ORDER
Motilal B. Naik, J. (Chairman)
1. In these two appeals the same issue is involved for adjudication, and, accordingly, these two appeals are disposed of by the following common order.
2. Miscellaneous Appeal 270/2004 has been filed by the Indian Overseas Bank, which instituted O.A. 1053/95 for recovery of certain amounts against the defendants before the DRT. Miscellaneous Appeal 245/2004 is filed by defendants 3 and 4 in the O.A.
3. During pendency of the proceedings before the Tribunal, an application in I.A. 442/ 2004 was filed by the Bank bringing to the notice of the Court that the suit for recovery of more than Rs. 87 lakh with pendente lite and future interest was filed against the defendants, that the said O.A. has been opposed by defendants 3 and 4 only, who are guarantors, and that the rest of the defendants have been proceeded ex parte. It was also urged in the application that the Bank has settled the matter with defendants 3 and 4, whereby it has been agreed that the defendants 3 and 4 would pay to the Bank a sum of Rs. 13 lakh towards full and final satisfaction of their liability, and that on payment of such amount the applicant Bank would release the defendants 3 and 4 from their liability, and proposed to drop them from the proceedings, and claim their balance from the rest of the defendants. It was also averred in the application that the amount of Rs. 13 lakh have been paid by the defendants 3 and 4, which was received by the applicant Bank. The Bank, therefore, pleaded that tie defendants 3 and 4 be dropped from the proceedings.
4. The said application came up for consideration before the Tribunal. However, the Tribunal rejected the said application on the premise that the O.A. was, though, instituted for recovery of more than Rs. 87 lakh, the applicant has received only Rs. 13 lakh from defendants 3 and 4 and defendants 1 and 2 were set ex parte and as such it is not a compromise between all the parties, but it is only an application to drop the defendants 3 and 4 from the array of the parties. The Tribunal further found defendant No. 5 is PICUP Ltd. who has the first charge over the fixed assets of the defendant No. 1-company and without taking its consent the applicant Bank cannot settle the matter and drop the case against the defendants 3 and 4. It is this order which has been challenged before this Court on various grounds.
5. The learned Counsel appearing for the Bank as well as the defendants 3 and 4, who are appellants in Miscellaneous Appeal 245/2004, at the outset submitted that the law is well settled that when a suit is instituted, the creditor is at liberty to choose the defendants in the suit, and even after obtaining a decree the creditor is at liberty to execute the decree against one or all the defendants, i.e. the judgment-debtors. In other words, according to the learned Counsel, the liability of the defendants or judgment-debtors is co-extensive and as such, liberty is always with the decree-holder who can seek recovery from any of the judgment-debtors. While making these submissions, the learned Counsels drew my attention to a decision of the Hon’ble Kerala High Court in State Bank of India v. G.J. Herman and Ors., and pointed out that while rendering this judgment the learned Judge of the Hon’ble Kerala High Court have referred to the decisions of the Hon’ble Supreme Court in Bank of Bihar v. Damodar Prasad, and in State Bank of India v. Indexport Registered, , and that in para 15 the view expressed by the Hon’ble Supreme Court has been recorded.
6. The law laid down by the Hon’ble Supreme Court is that the liability of the sureties is co-extensive with that of the principal debtor, that consequently creditor can proceed against the principal debtor or against the sureties, unless it is otherwise provided in the contract, that the same should also be the principle with regard to the rights and liabilities between co-sureties as well, that a co-surety cannot insist that the creditor should proceed either against the principal debtor or against the other sureties before proceeding against him, since the liability of a surety is joint and several, that the option is entirely that of the creditor to decide against whom he could proceed with either against principal debtor, or against any of the sureties. The Court for that matter, or a co-surety cannot insist that creditor should proceed against other sureties before proceeding against him. In other words, it could be said that the creditor is dominus litus and shall be entitled to proceed against any or all the defendants whether they are principal borrowers or guarantors.
7. In view of the ratio laid down by the Hon’ble Supreme Court in the cases cited supra, I am of the considered view that it is not open to the Court to reject the application filed on behalf of the creditor, seeking dropping of defendants from the array of parties.
8. For all the reasons, the impugned order is set aside. Consequently, I.A. 442/2004 is allowed. As a result of this order, defendants 3 and 4 are dropped from the array of defendants. The Court shall proceed to decide the case against defendants 1 and 2 only. Appeal is accordingly ordered. No costs.