Allowed

The Ap State Essestial Commodities Corpt. Ltd., v. Syndicate Bank

Telangana HC1 Sept 2023AS/707/2000

Case brief

AI extract

What is this about?

This appeal challenged a trial court decree holding a guarantor liable. The High Court allowed the appeal, ordering set aside of the lower court judgment and dismissal of the suit against the appellant, reasoning that proceedings against the principal borrowers were dismissed.

What did the court decide?

The judgment and decree dated 17.01.2000 in O.S.No.60 of 1995 set aside; suit against the appellant (Defendant No.3) dismissed. No order as to costs.

The Ap State Essestial Commodities Corpt… — Contract and Commercial Disputes | Telangana HC (2023)

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[³²¹⁶ I

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAO

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FRIDAY,THE FIRST DAY OF^SEPTEMBER TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE SRI JUSTICE M.LAXMAN

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APPEAL SUIT NO: 707 oF 2000

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Appeal under section 96 of C.P.C against the Judgment^{and Decree Dated} 17.Oi.2OOO made in O.S.No.60 of 1995 on the^{file of the Court of the l"rAdditional} Senior Civil Judge, Warangal.

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Between:

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The A.P. State Essential Commoclities Corpt.^{Ltd.,, Rep by its Managing} Director, Somajiguda, Hyderabad.

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...APPELLANT/DEFENDANT No.3

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AND

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Syndicate Bank,, Hanamkonda branch,^{Rep by its branch Manager Sri D.V.N.} Kamaraju, Hanamkonda, Warangal^Dist.

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Smt. Prameela,, w/o late Kistaswamy, Age:^{45 years, Occ: HouseholdRi/o 3-} 16-35, Warangal Town, Warangal Dist.

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G. Sambaiah,, S/o ramulu, Age:^{42 years, Occ: DriverRl/o Chennaraopet,} Narasampet, Warangl.

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H.Tarzan Kumar,, S/o Kistaswamy, Age:^{16 years, Being Minor, Rep by} natural guardian H. Prameela^(D-1)

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H. Arjun Kumar,, S/o Kistaswamy,^{Age: l3 years, Being Minor Rep by natural} guardian H. Prameela (D-1) r I r ir: al&.to.'^{a.f^.,Vtvpir- clurl crt&v ci{l Elrltt,t}

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...RESPONDENTS/PLAINTIFF/DEFENDANTS 1,2,4 & 5

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Counsel for the Appellant : Sri CHALAKANI^{VENKAT YADAV}

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Counsel for Respondent No.1 : Sri K.G. SASTRY

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Counsel for Respondent Nos.2,4 & 5 :^Noneappeared

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The Court delivered the following: JUDGMENT

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TI.I,E HON'BLE SRI JUSTICE M. LAXMAN

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APPEAL SUIT No.7O7 of 2(frO

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JIIDGMENT:

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The challenge in the present appeal is to the judgment and decree dated 17.01.20OO in O.S.No.6O of 1995 on the file of the I Additional sen:or civil Judge, warangal (hereinafter referred to as trial CourtJ, wherein and whereby the suit filed by the respondent No I herein for recovery of Rs.3,39,916/_ was partly allowed orderin g recovery from the appellant herein. The present appeal is filed at the instance of defendant No.3 before the trial Court.

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The appellant herein is defendant No.3, respondent No.l is plaintiffand re:;pondent Nos.2 to 5 are defendant Nos.l, 2,4 and, 5 before the trirrl court. For the sake of convenience the parties are hereinafter t'eferred to as they were arrayed in suit.

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It is the t;ase of the plaintiff that they have extended an amount of Rs.1,14,O0O/- towards loan for purchase of tractor and trailer under a srcheme called^.Own your Tractor' provided by A.p. State Essential Commodities Corporation Limited, Warangal. Under the said r;cheme, loan amount was sanctioned to one Late H. Kistaswamy end defendant No.2 to purchase tractor and trailer and the s€une v/as released on 02.01.19g6 directly to the HMT

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", l l

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Limited, Chandigarh and Shekar Industries, Warangal. Defendant No.2 and said Kistaswamy purchased tractor and trailer bearing No.759O. Defendant No.3 stood as suret5r for repayment of loan amount borrowed by defendant No.2 and Kistaswamy. Defendant No.2 and Kistaswarny were principal borrowers and defendant No.3 is guarantor to the said loan transaction and memorandum of agreement was also entered infavour of plaintiffon 02.01.1986. An amount of Rs.2,85O/- was payable per month from O2.02.1986 with interest at l3.5%o per annum with quarterly compound for the loan amount of Rs. 1,14,000/-. They also agreed to pay interest at 2.5o/o on overdue amount. Defendant Nos. 1, 4 and 5 are legal heirs of the Late H. Kistaswamy. Defendant No.2 has acknowledged the debt on 07.12.1988 and defendant No. 1 acknowledged the debt on 08.10.1992. The last pa5,.rnent of Rs.2,000/- was made on 1L.02.1992. Subsequently, no paJ[nents were made in spite of demarrds. Hence, legal notice dated 07. lO.I994 was issued to defendants and as there was no response to the legal notice, the present suit is filed.

