Petitioner, a guarantor who paid Rs.46 lakhs to clear defendants' bank loan, sought recovery under Section 140 of the Indian Contract Act. The High Court applied the statute and decreed recovery against the principal debtors.
Decree against defendants 1 & 2 for Rs.46,46,000 with interest at 18% p.a. from 18.10.2010; suit against defendant 3 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.
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 19.01.2018
CORAM
THE HON'BLE MR. JUSTICE R.SUBRAMANIAN
C.S.No.142 of 2011
1. A.M.Deenathayalan
2. D.Shanthi ... Plaintiffs
Vs.
1. C.S.Thangaraj
2. C.S.Prabakar
3. Bank of Baroda,
Rep by its Manager,
ARM Branch,
Triplicane,
Chennai – 600 005. ...Defendants
Prayer:- Plaint filed under Order 4 Rule 1 of Original Side Rules read with Order 7 Rule 1 to 6 of Civil Procedure Code to pass a judgment and decree against the defendants 1 & 2 for
a. Recovery of a sum of Rs.46,46,000/- with interest at 24% per annum from 18.10.2010 till the date of realization;
JUDGMENT
The suit is one for recovery of a sum of Rs.46,46,000/- with
interest at Rs.24% per annum from 18.10.2010 till the date of realisation. http://www.judis.nic.in
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The plaintiff stood as a guarantor for repayment of the loan that was borrowed by the defendants 1 & 2 from Bank of Baroda. According to the plaintiff since defendants 1 & 2 did not repay the loan, the Bank had initiated proceedings under SARFAESI Act and the property belonging to the plaintiff was sought to be brought for sale. Under such threat of sale, the plaintiff had negotiated for a one time settlement with the Bank and the Bank had agreed for such settlement at Rs.46,00,000/- by letter dated 08.09.2010, which is marked as Ex.P.13. It is seen from Ex.P.16 that the plaintiff has paid a sum of Rs.46 lakhs as offered by him and the amount has been credited to the loan account of defendants 1 and 2 namely A/c. M/s.Sakthi Mines of which defendants 1 & 2 are partners. The plaintiff seeks
recovery of the said sum of Rs.46,00,000/- with subsequent interest.
that as the surety who has guaranteed payment of the debt and the said guarantee having been invoked, the plaintiff is entitled for the money from
the principal debtors as per Section 140 of the Indian Contract Act. The defendants have remained ex-parte. The first plaintiff has examined himself as PW1. Ex.P.1 to Ex.P.20 have been marked on the side of the plaintiff. From Ex.P.13 and Ex.P.16 the fact that the plaintiff has paid a sum of Rs.46,00,000/- in Bank of Baroda is proved. In view of the same, the suit is decreed as against the defendants 1 & 2 with costs. They are liable to pay
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Rs.46,46,000/- along with interest at Rs.18% per annum from 18.10.2010 till
date of realisation. The suit against the third defendant stands dismissed.
19.01.2018
Index: Yes/No
Internet:Yes/No
Speaking/Non speaking order
dpq
List of the witnesses examined on the side of the plaintiffs:
P.W.1 A.Deenathayalan
P.W.2. D.Shanthi
List of Exhibits marked on the side of the plaintiffs:
| Sl. No. |
Exhibits | Description of Documents |
|---|---|---|
| 1 | Ex.P1 | Original Sale Deed dated 05.08.1987 |
| 2 | Ex.P2 | Photo Copy of deed of induction of partners dated 10.09.1990 |
| 3 | Ex.P3 | Photo copy of deed of resignation of partners dated 15.10.1990 |
| 4 | Ex.P4 | Photo Copy of deed induction of partners dated 29.11.1991 |
| 5 | Ex.P5 | Photo Copy of deed of reconstitution of firm dated 06.02.1992 |
| 6 | Ex.P6 | Photo copy of death certificate dated 08.12.2007 |
| 7 | Ex.P7 | Photo copy of legal heir certificate dated 08.12.2007 |
| 8 | Ex.P8 | Photo copy of letter of plaintiffs to 3rddefendant dated 02.07.2009 |
| 9 | Ex.P9 | Photo copy of order of recovery officer dated 30.12.2009 |
| 10 | Ex.P10 | Photo copy of notice form 3rddefendant dated 05.02.2010 |
| 11 | Ex.P.11 | Photo Copy of letter of recovery officer dated 22.07.2010 |
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R.SUBRAMANIAN, J.,
dpq
12 Ex.P.12 Photo Copy of letter to 3 rd defendant dated 30.08.2010
13 Ex.P.13 Photo Copy of letter of 3 rd defendant dated 08.09.2010
14 Ex.P.14 Photo Copy of letter of plaintiffs dated 19.10.2010
15 Ex.P.15 Photo Copy of letter of 1 st plaintiff dated 28.10.2010
16 Ex.P.16 Photo Copy of letter of 3 rd defendant dated 28.10.2010
17 Ex.P.17 Photo Copy of complaint lodged by plaintiffs dated
09.03.2010
18 Ex.P.18 Photo Copy of order DRT-III, Chennai dated 03.01.2011
19 Ex.P.19 Photo Copy of legal notice dated 03.11.2010
20 Ex.P.20 Photo copy of returned covers.
List of the witnesses examined on the side of the defendants: Nil.
List of Exhibits marked on the side of the defendants: Nil.
C.S.No.142 of 2011
To The Sub Assistant Registrar Original Side, High Court, Madras.
3 issues framed by the court
Whether a guarantor who has paid the debt of principal borrowers is entitled to recover the amount from them under Section 140 of the Indian Contract Act.
Whether the suit against the main debtors should be decreed for recovery of the guaranteed amount paid by the petitioner.
Whether the suit against the third defendant (the bank as a separate litigant in the O4 application context) should be dismissed on merits.
3 provisions across 3 enactments
A.M.Deenathayalan
D.Shanthi
C.S.Thangaraj
C.S.Prabakar
Bank of Baroda
R.Subramanian
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
