Remanded

Mr S Madhusudhan v. M/S Canara Bank

Karnataka HC19 Jul 2021RFA/147/2014

Case brief

AI extract

What is this about?

TheHigh Court of Karnataka allowed the revision filed by a guarantor challenging a recovery decree. Appearing for the first time on appeal, the appellant raised a limitation defence. The High Court remanded the matter to the trial court solely to examine the issue of limitation regarding the guarantor's liability.

What did the court decide?

The matter is remanded to the trial court to examine the issue of limitation regarding the appellant's liability as a guarantor.

Mr S Madhusudhan Vs M/S Canara Bank — Contract and Commercial Disputes | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 19^TH DAY OF JULY, 2021

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BEFORE

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THE HON’BLE MR. JUSTICE M.I.ARUN

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RFA NO.147 OF 2014 (MON)

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BETWEEN :

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MR. S. MADHUSUDHAN S/O MR. N.S.IYENGAR AGED ABOUT 63 YEARS R/AT NO.101, KT 26 6^TH MAIN, 8^TH CROSS MALLESHWARAM BANGALORE – 560 003 … APPELLANT

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(BY SRI. KARAN JOSEPH, ADVOCATE)

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AND :

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M/S.CANARA BANK

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CORPORATE CONSUMER FINANCE BRANCH INFANTRY ROAD, BANGALORE – 560 001 REP. BY ITS MANAGER

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MR. A.BALAKRISHNAN S/O MR. P.NARAYANAN NAIR AGED ABOUT 55 YEARS R/AT NO.30, 1, ‘A’ CROSS OLD HASB LAYOUT BEHIND SCT COLLEGE VIGYANAPURA NEW THIPPASANDRA POST BANGALORE – 560 075

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M/S.ENCLOTEK READY PANELS LTD. NO.40, ROAD NO.3, 1^ST PHASE JIGANI INDUSTRIAL AREA BANGALORE – 562 106 REP. BY ITS MANAGING DIRECTOR

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THE MANAGING DIRECTOR M/S.ENCLOTEK READY PANELS LTD. NO.40, ROAD NO.3, 1^ST PHASE JIGANI INDUSTRIAL AREA BANGALORE 562 106 … RESPONDENTS

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(BY SRI. K.SURESH, ADV. FOR R1; VIDE COURT ORDER DATED 19.09.2016 NOTICE TO R2 TO R4 IS HELD SUFFICIENT)

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THIS RFA IS FILED UNDER SECTION 96 OF THE CODE OF CIVIL PROCEDURE, 1908 AGAINST THE JUDGMENT AND DECREE DATED 25.10.2013 PASSED IN O.S.NO.5721/2010 ON THE FILE OF THE 42^ND ADDL.CITY CIVIL AND SESSIONS JUDGE, BANGALORE, DECREEING THE SUIT FOR RECOVERY OF MONEY.

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THIS RFA COMING ON FOR HEARING THIS DAY, THE COURT THROUGH VIDEO CONFERENCE DELIVERED THE FOLLOWING:

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JUDGMENT

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Aggrieved by the judgment and decree dated 25.10.2013 passed by 42^nd Additional City Civil and

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Sessions Judge, Bangalore, in O.S.No.5721/2010, defendant no.2 therein has preferred this appeal.

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For the sake of convenience, the parties are referred to herein as per their status before the trial court.

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Respondent no.1/plaintiff filed O.S.No.5721/

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2010 contending that defendant no.1 availed of a loan from it under Canbudget Scheme by way of an application dated 09.10.2002 and a loan of Rs.1,60,000/was granted to defendant no.1. Defendant no.2 stood as guarantor to the said loan. Defendant nos.3 and 4 are one and the same, a Company incorporated under the Companies Act in which defendant no.1 was employed with. Defendant no.1 committed default in payment of the loan amount because of which, it was constrained to file O.S.No.5721/2010 for recovery of a sum of Rs.3,41,918/- with future interest @ 16.5% per annum compounded quarterly from the date of the suit till realisation with costs.

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4. Upon service of notice, defendant no.2 appeared

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through his Counsel before the trial court and has contested the suit. The suit was dismissed as against defendant nos.3 and 4. Defendant no.1 had remained absent and was placed ex parte .

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Based on the pleadings, the trial court framed

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the following issues for consideration:

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“1. Whether the plaintiff proves that defendant No.2 is the Co-obligant for the loan borrowed by defendant No.1 from the plaintiff on 11.10.2002 under Can Budget Scheme?