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Defendant Nos.l arrd 2 filed their respective written statements stating that defendant No.2 and husband of delendant No.l were only engaged as drivers to the tractor and trailer by the

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District Suppiy Officer for supply of essential commodities from go-downs to the door step of fair price shop dealers. They were paid an amotmt of Rs.75O/- per month. They contended that they were not loanees ald the Collector, Civil Supplies, Warangal, was loanee. l{ence, they are not liable to pay any arnount and prayed to disrr iss the suit.

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Similarly, defendant No.3 rrled written statement claiming that they are c,nly sponsorers and they are unconcerned with the loan transacti.n, 8ozo loa, amount was to be sanctioned by the plaintiff atd 2Oo/o by the sponsoring agency. The Tractor was registered in ttLe name of Collector, Civil Supplies, Warangal, and hypothecated tc plaintiff. Further, the District Supply oflicer i.e., the Ex-OfIicio District Manager of A.p.S.E.C.C.L, was not authorized to sign loan. agreement and stand as suret5r. He exceeded his powers without any proper resolution from Corporation. ltrerefore, they are not liable to pay arry amount. Hence, prayed lo dismiss the suit against them.

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On the birsis of above pleadings, the following issues and additional issues were framed. by the trial Court:

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"Issues:-

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Whether the DSO who signed the guarantee deed had no authorit5r e.s contended by D3 to sign it, if so, does it not bind D3?

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i i I rl

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Whether the defendants I arrd 2 signed the forms of acknowledgements of debt when they were blank?

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3.Whether the suit is bad for non-joinder of the sons of the late H. Kistaswamy and D1?

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Whether the plaintiff is entitled to recover the suit amount from Dl to D3?

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To what relief.)

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Additional Issues:-

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Whether D4 and D5 are liable to the suit claim?

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Whether any property of late Kistaswarny was inherited by D4 and D5 and they have been enjoying the same?"

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The plaintiff in support of its case got exarnined P.W. I and marked Exs.A-l to A-10. The defendants got exarnined D.Ws.1 and 2 and got marked Exs.B-1 to 8-6.

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The trial Court after appreciating the evidence on record disrnissed the suit against defendant Nos. 1, 2,4 atd 5 and decreed the suit against defendant No.3. Aggrieved by the said decree, the present appeal is filed by defendant No.3.

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Heard both sides.

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Now, the only point for consideration in the present appeal is as follows:

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i'i

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:Wh:th:r^{the liabilityof defendantNo.3/appellant} can be fixed whr:n the principal borrowers ,r. .*or.."t"d from the liability?'

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Point:-

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The evid:nce on record shows that the plaintiff_bank claims that they havr: lent an amount of Rs. 1,14,0OO/_ for purchase of tractor and tr,iller to defendant No.2 and husband of defendant No.l. In this regard, loan agreement was entered and defendant No'3 stood as guarantor- The loan amount was directry rereased to HMT Tracto,- Compa,y, Chandigarh, and the tractor and trailer were registere I in the name of the Collector, Civil Supplies, warangal. The evidence arso shows that there is a scheme named as 'own Your !'ractor' and this scheme was floated for ereation of employment and conferring ownership rights after the loan amounts are cleared. Initially, defendant No.2 and husband of defendant No. I were employed as drivers for monthly salary of Rs.75O/-. The e'ridence also shows that Kistaswamy, husband of defendant No.l was removed from such employment and other person was app,ointed as driver. These are all things which show that the loan was grarted to them. If loan was granted to purchase tractcr and trailer in their name, the same should have been registered in their narne and they should have been treated as owners of tlLe tractor and trailer and t.Ile same should have been hypothecar:ed to plaintiff-bank. Such rights were not created

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on them under the scheme. This indicates that after clearance of the loa,, the driver becomes owner. This also mearrs that ttre loan amount is not paid to defendant No.2 and husband of defendant No.l by the plaintiff-bank. If really, that is so, the tractor and trailer should have been registered in their name and hypothecated to bank and not in trre name of the conector, civil Supplies, Warangal.

