Dismissed

Balwant Singh & Anr. v. Bank of India & Ors.

Punjab & Haryana HC19 Jan 2009RSA/315/2009

Case brief

AI extract

What is this about?

In an oral judgment, the High Court of Punjab and Haryana allowed a condonation of delay application under Section 5 of the Limitation Act. Substantively, in a second appeal concerning a loan recovery suit, the court dismissed the appeal, holding that guarantors who accepted to be treated as principal debtors could not claim discharge under Section 139 of the Contract Act.

What did the court decide?

The condonation of delay application (C.M.) was allowed. The second appeal was dismissed with no merit.

Balwant Singh & Anr. Vs Bank of… — Contract and Commercial Disputes | Punjab & Haryana HC (2009)

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R.S.A. No. 315 of 2009 (O&M)

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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R.S.A. No. 315 of 2009 (O&M) Date of decision: 19.1.2009

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Balwant Singh and another

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....Appellants

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Versus

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Bank of India and others

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....Respondents

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CORAM: HON'BLE MR. JUSTICE VINOD K. SHARMA

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Present: Mr. V.K. Sandhir, Advocate, for the appellants.

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VINOD K. SHARMA, J (ORAL)

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C.M. No. 755-C of 2009

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This is an application under Section 5 of the Limitation Act for condoning the delay of 13 days in filing the present appeal.

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The plea raised is that delay has occurred due to wrong computation of limitation.

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For the reasons stated in the application, C.M. is allowed and the delay of 13 days in filing the appeal is condoned.

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R.S.A. No. 315 of 2009

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This regular second appeal is directed against the judgments and decree dated 2.4.2007 and 1.10.2008 passed by the learned Courts below vide which the suit filed by the respondent-bank for recovery of an amount from the appellant/defendants has been ordered to be decreed.

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The plaintiff/respondent-bank brought a suit for recovery of an

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R.S.A. No. 315 of 2009 (O&M)

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amount due from the principal debtor on the plea that loan was advanced to late Sh. Ram Lubhaya, who failed to repay the loan amount.

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The learned Courts below on appreciation of evidence recorded a concurrent finding of fact, that loan on agreed terms was advanced to Ram Lubhaya. He became defaulter, and the bank was thus entitled to recover the amount along with interest, jointly and severally from the principal debtor as also from guarantors.

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The appellant/defendants No. 4 and 5 were impleaded as defendants in pursuance to the deed of guarantee executed in favour of the bank.

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It was stipulated in the guarantee deed that the appellant/defendants would be treated to be principal debtor in the event of failure of the principal debtor, to pay the loan amount advanced.

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The suit was contested by the appellant/defendants No. 4 and 5 on the plea that their liability stood discharged as the bank had not taken steps to protect the hypothecated stocks in spite of notice having been issued to the bank, to take over the hypothecated stock.

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The plea was rejected by the learned trial Court. The finding of the learned trial Court was affirmed by the learned lower appellate Court by observing as under: -

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“This Court fails to appreciate as to how this ruling, which has been cited by the defendants, helps them and rather it clinches the matter and repels the contentions of the defendants that they are not liable or that they stand discharged on account of the negligence on the part of the plaintiff-bank to proceed against the hypothecated stock and the goods. They were required to prove that this negligence on the part of the bank impaired their eventual remedy against the principal borrower. There is nothing on the record to conclude that on account of this negligence of the bank, they have been impaired of their eventual remedy against the principal borrower. Therefore, they

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R.S.A. No. 315 of 2009 (O&M)

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were never discharged of their liability as guarantors and on the basis of the guarantee agreement executed by them, they are liable to pay the amount in dispute jointly and severally along with the legal heirs of the principal borrowers.”

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In the present case, it is not in dispute that the appellant/defendants are to be treated as principal debtors as the principal borrower failed to repy the loan amount.

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The learned counsel for the appellants contended that following substantial question of law arises for consideration: -

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"Whether in view of Section 139 of the Contract Act, on the facts and circumstances appellants stood discharged of their liability?"

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The learned counsel for the appellants contends that the learned Courts below mis-read the statement of PW-1 in not considering the fact that he had categorically admitted that after the death of Ram Lubhaya, the shop was being run by his widow. In spite of notice by the appellants/defendant, no inventry was made and the goods were allowed to be disposed of by the legal heirs of the principal debtor and thus, the learned Courts below were not justified in not accepting the plea of the appellant/defendants No. 4 and 5 that their liability stood discharged.

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However, this plea of the learned counsel for the appellants cannot be accepted, in view of the well reasoned findings recorded by the learned Courts below as referrred to above and also for the reason that once the appellants had accepted to be treated as principal debtor in the deed of guarantee, they were not entitled to claim the benefit under Section 139 of the Contract Act.

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Furthermore, the learned Courts below rightly held that no evidence was brought on record to show, as to how their right to recover the amount from principal debtor stood prejudiced so as to deny the right of recovery to respondent-bank. The learned Courts were right

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R.S.A. No. 315 of 2009 (O&M)

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in decreeing the suit. The findings of fact have been recorded by the learned Courts below on appreciation of evidence.

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The substantial question of law as raised is answered against

the appellants.

No merit.

Dismissed.

(Vinod K. Sharma) Judge

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January 19, 2009 R.S.

Balwant Singh & Anr. v. Bank of India & Ors.

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Balwant Singh & Anr. v. Bank of India & Ors.

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