Karnataka High Court
M/S Margadarsi Chits (Kar) vs Mr Narayan Koteshwara Rao on 16 March, 2022
Bench: S.G.Pandit
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF MARCH, 2022
BEFORE
THE HON'BLE MR.JUSTICE S.G.PANDIT
WRIT PETITION NO.49976 OF 2018 (GM-CFA)
BETWEEN:
M/S. MARGADARSI CHITS (KAR)
PVT. LTD.,
D.NO.143/1, MAHAVEER COMPLEX,
1ST FLOOR, TRAFFIC ISLAND
HUBLI, DHARWAD DISTRICT - 29
REP. BY ITS GENERAL MANAGER
SRI. P. LAKSHMANA RAO
... PETITIONER
(BY SRI. JAYAKUMARA P.P., ADVOCATE)
AND:
1. MR. NARAYAN KOTESHWARA RAO
AGE 36 YEARS,
OCC: BUSINESS,
M/S SHRI BASAVA
TRADING COMPANY,
NO.27, 1ST FLOOR, 2ND MAIN ROAD,
APMC, YESHWANTHAPURAM
BANGALORE - 560 022
RESI: H.NO.5/1, 5TH CROSS,
SARASWATHIPURAM, NANDINI LAYOUT
BANGALORE - 560 022
2. MR. HURALICHIKANAHALLI P
NARAYANKUMAR
AGE 36 YEARS,
2
OCC: BUSINESS
KUMAR ELECTRICALS
NO.305/2, 4TH MAIN
4TH CROSS, LAKSHMI NARAYANAPURA
NAGAPPA BLOCK,
BANGALORE - 21
RESI: H.NO.10/1, 5TH CROSS, 7TH MAIN
LAKSHMI NARAYANAPURA
BANGALORE - 560 021
3. MR. SUBRAMANYA REDDY BHOOPAL
AGED 47 YEARS,
OCC:BUSINESS, ESHWAR TRADERS
NO.17/1, 2ND MAIN ROAD, APMC YARD
YEASHWANTHAPURA, BANGALOE - 560 058
RESI: H.NO.130, 3RD CROSS, MEI LAYOUT
HEGGERE, BANGALORE - 560 058
4. MR. RAJENDRAPRASAD CHANDRAPRAKASH
AGE 39 YEARS,
OCC:BUSINESS
CHANDRA TRADING CO. LTD.,
NO.124, 10TH MAIN, 2ND CROSS
SHANKAR NAGAR, BANGALORE - 560 096
RESI: H.NO.124, 10TH MAIN, 2ND CROSS
SHANKAR NAGAR, BANGALORE - 560 096
... RESPONDENTS
(BY SRI.CHIDANANDA H.M., ADVOCATE FOR R2;
NOTICE TO R1, R3 & R4 D/W)
THIS WRIT PETITION IS FILED UNDER ARTICLES
226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE IMPUGNED ORDER DTD 03.04.2018 PASSED
IN EX NO.77/2009 ON THE FILE OF THE HON'BLE CITY
CIVIL COURT AT BANGALORE [CCH-53] IN VIDE
ANNEXURE-A AND ETC.,
3
THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING 'B' GROUP, THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
The petitioner, a financial institution is before
this Court challenging the order dated 03.04.2018
passed in Ex.No.711/2009 on the file of the City Civil
Judge at Bengaluru (Annexure-A), wherein the
application filed by respondent No.2 - Judgment
Debtor No.2 under Section 151 of the CPC was
allowed and the decree- holder, petitioner herein is
directed to exhaust remedy against the Judgment
Debtor No.1.
2. Heard the learned counsel for petitioner
and learned counsel for respondent No.2. Perused the
writ petition papers.
3. Learned counsel for the petitioner submits
that the petitioner has filed Execution case
No.711/2009 to execute the decree (Annexure-D)
dated 08.04.2008 in dispute
No.AR/15/ANML/52/ABN/07-08.
4. Respondent guarantors particularly
respondent No.2 on appearance filed an application
under Section 151 of CPC to stay the attachment of
moveable warrant against him. Accepting the
application of the petitioner, the Execution Court
directed the petitioner/decree-holder to exhaust
remedy as against Judgment Debtor No.1. Aggrieved
by the same, the petitioner is before this Court.
5. Learned counsel for the petitioner would
submit that it is for the decree-holder to execute the
decree either against the principal borrower or against
guarantors and in that regard, he relies upon the
decision of the Hon'ble Apex Court in the case of
STATE BANK OF INDIA Vs. MESSRS. INDEX PORT
REGISTERED AND OTHERS reported in AIR 1992
SC 1740 in support of his contention. Thus, he prays
for allowing the writ petition.
6. Per contra, learned counsel for respondent
No.2 submits that respondent No.2 is the guarantor
and respondent No.1 is the borrower. The
petitioner/decree-holder has not proceeded against
respondent - borrower and other guarantors, which
according to him is arbitrary and unreasonable. Thus,
he justifies the order passed by the Execution Court.
7. The trial Court committed an error in
allowing the application of respondent No.2/Judgment
Debtor No.2 and in directing the petitioner/decree-
holder to exhaust remedy against the judgment
debtor No.1. The trial court has not looked into
Section 128 of the Contract Act wherein it is clear that
the liability of the surety is co-extensive with that of
the principal debtor, unless it is otherwise provided by
the contract. Respondent No.2 has not prayed
otherwise by producing contract. In that
circumstances, the liability of surety is co-extensive
with principal debtor.
8. The Hon'ble Apex court in the case of
STATE BANK OF INDIA V. MESSRS. INDEX PORT
REGISTERED AND OTHERS stated supra at
paragraph No.22, has held as follows:
"22. The decree for money is a
simple decree against the judgment-
debtors, including the guarantor and in
no way subject to the execution of the
mortgage decree against the judgment
debtor No.2. If on principle a guarantor
could be sued without even the principal
debtor there is no reason, even if the
decretal amount is covered by the
mortgaged decree, to force the decree-
holder to proceed against the mortaged
property first and then to proceed against
the guarantor. It appears the above quoted
observations in Manku Narayana's case
(AIR 1987 SC 1078( (supra) are not based
on any established principle of law and/ or
reasons, and in fact, are contrary to law. It,
of course, depends on the facts of each
case how the composite decree is drawn
up. But if the composite decree is a decree
which is both a personal decree as well as a
mortgage decree, without any limitation on
its execution, the decree holder, in
principle, cannot be forced to first exhaust
the remedy by way of execution of the
mortgage decree alone and told that only if
the amount recovered is insufficient, he can
be permitted to take recourse to the
execution of the personal decree. For a
simple mortgage decree as prescribed in
Form No.5 of Appendix D of the Code of
Civil Procedure it could be so because the
decree provides like that. It is only when
the sum realised on sale of the mortgaged
property is insufficient then the judgment-
debtor can be proceeded with personally.
But the observations of the Court in Manku
Narayana's case (AIR 1987 SC 1078)
(supra) that even if the two portions of the
decree are severable and merely because a
portion of the decretal amount is covered
by the mortgage decree, the decree-holder,
per force has to proceed against the
mortgaged property first are not based on
any principle of law. With all due respect to
the learned Judges, in the light of the
observations made by us earlier, we are
constrained to observe that Manku
Narayana's case (AIR 1987 SC
1078)(supra) was not correctly decided."
For the reasons stated above, the writ petition is
allowed. The impugned order dated 03.04.2018
passed in Ex.No.711/2009 on the file of the City Civil
Court, Bangalore, is set aside.
Sd/-
JUDGE
RKA