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In fact, the tractor and trailer were registered in the name of Collector, Civil Supplies, Warangat, and loan was benefited to him. Therefore, the Collector, Civil Supplies, Warangal, becomes principal borrower though loan agreement was obtained in the name of defendant No.2 and husband of defendalt No.1. The suit was dismissed against defendant Nos. l, 2, 4 and 5, whom the plaintiff-bank claimed to have been the principar borrowers and legal heirs of principal borrower. There is no challenge against the said dismissal from the praintiff-bank. when, the suit itserf is dismissed against principal borrower, the suit against the surety cannot be decreed. The triar court committed error in fixing the liability on defenda,t No.3, when suit itserf is dismissed against the principal borrower.

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In the result, the appeal is allowed and the judgment and decree dated 17.o1.2000 in o.S.No.6o of 1995 on the frle of the I

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Additional S enior Ci\dl Judge, Warangal, is set aside. Consequenfly suit against defendant No.3 i.e., the appellant herein is disrnissed, since the dismissal of suit against other defenda,ts atr:ained frnality. No order as to costs. Miscenaneous

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petitions, if ary, pending shall stand closed.

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Sd/- B.S.CHIRANJEEVI JOt\a\99 STRAR //TRUE COPY// V SECTION OFFICER

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To,

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The 1st Ad,litional Senior^{CivilJudge, Warangal. (with records,if any)}

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One CC to Sri. CHALAKANI^{VENKAT YADAV, Advocate} [OPUC]

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One CC to Sri. K.G.SASTRY,^Advocate [OPUC]

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Two CD Copies

ASR/NJB Y(

HIGH COURT

DATED:O1109t2023

JUDGMENT + DECREE

AS.No.707 oti2000

lHE SI4
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ALLOWING THE APPEAL SUIT WITHOUT CCISTS

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G^cq,** w zs\rlrrl

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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FRIDAY ,THE FIRST DAY OF SEPTEMBER TWO THOUSAND AND TWENTY^THREE

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PRESENT

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THE HONOURABLE SRI JUSTICE M.LAXMAN

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APPEAL SUIT NO: 707 OF 2000

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Between:

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The A.P. State Essential Commodities Corpt.^{Ltd.,, Rep by its Managing} Director, Somajiguda, Hyderabad.

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...APPELLANT/DEFENDANT No.3

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AND

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Syndicate Bank,, HanamkoMa branch,^{Repby its branch ManagerSri} D.V.N. Kamaraju, Hanamkonda, Warangal Dist.

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Smt. Prameela,, Wo late Kistaswamy,^{Age: 45 years,Occ: HouseholdR:/o} 3-16-35, Warangal Town, Warangal Dist.

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G. Sambaiah,, S/o ramulu,^{Age:.42 years,Occ:DriverRl/o Chennaraopet,} Narasampet, Warangl.

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H.Tazan Kumar,, S/o Kistaswamy, Age:^{16 years, Being Minor, Rep by} natural guardian H. Prameela^(D-1)

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H. Arjun Kumar,, S/o Kistaswamy,^{Age: 13 years, Being Minor Rep by} natural^guardian H. Prameela^(D-1)

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...RESPONDENTS/PLAINTIFF/DEFENDANTS^{1,2,4 & 5}

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Appeal under section 96 of C.P.C against^{the Judgmentand Deqree Dated} 17.01.2ooo made in O.S.No.60 of 1995^{on the file of the Court of the t"tAdditional} Senior Civil Judge, Warangal.

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ORDER : This appeal coming on for^{hearingand upon perusingthe groundsof} appeal, the Judgment and Decree of the^{Lower Courtand the material papers in} the MVOP and upon hearing the arguments^{of Sri CHALAKANI VENKATYADAV'} Advocate for the Appellant and of Sri K.G.^{SASTRY, Advocatefor the Respondent} No.1 and None appeared for Respondent^{Nos. 2 to 4 & 5.}

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This Court doth Jucgment and decree as follows:-

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That the Appear be and hereby is artowed and the Judgment and decree dated 17.01.2000 in o.S.No. 60 of 1995 on the fire of the of^{.rstAdditional} Senior Civil . udge, Warangal, is set aside;

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Thal the suil against defendant No.3 i.e., the appellant herein be and hereby is dismissed as the dismissal of suit against other defendants attained finality; and

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That there shall be no order as to costs in this appeal.

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Sd/- B.S.CHIRANJEEVI JOINT

//TRUE COPYII

To,

SECTION OFFICER

1 . The^'1st Additional Senior Civil Judge, Warangal.

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Two CD C:opies

ASR/NJBw

HIGH COTIRT

DATED:01 l0gl2023

DECREE

AS.No.707 of 2000

ALLOWING THE APPEAL SUIT WITHOUT COSTS

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1.,\c!P&l W ftt"'

The Ap State Essestial Commodities Corpt. Ltd., v. Syndicate Bank

Case brief

What is this about?

What did the court decide?

The Ap State Essestial Commodities Corpt. Ltd., v. Syndicate Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Parties & counsel

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