Allowed

The Nalunackal Service Co-Op. Bank Ltd. v. P.v.John

Kerala HC2 Jun 2017AS/536/2001

Case brief

AI extract

What is this about?

The High Court allowed the Bank's appeal, holding that the guarantor's promise to cover the principal debtor's deficit was valid consideration under the Indian Contract Act. The decree against the first defendant was restored for the realization of amounts defalcated by the employee.

What did the court decide?

The appeal allowed and the suit decreed for the plaint amount of ` 1,56,004.96 with interest.

The Nalunackal Service Co-Op. Bank Ltd. Vs P.v.John — Cooperative Societies | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE V.CHITAMBARESH & THE HONOURABLE MR. JUSTICE SATHISH NINAN

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FRIDAY, THE 2ND DAY OF JUNE 2017/12TH JYAISHTA, 1939

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AS.No. 536 of 2001 ( )

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AGAINST THE JUDGMENT AND DECREE IN OS 10/1995 of ADDL.SUB COURT,KOTTAYAM DATED 24-02-2001

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APPELLANT(S): PLAINTIFF IN O.S.NO.10/1995

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THE NALUNACKAL SERVICE CO-OPERATIVE BANK LTD. NO.296 NALUNACKAL P.O., CHANGANASSERY, REPRESENTED BY ITS SECRETARY, S.MOLYKUTTY.

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BY ADVS.SRI.C.T.JOSEPH

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SRI.K.R.GANESH SRI.C.JAYACHANDRAN SRI.N.SAJU THOMAS

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RESPONDENT(S):Defendant No.2 and addl.defendants 3 to 8 in O.S.10/1995

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P.V.JOHN, S/O.VARHESE, NOW RESIDING AT PARAPATTU HOUSE, NALUNACKAL P.O., VAKATHANAM VILLAGE, CHANGANASSERY.

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THANKAMMA ALIAS ACHAMMA VARGHESE, PARAPATTU HOUSE, NALUNACKAL P.O., VAKATHANAM.

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ANNAMMA, MALAYIKARUVELIL, MEENPARA P.O., PUTHENKURISH, ERNAKULAM DISTRICT.

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P.V.VARGHESE, MANAGER, HOTEL PARADISE, MALLAPPALLY, CHANGANNUR.

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P.V.UMMEN, PARAPATTU HOUSE, NALUNACKAL P.O., VAKATHANAM.

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P.V.KURIAKOSE, PARAPATTU HOUSE, THRIKODITHANAM P.O., CHANGANASSERY.

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P.V.JOYKUTTY, PARAPATTU HOUSE, THRIKODITHANAM P.O., CHANGANASSERY.

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R,R1,2 BY ADV. SRI.A.K.PILLAI R,R1,2 BY ADV. SRI.RAM MOHAN.G. R,R1,2 BY ADV. SRI.G.P.SHINOD

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THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 30.5.2017, THE COURT ON 2.6.2017 DELIVERED THE FOLLOWING:

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V.CHITAMBARESH & SATHISH NINAN, JJ.

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A.S.No. 536 of 2001

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------------------------Dated this the 2^nd day of June, 2017

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J U D G M E N T

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Chitambaresh, J.

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The second defendant who is the son of the first defendant was an employee of the plaintiff Bank and defendants 2 to 8 are the legal heirs of the first defendant who died pending suit. The Bank filed an arbitration case against defendants 1 and 2 for realisation of amounts allegedly defalcated by the second defendant under Section 69 of the Kerala Co-operative Societies Act, 1969. The first defendant was impleaded for the reason that he had executed Ext.A5 agreement guaranteeing the payment of amounts due from the second defendant by himself. The arbitration case as against the first defendant was eventually held to be not maintainable in terms of Section 69 of the Act as he was neither an employee nor a member. This was by virtue of

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A.S.No.536/2001

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Ext.A4 judgment in O.P.No.883/1989 and Ext.A1 judgment in W.A.No.167/1991 on the file of this Court at the instance of the the Bank and the second defendant.

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The second defendant was found liable to the Bank for a sum of ` 83,293.87 under Ext.A2 revised order in R.P.No.6/87 and Ext.A3 order in R.P.No.1/1993 in R.P.No.6/87 of the Kerala Co-operative Tribunal. The present suit has been filed by the Bank within three years therefrom to realise the amount from the first defendant on the basis of Ext.A5 agreement of guarantee. The court below has refused to recognise Ext.A5 agreement of guarantee on the premise that it is not supported by consideration even though its due execution has been upheld. A cursory look at Section 127 of the Indian Contract Act, 1872 shows that anything done or any promise made for the benefit of the principal debtor may be a sufficient consideration to the surety.

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A.S.No.536/2001

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The first defendant has bound himself

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responsible for any deficit in stock on account of the omission or commission of the second defendant to the Bank in Ext.A5

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letter of guarantee. Such a promise made for the benefit of the second defendant who is the principal debtor is undoubtedly a sufficient consideration to the first defendant for giving Ext.A5 letter of guarantee. The court below was in serious error in holding that Ext.A5 letter of guarantee lacks consideration and that liability cannot be clamped on the first defendant on that count. The first defendant is liable to the Bank for whatever amounts are due from the second defendant to the Bank in terms of Exts.A2 and A3 orders of the Kerala Co-operative Tribunal.

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There is no reason as to why a decree cannot be

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granted to the Bank as against the first defendant on the basis of Ext.A5 letter of guarantee and his property is reportedly

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A.S.No.536/2001

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under attachment before judgment. The suit is accordingly decreed for the plaint amount of ` 1,56,004.96 which shall carry interest at 9% per annum for the pre-decretal period and 6% per annum for the post decretal period. Whatever amounts have been recovered from the second defendant shall be given credit to (if not already done) in the proceedings for execution of the decree. It is made clear that the legal heirs of the first defendant shall be liable to the extent of the property inherited by them including the one said to be under attachment before judgment.

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The Appeal Suit is allowed. No costs.

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Sd/V.CHITAMBARESH, JUDGE

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Sd/SATHISH NINAN, JUDGE

nj/30.05.2017

//True copy//

P.S. to Judge.

A.S.No.536/2001

The Nalunackal Service Co-Op. Bank Ltd. v. P.v.John

Case brief

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The Nalunackal Service Co-Op. Bank Ltd. v. P.v.John

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