{"id":105601,"date":"2009-04-28T00:00:00","date_gmt":"2009-04-27T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/whether-reporters-of-local-papers-vs-punjab-national-bank-on-28-april-2009"},"modified":"2017-05-25T04:43:55","modified_gmt":"2017-05-24T23:13:55","slug":"whether-reporters-of-local-papers-vs-punjab-national-bank-on-28-april-2009","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/whether-reporters-of-local-papers-vs-punjab-national-bank-on-28-april-2009","title":{"rendered":"Whether Reporters Of Local Papers &#8230; vs Punjab National Bank on 28 April, 2009"},"content":{"rendered":"<div class=\"docsource_main\">Bombay High Court<\/div>\n<div class=\"doc_title\">Whether Reporters Of Local Papers &#8230; vs Punjab National Bank on 28 April, 2009<\/div>\n<div class=\"doc_bench\">Bench: K. K. Tated<\/div>\n<pre>                               1\n\n\n\n\n              FIRST APPEAL NO.05 OF 1995\n\n\n\n\n                                                                   \n    Date of decision   28th April, 2009.\n\n    For approval and signature.\n\n\n\n\n                                           \n    THE HONOURABLE SHRI JUSTICE K.K. TATED.\n\n\n\n\n                                          \n    1.   Whether Reporters of Local Papers                }\n         may be allowed to see the judgment?              } Yes\n\n    2.   To be referred to the Reporter or not?           } Yes\/No\n\n    3.    Whether Their Lordships wish to see\n\n\n\n\n                                  \n         the fair copy of the judgment?                   } No\n\n    4.\n                    \n         Whether this case involves a substantial\n         question of law as to the interpretation\n         of the Constitution of India, 1950 or\n                                                          }\n                                                          }\n                                                          } No\n         any Order made thereunder?                       }\n                   \n    5.    Whether it is to be circulated to the           }\n         Civil Judges?                                    } No\n\n    6.    Whether the case involves an important          }\n         question of law and whether a copy of            } No\n      \n\n\n         the judgment should be sent to Mumbai,           }\n         Nagpur and Panaji offices?                       }\n   \n\n\n\n\n\n        [ S.U.Tupe ]\n    Personal Assistant to\n    the Honourable Judge.\n\n\n\n\n\n                                           ::: Downloaded on - 09\/06\/2013 14:33:41 :::\n                                        1\n\n\n\n\n        IN THE HIGH COURT OF JUDICATURE AT BOMBAY\n\n                           BENCH AT AURANGABAD.\n\n\n\n\n                                                                          \n                  FIRST APPEAL NO.05 OF 1995\n\n\n\n\n                                                  \n    Bansilal s\/o Nivrutti Pandit,\n    Age: Major, Occ: Business,\n    R\/o. 445, Mangalwar Peth, Pune.\n                                .... APPELLANT\n\n\n\n\n                                                 \n                           VERSUS\n\n    1. Punjab National Bank, a body\n       corporate constituted under the\n       Banking Companies (Acquisition and\n       Transfer of Undertakings), Act, 1970,\n\n\n\n\n                                          \n       and having its Head Office at\n       Dal Mandai Road, Ahmednagar.\n                           \n    2. M\/s. Kolhapur Constructions,\n       Prop. P.S. Kulkarni, R\/o. Court Galli,\n       Ahmednagar, Gunewada.\n                          \n       (Appeal is dismissed as against\n        respondent No.2 as per Registrar's\n        order dated 16-11-99).\n                                .... RESPONDENTS\n\n                           ...\n      \n\n\n    Shri.G.N.Patil, Advocate for the appellant.\n    None for respondent No.1.\n   \n\n\n\n                           ...\n\n                                  CORAM:   K.K. TATED, J.\n<\/pre>\n<p>                                  DATE :   28TH APRIL, 2009.\n<\/p>\n<p>    ORAL JUDGMENT: ( PER : K.K. TATED, J.)<\/p>\n<p>    .         Heard    learned      Counsel for the     appellant.\n<\/p>\n<p>    Learned     Counsel appearing on behalf of respondent<\/p>\n<p>    No.1 is absent.         Appeal against respondent No.2 is<\/p>\n<p>    dismissed         as    per     Registrar&#8217;s    order         dated<\/p>\n<p>    16-11-1999.\n<\/p>\n<p><span class=\"hidden_text\">                                                  ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                         2<\/span><\/p>\n<p>    2.        