies against the principal debtor.'
'Before payment the surety has no right to dictate terms to the creditor and ask him to pursue his remedies against the principal in the first instance. As Lord Eldon observed in Writ v. Simpson. (1802) 6 Ves Jun 714 at P. 734 : 31 ER 1272 at p. 1282; 'But the surety is a guarantee; and it is his business to see whether the principal pays, and not that of creditor. 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 the principal in some other proceedings.'
14. Thus if a suit can be filed, decree obtained and executed against the guarantors before any suit is instituted against the principal debtor for enforcement of the security given by him in other words before the remedies are exhausted against the principal debtor, on a parity of reasoning the creditor can sue on promissory note and the agreements of guarantee for realisation of his dues. The guarantors in any event cannot restrain an action against them by the creditor on the ground that the creditor has not exhausted his remedies against the principal debtor. The very object of the guarantee will be defeated if the creditor is asked to postpone the remedies against the surety. The banking company obtains guarantee as a collateral security in consideration of granting cash credit facilities or loan to the principal debtor. This security may become useless if his right against the surety is postponed till the creditor exhausts his remedies against the principal debtor. A creditor is not obliged to wait until the security is fully realised by appropriate action. In that process he may suffer as ultimately he may not get anything from the guarantor either. The creditor has acquired a right to immediate payment from the guarantors. The contention of the appellants if accepted would make the guarantee illusory. Neither law nor equity supports the contention raised by the appellants.
15. Before parting with this case it is necessary to refer to another decision of the Supreme Court relied on by the appellants, in the case of State Bank of Saurashtra v. Chitranjan Rangnath Raja, reported in : 3SCR915 . In that case the bank has given a cash credit facility to a person as against two securities offered by him, namely, (1) the pledge of goods to be kept under lock and key under supervision of the bank and (ii) personal guarantee of the surety. The pledge and the personal guarantee were not two independent transactions but they formed part and parcel of one composite transaction. The surety himself agreed to give personal guarantee on the specific understanding and with the full knowledge of the bank that the principal debtor was offering another security, namely, pledge of goods. The surety in good faith contracted to offer personal guarantee on the clear understanding that the principal debtor has offered security by way of pledge of goods and the goods were to be in the custody of the creditor bank. It was concurrently found that the bank was utterly negligent with regard to the safe keeping and handling of pledged goods and the security of pledged goods was lost on account of the negligence of the bank. On the aforesaid facts the Supreme Court held that in the circumstance aforesaid Section 141 of the Contract Act 1872 would be attracted. Supreme Court held that even if the surety of personal guarantee is not aware of any other security offered by the principal debtor yet once the right of the surety against the principal debtor is impaired by any action or inaction which implies negligence appearing from lack of supervision undertaken in the contract, the surety would be discharged under the combined operation of Sections 139 and 141 of the Act.
16. This case is distinguishable on facts. In that case the bank was prevented from taking recourse against the surety because the bank had in its possession various valuable properties and assets, belonging to the principal debtor and which were lost through the negligence of the Bank itself. Because of the negligence of the Bank which resulted in the loss of property it was held that Section 141 of the Contract Act came into operation. These are not the facts in the instant case before us. There is no such allegation that security has been lost because of the negligence on the part of the Bank. On the contrary, in the instant case a suit has been filed by the Bank to enforce the equitable mortgage in the appropriate court.
17. For the reasons aforesaid we are of the view that there is no merit in this appeal. The appeal fails and is dismissed with costs. All interim orders are vacated. Filing of paper book is despensed with. Undertaking is discharged.
Dipak Kumar Sen, J.
18. I agree.