Madras High Court
M.Ramamoorthy vs The Authorised Officer on 22 April, 2022
W.P.No.10200 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 22.04.2022
Coram:
THE HONOURABLE MR.MUNISHWAR NATH BHANDARI, Chief Justice
and
THE HONOURABLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
W.P.No.10200 of 2022
and
W.M.P.No.9901 of 2022
M.Ramamoorthy .. Petitioner
Vs.
The Authorised Officer,
City Union Bank Limited,
Credit Recovery and Management Department,
Administrative Office No.24-B,
Gandhi Nagar,
Kumbakonam - 612 001. .. Respondents
Writ Petition filed under Article 226 of the Constitution of India, praying
for issuance of a Writ of Certiorari to call for the records pertaining to the Auction
Notice Ref.No.C.O/REC/NPA/2022, dated 15.03.2022 pertaining to property of
the petitioner being house and ground bearing Door No.5, Annanagar, Seerkadu
Road, Thiruvalluvar University, Katpadi Taluk, Vellore District, Comprised in
Survey No.75/4B, New Subdivided Survey No.75/4B6 of an extent of 2639 Sq.ft
in respect of Auction to be held on 25.04.2022 at 1.00 P.M at City Union Bank
Limited, Gudiyatham Branch, Ward No.3, Muthu Naidu Street, Pichanoor,
Page No.1/6
https://www.mhc.tn.gov.in/judis
W.P.No.10200 of 2022
Gudiyatham, Vellore - 632 602.
For petitioner : Mr.K.Venkateswaran
ORDER
(The Order of the Court was made by The Honourable Chief Justice)
By this Writ Petition, a challenge has been made to the auction notice,
dated 15.03.2022 on the ground that reserve price of the borrower's property
would be sufficient to satisfy the loan amount advanced by the Bank. Thus,
auction of guarantor's property be stayed.
2. We have considered the submissions made by the learned counsel for
the petitioner. We find that the financial institutions can recover the due amount
by enforcing it against the guarantor without affecting the borrower and vice
versa. The guarantor cannot press for recovery of the amount from the borrower
only, in view of the judgment of the Apex Court in the case of Industrial
Investment Bank of India Vs. Biswanath Jhunjhunwala, reported in 2009 (9) SCC
478, and the relevant portion of the same read as follows:
"15. This Court, while approving the said
judgment, observed that: (Damodar Prasad
case (Bank of Bihar Limited Vs. Dr.Damodar Prasad)
[AIR 1969 SC 297 : (1969) 1 SCR 620] , AIR p.299,
para 6)
“6. … The very object of the guarantee
is defeated if the creditor is asked to
Page No.2/6
https://www.mhc.tn.gov.in/judis
W.P.No.10200 of 2022
postpone his remedies against the surety. In
the present case the creditor is a banking
company. A guarantee is a collateral security
usually taken by a banker. The security will
become useless if his rights against the surety
can be so easily cut down.”
16. In SBI v. Indexport Registered [(1992) 3
SCC 159 : AIR 1992 SC 1740] this Court held that the
decree-holder bank can execute the decree against
the guarantor without proceeding against the
principal borrower. The guarantor's liability is
coextensive with that of the principal debtor.
17. In that case, this Court further observed
that: (Indexport case [(1992) 3 SCC 159 : AIR 1992
SC 1740] , SCC p.164, para 10)
“10. … The execution of the money
decree is not made dependent on first
applying for execution of the mortgage
decree. The choice is left entirely with the
decree-holder. The question arises whether a
decree which is framed as a composite decree,
as a matter of law, must be executed against
the mortgage property first or can a money
decree, which covers whole or part of decretal
amount covering mortgage decree can be
executed earlier. There is nothing in law which
provides such a composite decree to be first
executed only against the [principal debtor]
[Ed.: The word in the original is “property”—
however the import is the same: that a
composite decree can be executed both
against the principal debtor or the sureties.] .”
The Court further observed that (Indexport
case [(1992) 3 SCC 159 : AIR 1992 SC 1740] , SCC
p.165, para 13) “the liability of the surety is
coextensive with that of the principal debtor, unless
it is otherwise provided by the contract”. [Ed.: This is
the verbatim text of Section 128 of the Contract Act,
Page No.3/6
https://www.mhc.tn.gov.in/judis
W.P.No.10200 of 2022
1872.]
18. The term “coextensive” has been defined
in the celebrated book of Pollock & Mulla on Indian
Contract and Specific Relief Act, 10th Edn., at p.728
as under:
“Coextensive.—Surety's liability is
coextensive with that of the principal debtor.
A surety's liability to pay the debt is not
removed by reason of the creditor's omission to
sue the principal debtor. The creditor is not
bound to exhaust his remedy against the
principal before suing the surety, and a suit
may be maintained against the surety though
the principal has not been sued.”
27. The legal position as crystallised by a
series of cases of this Court is clear that the liability
of the guarantor and principal debtors is coextensive
and not in alternative. When we examine the
impugned judgment in the light of the consistent
position of law, then the obvious conclusion has to
be that the High Court under its power of
superintendence under Article 227 of the
Constitution of India was not justified to stay further
proceedings in OA No.156 of 1997. Consequently,
the appeal is allowed and the impugned judgment of
the High Court of Calcutta is set aside. The appellant
shall be entitled to costs of Rs 50,000."
3. Thus, the financial institutions have been given an option to recover the
amount from the guarantor also. Accordingly, we do not find that any case is
made out in favour of the petitioner in reference to the prayer made.
Accordingly, this Writ Petition fails and is dismissed. There shall be no order as
Page No.4/6
https://www.mhc.tn.gov.in/judis
W.P.No.10200 of 2022
to costs. Consequently, the connected miscellaneous petition is closed.
(M.N.B., C J) (D.B.C.J)
22.04.2022
Index: Yes/no
Speaking Order: Yes/no
cs
Page No.5/6
https://www.mhc.tn.gov.in/judis
W.P.No.10200 of 2022
THE HONOURABLE CHIEF JUSTICE
and
D.BHARATHA CHAKRAVARTHY, J
cs
W.P.No.10200 of 2022
22.04.2022
Page No.6/6
https://www.mhc.tn.gov.in/judis
