The High Court held that guarantors under a continuing guarantee remain liable despite the statute of limitations barring the creditor's claim against the principal debtor, provided the debt remains unsettled and the guarantee contract lacks a demand stipulation.
Second Appeal dismissed; pending interlocutory applications dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE THOMAS P.JOSEPH
FRIDAY, THE 13TH DAY OF JULY 2012/22ND ASHADHA 1934
RSA.No. 890 of 2012 ()
AS.112/2006 of SUB COURT, OTTAPPALAM OS.3/2000 of MUNSIFF-MAGISTRATE COURT,PATTAMBI
APPELLANT(S)/APPELLANT/3RD DEFENDANT:
P.V.GOPINATHAN, AGED 57 YEARS S/O.LATE RAMAN NAIR, PANIKKAVEETTIL HOUSE PARADUR AMSOM AND DESOM, OTTAPALAM TALUK PALAKKAD DISTRICT, PARUDUR POST.
BY ADVS.SMT.T.D.RAJALAKSHMI
SRI.R.SREEHARI
RESPONDENT(S)/RESPONDENTS/PLAINTIFF, IST DEFENDANT AND SUPPL. DEFENDANTS 4 TO 7:
PARUDUR POST, PIN.679 312.
W/O.LATE SIVASANKARAN NAIR
THIS REGULAR SECOND APPEAL HAVING COME UP FOR ADMISSION ON 13-07-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
THOMAS P. JOSEPH, J.
R.S.A. No.890 of 2012
Dated this the 13th day of July, 2012.
JUDGMENT
The effect and extent of a continuing guarantee so far as the law of limitation is concerned, is the question raised for a decision in this Second Appeal. It arises at the instance of the 3rd defendant in O.S.No.3 of 2000 of the Munsiff-Magistrate's Court, Pattambi and the confirmation of that judgment and decree by the learned Sub Judge, Ottapalam in A.S.No.112 of 2006.
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and respondents 3 to 6 contended that the 2nd respondent has not executed any revival letter and that the suit has become wholly time barred not only against the 2nd respondent but also against the deceased 2nd respondent and the appellant. They contended that the revival letter allegedly executed by the 2nd respondent is a concocted document.
Margaret Lalita samuel v. Indo Commercial Bank Ltd. (AIR 1979 SC 102) relied on by the courts below has been distinguished by the Supreme Court in
Syndicate Bank v. Channaveerappa Beleri (AIR 2006 SC 1874) . According to the learned counsel, in the absence of a demand, 1st respondent could not make the appellant and the deceased 2nd defendant liable even on the strength of
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Ext.A3, continuing guarantee. No such demand is proved in this case though it is stated in the plaint.
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guarantors is discharged? The courts below referred to the decisions in Mrs. Margaret Lalita samuel v. Indo Commercial Bank Ltd. (supra), Union Bank of India, Ernakulam v. T.J.Stephen and others (AIR 1990 Kerala 180) and B.G.Vasantha v. Corporation Bank, Mangalore & another ((2005) 10 SCC 215) to hold that notwithstanding that personal liability of the 2nd respondent/1st defendant, the principal debtor stood discharged by the law of limitation, the guarantors continued to be liable on the strength of Ext.A3, continuing guarantee in so far as the account remained alive in the sense that it was not settled.
Syndicate Bank v. Channaveerappa Beleri (supra). There, what is held in paragraph 11 is that even in the case of continuing guarantee, the period of limitation will begin to run when a demand is made and the guarantor commits breach by not complying with the demand.
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of law or otherwise settled by the parties. Therefore, on the strength of Ext.A3, continuing guarantee, liability of the guarantors continued notwithstanding that the personal remedy against the 2nd respondent stood discharged.
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plaint and that forms part of the pleadings. What remained is only an interpretation of the provisions on the strength of settled position of law as to the liability of the guarantors.
Second Appeal is dismissed.
All pending interlocutory applications will stand dismissed.
THOMAS P.JOSEPH, Judge.
cks
2 issues framed by the court
Whether liability of guarantors under a continuing guarantee continues even when the principal debtor's claim is barred by limitation.
Whether a demand by the creditor is a precondition to invoking liability under a continuing guarantee when the contract lacks such a stipulation.
Colour shows how this judgement treated each authority
Mrs. Margaret Lalita Samuel v. Indo Commercial Bank Ltd.Affirmed¶14
Mrs. Margaret Lalita Samuel v. Indo Commercial Bank Ltd. (AIR 1979 SC 102) · Who else cites this
Syndicate Bank v. Channaveerappa BeleriDistinguished¶12
Syndicate Bank v. Channaveerappa Beleri (AIR 2006 SC 1874) · Who else cites this
Union Bank of India, Ernakulam v. T.J.Stephen and othersAffirmed¶14
Union Bank of India, Ernakulam v. T.J.Stephen and others (AIR 1990 Kerala 180) · Who else cites this
B.G.Vasantha v. Corporation Bank, MangaloreAffirmed¶10
B.G.Vasantha v. Corporation Bank, Mangalore & another ((2005) 10 SCC 215) · Who else cites this
1 provisions across 1 enactments
P.V.Gopinathan
The Nedungadi Bank Ltd
Thomas P. Joseph
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
