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Punjab National Bank Vs. Mehra Brothers (P) Ltd. (In Liqn.) and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberSuit No. 1659 of 1960
Judge
Reported inAIR1983Cal335,[1983]54CompCas541(Cal)
ActsContract Act, 1872 - Sections 133 and 137
AppellantPunjab National Bank
RespondentMehra Brothers (P) Ltd. (In Liqn.) and ors.
Advocates:B.K. Chatterjee, Adv.
Excerpt:
- .....nos. 2, 3 and 4 from their liability towards the plaintiff bank inasmuch as the plaintiff bank's claim against the company (in liquidation) had been admitted by the liquidator and settled at rs. 8887.09. in the case reported in : air1959mp26 it has been held that the liability of a surety is co-extensive with that of the principal debtor and his liability to pay the debt is not absolved by creditor's omission to sue the principal debtor as a creditor is not bound to exhaust his remedy against the principal before suing the surety and a suit may be maintained against the surety, though the principal has not been sued.8. in the case reported in : air1957pat256 it has been held that a suit to enforce a contract of guarantee can succeed even if the plaintiff has not ex-hausted his.....
Judgment:
ORDER

Padma Khastgir, J.

1. The present suit had been filed by the Punjab National Bank in the year 1960 against Mehra Brothers (Private) Ltd. (now in liquidation), Prem Pal Mehra, Master Nandalal and Raj Kumar Mehra. The claim by the plaintiff Bank against the defendant No. 1, Company was for recovery of a sum of Rs. 8887/- as a principal debtor and the claim against the defendant Nos. 2, 3 and 4 was that of a Guarantor in respect of the loan granted by the Plaintiff Bank to the Company. Such Guarantee was given by the defendant Nos. 2, 3 and 4 in their personal capacity for due repayment of the money, which the defendant No. 1 owed to the plaintiff bank. On 15th December, 1951 M/s. Mehra Brothers Private Ltd. was wound up and the Court Liquidator was appointed Official Liquidator to represent the said Company in liquidation. Leave was obtained on the 7th November, 1960 to proceed against the Company in liquidation and the other defendants for recovery of the Bank's dues.

2. Thereafter an application was made by the Plaintiff-Bank for leave to file its claim before the Official Liquidator and by an order dt. the 4th May, 1956 the Official Liquidator was directed to adjudicate upon the debt payable by the Company (in liquidation) to the Bank.

3. It appears that the claim to the extent of Rs. 8,887.09P had been admitted by the Official Liquidator in favour of the Plaintiff-bank and a sum of Rs. 444.35P had been paid to the Manager of the Plaintiff-bank towards the first dividend.

4. The suit came up for hearing before this Court and the learned lawyer appearing on behalf of the plaintiff bank submitted that as the claim of the plaintiff bank against the defendant company (in liquidation) had been admitted by the Official Liquidator, the Bank would not proceed against the Company (in liquidation); but the Bank intended to proceed against the other defendants for recovery of the sum claimed against the other defendants.

5. At that stage an objection was taken by the learned lawyer appearing on behalf of the defendants Nos. 2, 3 and 4 on two grounds. The first ground was that no leave was obtained by the plaintiff-bank to proceed against the Official Liquidator under Section 446 of the Companies Act and secondly, it had been submitted that by preferring a claim before the Liquidator, the Company had in full and final settlement accepted the bank's dues from the Liquidator. Under the circumstances, the liability of the guarantors has ceased and/or lapsed.

6. In support of this contention Mr. D' Rose, appearing for the defendant Nos. 2, 3 and 4 craved reference to Sec-tion 128 of the Contract. Act, which provides that the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract clause. He also craved reference to a case reported in in which it was held that under the Contract Act, by virtue of Section 128 surety's liability is co-extensive with that of the principal debtor and where there is an application by the principal debtor under Section 6 of the Registration for Relief of Agricultural Indebt-ness Act, 1957 for scaling down his decretal liabilities, it was held that by virtue of Section 126 of the Contract Act, surety was entitled to the benefit of the outcome of the application under Section 6 of the Act of 1957, and where the principal debtor's liability was diminished in appeal, surety's liability was also diminished in like proportion. Mr. D' Rose referred to Section 133 of the Contract Act and submitted that there had been a variance, made in the agreement as to the liability of the principal debtor without the surety's consent. Under the circumstances, the liability of the sureties is discharged and the defendants Nos. 2, 3 and 4 are not liable to the plaintiff-bank any longer inasmuch as the plaintiff bank had accepted the said sum of Rupees 8,887.09 from the Liquidator.

7. Mr. B. K. Chatterjee, appearing on behalf of the plaintiff bank submitted that Section 137 of the Contract Act, provides that mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety. In that respect Mr. Chatterjee craved reference to the cases reported in : AIR1957Pat256 , : AIR1959MP26 and : [1969]1SCR620 . It would appear from the decisions referred to by Mr. Chatterjee that any forbearance on the part of the plaintiff to sue the principal debtor would not absolve the liability of the Guarantor in respect of the claim of the litigant. Nothing has been shown be fore me to indicate that there was any clause in the Deed of Guarantee which would absolve the defendant Nos. 2, 3 and 4 from their liability towards the plaintiff bank inasmuch as the plaintiff bank's claim against the company (in liquidation) had been admitted by the Liquidator and settled at Rs. 8887.09. In the case reported in : AIR1959MP26 it has been held that the liability of a surety is co-extensive with that of the principal debtor and his liability to pay the debt is not absolved by creditor's omission to sue the principal debtor as a creditor is not bound to exhaust his remedy against the principal before suing the surety and a suit may be maintained against the surety, though the principal has not been sued.

8. In the case reported in : AIR1957Pat256 it has been held that a suit to enforce a contract of guarantee can succeed even if the plaintiff has not ex-hausted his remedies against the principal debtor. In the case reported in : [1969]1SCR620 it has been held that under Section 128, save as provided in the Contract, the liability of the surety is co-extensive with that of the principal debtor. The surety thus becomes liable to pay the entire amount. His liability is immediate. It is not deferred until the creditor exhausts his remedies against the principal debtor.

9. In view of Section 137 of the Contract Act and also in view of various judgments on this point, the surety's liability towards the creditor remains uneffected, even when the creditor has chosen not to sue the principal debtor.

10. In the instant case, not only the plaintiff bank filed a suit against the principal debtor but also against the guarantors. By preferring its claim before the Liquidator and its claim being admitted by the Liquidator, the plaintiff bank has not foregone its right to proceed against the guarantors and such preference of claim before the Liquidator did not amount to foregoing their claim against the guarantors and also that did not amount to any variation of the contract that was entered into by and between the parties.

11. In the circumstances, I am of the view that the plaintiff bank was entitled to proceed against the guarantors in this suit. In the result, I disallow the objection that has been raised by the guarantors in this suit.


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