Present    appeal        is preferred        by     original<\/p>\n<p>    defendant      No.    2 against the judgment and                  decree<\/p>\n<p>    dated 26-04-1994 passed by the Civil Judge, Senior<\/p>\n<p>    Division,      Ahmednagar      in Special Civil             Suit       No.<\/p>\n<p>    96\/1987.         Present      appellant      is   the         original<\/p>\n<p>    defendant      No.2 &#8211; guarantor, respondent No.                    1     is<\/p>\n<p>    the    original      plaintiff and respondent No.                  2     is<\/p>\n<p>    original      defendant      No.     1 &#8211; principal          borrower.\n<\/p>\n<p>    The    plaintiff      filed    Special        Civil         Suit        No.<\/p>\n<p>    96\/1987 on 05-03-1987 in the Court of Civil Judge,<\/p>\n<p>    Senior<\/p>\n<p>                Division, at Ahmednagar for recovery of                       a<\/p>\n<p>    sum    of     Rs.2,03,411-35 ps.          with interest           @     18%<\/p>\n<p>    p.a.     from the date of filing of the suit till the<\/p>\n<p>    date     of decree.     It is the case of the                plaintiff<\/p>\n<p>    that     defendant     No.      1    was    doing      business          of<\/p>\n<p>    building      contractor      in     the name     and        style       as<\/p>\n<p>    &#8220;Kolhapur      Constructions&#8221;,           approached         plaintiff<\/p>\n<p>    bank     at    Dal   Mandai,        Ahmednagar       for      loan       of<\/p>\n<p>    Rs.61,850\/-       for the purpose of construction                     work<\/p>\n<p>    undertaken      by defendant No.1.          As per request               of<\/p>\n<p>    defendant      No.1, the plaintiff&#8217;s officer                  accepted<\/p>\n<p>    request       of defendant No.1 and sanctioned loan                      to<\/p>\n<p>    the    tune of Rs.61,850\/-.             Defendant No.         1 agreed<\/p>\n<p>    to     pay to the plaintiff bank interest @ 16%                        p.a.<\/p>\n<p>    with     quarterly rests.          Defendant No.         2 stood         as<\/p>\n<p><span class=\"hidden_text\">                                                        ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                                    3<\/span><\/p>\n<p>    guarantor for the repayment of entire loan amount.\n<\/p>\n<p>    Defendant          No.        2 as guarantor accepted                defendant<\/p>\n<p>    No.1&#8217;s     liability            jointly and              severally.         After<\/p>\n<p>    completing all the formalities, the plaintiff paid<\/p>\n<p>    sum      of    Rs.61,850\/-                to       defendant      No.         1    on<\/p>\n<p><span class=\"hidden_text\">    11-05-1978.              In     terms of that, defendant No.                        1<\/span><\/p>\n<p>    executed       Demand Promissory Note dated                        11-05-1978<\/p>\n<p>    and     defendant No.                2 executed letter of guarantee<\/p>\n<p>    dated     11-05-1978 in favour of the plaintiff                               bank<\/p>\n<p>    agreeing       to        pay     jointly           and    severally        amount<\/p>\n<p>    advanced to defendant No.1 with interest, cost and<\/p>\n<p>    charges.\n<\/p>\n<p>                       Thereafter, defendant No.                     1 failed and<\/p>\n<p>    neglected          to repay the said amount with                       interest<\/p>\n<p>    and      therefore,             defendant           No.      1     approached<\/p>\n<p>    plaintiff          bank        for     extension of time.                As       per<\/p>\n<p>    defendant          No.1&#8217;s request, plaintiff bank extended<\/p>\n<p>    time     for       repayment of the said loan amount.                             At<\/p>\n<p><span class=\"hidden_text\">    the     time       of extension of time, defendant No.                             1<\/span><\/p>\n<p>    executed       promissory             note         dated     26-02-1983           at<\/p>\n<p>    Exhibit-62          for        sum of Rs.1,01,336- 15 ps.                       with<\/p>\n<p>    interest       @     15% p.a.             with quarterly          rests         till<\/p>\n<p>    date     of    payment           in       full.      At    the     same       time,<\/p>\n<p>    defendant           No.         2     &#8211;    guarantor        also        executed<\/p>\n<p>    guarantee          letter       dated          18-02-1983 which            is     at<\/p>\n<p>    Exhibit-63.              