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Whether the plaintiff proves that loan carry interest at the rate of 14% p.a., and overdue interest at the rate of 2% p.a., in case of default?

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Whether the plaintiff proves that the defendants are in due of the suit amount?

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Whether the plaintiff is entitled for recovery of the suit amount from the defendants 1 and 2?

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What order or decree?”

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6. The plaintiff, to prove its case, examined two

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witnesses and got marked Exs.P1 to P11. Defendant no.2 got examined one witness and got marked two documents.

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Based on the pleadings and the evidence let in,

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the trial court has answered the above issues in the following manner:

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Issue No.1:In the affirmative. Issue No.2:In the affirmative. Issue No.3:In the affirmative. Issue No.4:In the affirmative. Issue No.5:As per final order for the following:

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Consequently, the suit of the plaintiff was decreed as under:

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ORDER

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“Suit of the plaintiff is decreed with costs as follows:

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The defendants 1 and 2 are jointly and severally liable to pay a sum of Rs.3,41,918/(Rupees three lakh forty one thousand nine hundred and eighteen only) with future interest at

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the rate of 14% per annum on the principal amount of Rs.1,60,000/- from the date of suit till realisation.

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Suit against the defendants 3 and 4 is already dismissed.

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Draw decree accordingly.”

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Aggrieved by the aforementioned judgment and

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decree passed in O.S.No.5721/2010, defendant no.2 therein has preferred this appeal.

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Heard the learned counsel for the appellant/defendant no.2 and respondent no.1/plaintiff.

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It is the specific case of the appellant/defendant

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no.2 that he has not stood as a guarantor for the loan

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alleged to have been granted in favour of defendant

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no.1 by the plaintiff. He has denied the execution of

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the documents. He has also alleged fraud and fabrication of the documents. However, it is

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interesting to note that he has not taken any action against defendant no.1 nor has lodged any complaint against the plaintiff-Bank for such fabrication. No iota of evidence is produced to prove that his signatures were forged on the deed of guarantee and letter of co-obligant. I find no error in the conclusion of the trial court that Defendant No.1 borrowed a loan of Rs. 1,60,000/- from plaintiff bank and has committed default in repayment of the loan and that defendant No.2 has stood guarantor for the said loan.

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However, defendant no.2 has stated that as per the plaintiff-Bank, loan was sanctioned on 11.10.2002 and the same had to be repaid within 48 equal monthly instalments with due interest and all the instalments fell due according to the Bank by the end of 2006. The suit was filed on 16.08.2010. It is stated that defendant no.2 has not renewed his deed of guarantee. The trial court ought to have dismissed

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the suit on the ground of limitation. Attention of the

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court is drawn to Exs.P7 and P8 which are revival letters acknowledging the debt. It is noticed that Exs.P7 and P8 are only signed by the borrower and not the co-obligant. Reliance is placed on Section 135 of the Indian Contract Act, which reads as under:

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“ 135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor. - A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract.”

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At this juncture, the learned counsel appearing

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for respondent no.1/plaintiff submits that the issue of limitation was never raised by the appellant/defendant no.2 before the trial court and that it is being raised for the first time. He further submits that he has necessary evidence to prove that defendant no.2 has

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agreed for granting further time for repayment of dues by defendant no.1. He submits that the matter may be remanded back to the trial court to enable him to produce the necessary evidence to prove that the suit is not barred by limitation as against defendant no.2. Learned counsel for the appellant/defendant no.2 also submits that the matter may be remanded back to the trial court.

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The submissions of the learned counsel appearing for respondent no.1/plaintiff and the appellant/defendant no.2 are placed on record.

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Hence, the following:

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ORDER

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(i) The appeal is allowed. The matter is remanded to the trial court only insofar as it relates to examining the issue of limitation in

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order to fasten the liability on defendant no.2/appellant;

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(ii) The findings of the trial court in other aspects are confirmed;

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(iii) Both the parties are directed to appear before the trial court on 16^th August 2021 without any further notice;

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(iv) Parties to bear their own costs;

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(v) If any amount is deposited by the appellant before this court, the same shall be refunded to the appellant;

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(vi) Office to verify and refund the court fee to the appellant, if he is so entitled in accordance with law.

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Sd/JUDGE

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hkh.

Mr S Madhusudhan v. M/S Canara Bank

Case brief

What is this about?

What did the court decide?

Mr S Madhusudhan v. M/S Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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