In     spite of extension of                time         for<\/p>\n<p>    payment of loan, defendant Nos.                           1 and 2 failed to<\/p>\n<p><span class=\"hidden_text\">                                                                 ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                           4<\/span><\/p>\n<p>    pay the same and therefore, the plaintiff by their<\/p>\n<p>    legal      notice        dated        11-02-1987        called       upon<\/p>\n<p>    defendant       Nos.     1 and 2 to repay the loan                amount<\/p>\n<p>    with interest.          In spite of the said legal notice,<\/p>\n<p>    both     the    defendants          failed to    repay      the      loan<\/p>\n<p>    amount     with interest and therefore, the plaintiff<\/p>\n<p>    bank     filed Special Civil Suit No.               96\/1987 in the<\/p>\n<p>    Court     of    the     Civil        Judge,     Senior      Division,<\/p>\n<p>    Ahmednagar         on        05-03-1987       for       recovery         of<\/p>\n<p>    Rs.2,03,411-35 ps.            with interest @ 18% p.a.               from<\/p>\n<p>    the date of filing of the suit till realisation.\n<\/p>\n<p>    3.       Defendant Nos.            1 and 2 appeared before the<\/p>\n<p>    trial     Court       and filed their         written     statement.\n<\/p>\n<p>    Defendant       No.      1 filed his written statement                   at<\/p>\n<p>    Exhibit-39        dated 12-07-1990 and defendant No.                      2<\/p>\n<p>    filed     his     written statement at Exhibit-26                  dated<\/p>\n<p>    27-07-1989.           Both    the     defendants     denied        their<\/p>\n<p>    liability       for     repayment of loan.          After       hearing<\/p>\n<p>    both     the    sides,       the      trial     Court     framed       the<\/p>\n<p>    following issues.\n<\/p>\n<pre>                          Issues                                  Findings\n\n\n\n         1. Whether the suit is               maintainable?         Yes.\n\n\n\n\n<span class=\"hidden_text\">                                                        ::: Downloaded on - 09\/06\/2013 14:33:41 :::<\/span>\n<span class=\"hidden_text\">                            5<\/span>\n\n\n\n\n<\/pre>\n<p>     2. Whether the suit is expressly<\/p>\n<p>       barred by limitation?                          No.<\/p>\n<p>     3. Whether the suit is properly<\/p>\n<p>       presented by authorised person.                Yes.\n<\/p>\n<p>     4. Does the plaintiff prove that<\/p>\n<p>       defts. have agreed to pay interest.            Yes.\n<\/p>\n<p>     5. Do defendants prove that the suit<\/p>\n<p>       is barred by principle of<\/p>\n<p>       Dam Duppat?                                    No.<\/p>\n<p>     6. Whether this Court has jurisdiction<\/p>\n<p>       to try this suit?                              Yes.\n<\/p>\n<p>     7. Is plaintiff entitle for relief<\/p>\n<p>       claimed?                                       Yes.\n<\/p>\n<p>     8. What order and decree?   As per order below.\n<\/p>\n<p>       Addl. Issues.\n<\/p>\n<p>     9. Does plff-prove that deft.No.\n<\/p>\n<p>       availed a loan of Rs.61850\/- with<\/p>\n<p><span class=\"hidden_text\">                                        ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                           6<\/span><\/p>\n<p>              the rate of interest at 16% p.a.?                      Yes.\n<\/p>\n<p>        10.      Does      plff.      prove         that        deft.No.1<\/p>\n<p>              executed       the     set       of      documents            as<\/p>\n<p>              pleaded in the plaint against the<\/p>\n<p>              said availment of the loan.                            Yes.\n<\/p>\n<p>        11.     Does      plff.      prove      that       defts.          are<\/p>\n<p>              jointly and severally liable for<\/p>\n<p>              the suit amount.?                                      Yes.<\/p>\n<pre>\n\n\n\n\n                                             \n        12.      Does\n                          \n                           plff.      prove         that        deft.No.1\n\n              executed      the      D.P.       note       on       26-2-80\n                         \n              in continuation of previous\n\n              D.P. Note?                                             Yes.\n      \n\n\n        13.     Is      deft.      No.1       entitled       for        rate\n   \n\n\n\n              of interest at 6&amp; p.a. and for\n\n              suitable instalments as pleaded?                       No.\n\n\n\n\n\n    .         After      recording    the evidence of               parties,\n\n    trial      Court     passed    judgment      and     decree        dated\n\n\n\n\n\n    26-04-1994         holding    that both the defendants                 are\n\n    jointly      and     severally    liable to pay             a    sum    of\n\n    Rs.2,03,411-35 ps.           to the plaintiff with interest\n\n\n\n\n<span class=\"hidden_text\">                                                       ::: Downloaded on - 09\/06\/2013 14:33:41 :::<\/span>\n<span class=\"hidden_text\">                                                   7<\/span>\n\n\n    @ 18% p.a.           from the date of suit till realisation\n\n    in     full.         The     trial        Court         further      restrained\n\n    defendant           No.     2 from alienating, transferring by\n\n\n\n\n                                                                                          \n    mode     of        transfer        by     way      of     injunction          order\n\n\n\n\n                                                                 \n    pertaining to land Gat No.                        375, area 74 Ares, and\n\n    Gat     No.         376 area 71 Ares situated                   at     Raleras,\n\n    Tal.         Barshi, District Sholapur till                       realisation\n\n\n\n\n                                                                \n    in full decretal amount.\n\n\n\n    4.       Being            aggrieved by the judgment and decree\n\n\n\n\n                                                     \n<\/pre>\n<p>    dated 26-04-1994 passed by the Civil Judge, Senior<\/p>\n<p>    Division,<\/p>\n<p>                        Ahmednagar          in Special Civil             Suit       No.<\/p>\n<p>    96\/1987,           original defendant No.2 &#8211; the                     appellant<\/p>\n<p>    hereinabove           preferred          present appeal on               several<\/p>\n<p>    grounds.            The learned Counsel appearing on behalf<\/p>\n<p>    of     the     appellant restricted his argument in                             the<\/p>\n<p>    present appeal on the ground that defendant No.                                    2<\/p>\n<p>    &#8211;     present        appellant          being a          guarantor       is     not<\/p>\n<p>    liable        to     pay said amount unless and                    until        the<\/p>\n<p>    plaintiff            bank     executes             the     decree        against<\/p>\n<p>    original           defendant       No.1 principal borrower.                       He<\/p>\n<p>    contended            that     if        the       sufficient         means        is<\/p>\n<p>    available           to     the plaintiff bank to                recover         the<\/p>\n<p>    decretal           amount     from the principal borrower,                        in<\/p>\n<p>    that     case, the guarantor is not liable to pay the<\/p>\n<p>    loan     amount.            In support of his contention,                       the<\/p>\n<p><span class=\"hidden_text\">                                                                 ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                            8<\/span><\/p>\n<p>    learned        Counsel    appearing          on     behalf      of       the<\/p>\n<p>    appellant        &#8211; original defendant No.2 relied on the<\/p>\n<p>    Apex     Court&#8217;s       judgment       in the      matter      of      Ashok<\/p>\n<p>    Mahajan        vs.    State of U.P.          and others,        reported<\/p>\n<p>    in 2006 AIR SCW 4925.\n<\/p>\n<p><span class=\"hidden_text\">                    4925<\/span><\/p>\n<p>    5.       It     is to be noted that the present                       appeal<\/p>\n<p>    is     filed    by the guarantor against the                  bank       and<\/p>\n<p>    principal borrower.           The present appeal is already<\/p>\n<p>    dismissed       against       the     principal      borrower          i.e.<\/p>\n<p>    respondent       No.      2     by    Registrar&#8217;s        order         dated<\/p>\n<p>    16-11-1999.\n<\/p>\n<p>                         The appellant failed and neglected to<\/p>\n<p>    take out appropriate proceedings for setting aside<\/p>\n<p>    dismissal       order     passed       by     the    Registrar             on<\/p>\n<p>    16-11-1999       till     the       matter    reached       for        final<\/p>\n<p>    hearing.        Learned Counsel appearing on behalf                        of<\/p>\n<p>    the     appellant &#8211; original defendant No.                    2 submits<\/p>\n<p>    that     defendant       No.1&#8217;s property is available                    for<\/p>\n<p>    recovery       of decretal amount and inspite of                      that,<\/p>\n<p>    the     trial Court restrained defendant No.                      2    from<\/p>\n<p>    creating any third party right, title and interest<\/p>\n<p>    in     respect of his two landed properties i.e.                         Gat<\/p>\n<p>    No.      375    area 74 Ares and Gat No.               376      area       71<\/p>\n<p>    Ares.     He submitted that the trial Court failed to<\/p>\n<p>    appreciate       that unless and until, the property of<\/p>\n<p>    the     principal debtor is sold for recovery of                         the<\/p>\n<p><span class=\"hidden_text\">                                                          ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                             9<\/span><\/p>\n<p>    decretal        amount, the guarantor is not responsible<\/p>\n<p>    to     pay the amount to the bank.              He submitted that<\/p>\n<p>    the     defendant        No.1&#8217;s property is available                with<\/p>\n<p>    the     bank and inspite of that, it remained on                       the<\/p>\n<p>    part     of     the     bank    to recover       their    dues.          He<\/p>\n<p>    further submitted that in view of the availability<\/p>\n<p>    of     the property of defendant No.1, defendant                       No.<\/p>\n<p>    2 is not responsible to pay the decretal amount to<\/p>\n<p>    the bank.           In support of his submission, he relied<\/p>\n<p>    on     the     judgment in the matter of            Ashok       Mahajan<\/p>\n<p>    (supra)        in which the Apex Court held that                  action<\/p>\n<p>    against        the<\/p>\n<p>                           guarantor cannot be taken until                 the<\/p>\n<p>    property        of principal debtor is sold.              Head       Note<\/p>\n<p>    of the said authority reads as under :\n<\/p>\n<blockquote><p>              &#8220;U.P. Public Moneys (Recovery of Dues) Act<br \/>\n              (23 of 1972), Ss.3,4 &#8211; Recovery of dues as<\/p>\n<p>              arrears of land revenue &#8211; Action against<br \/>\n              guarantor &#8211; Cannot be taken until property<br \/>\n              of principal-debtor is first sold &#8211; High<br \/>\n              Court directed to reconsider matter keeping<br \/>\n              in view observations of Supreme Court in<\/p>\n<p>              2004(6) SCC 58 and factual scenario of<br \/>\n              instant case.&#8221;\n<\/p><\/blockquote>\n<p>    6.        I     have     gone through the        said     authority.\n<\/p>\n<p>    The     said        authority     is     not   applicable       in     the<\/p>\n<p>    present        case     because        in that case,     the      action<\/p>\n<p>    taken        against the borrower for recovery of                  money<\/p>\n<p>    under        U.P.     Public Moneys (Recovery of Dues)                 Act<\/p>\n<p><span class=\"hidden_text\">                                                        ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                 10<\/span><\/p>\n<p>    (23   of   1972).   Sections 3 and 4 of U.P.         Public<\/p>\n<p>    Moneys (Recovery of Dues) Act (23 of 1972) read as<\/p>\n<p>    under :\n<\/p>\n<blockquote><p>           3.      Recovery of certain dues as arrears<br \/>\n           of land revenue.- (1) Where any person is<br \/>\n           party &#8211;\n<\/p><\/blockquote>\n<blockquote><p>           (a)     to any agreement relating to a<br \/>\n           loan, advance or grant given to him or<br \/>\n           relating to credit in     respect of, or<br \/>\n           relating to hire-purchase of goods sold to<br \/>\n           him   by the State    Government or    the<br \/>\n           Corporation,   by    way    of   financial<\/p>\n<p>           assistance; or<\/p>\n<\/blockquote>\n<blockquote><p>           (b)<\/p>\n<p>                   to any agreement relating to a<br \/>\n           loan, advance or grant given to him or<br \/>\n           relating to credit in      respect of, or<br \/>\n           relating to hire-purchase of goods sold to<\/p>\n<p>           him, by a banking company or a Government<br \/>\n           company, as the case may be, under a<br \/>\n           State-sponsored scheme; or<\/p>\n<\/blockquote>\n<blockquote><p>           (c)     to any agreement relating to a<br \/>\n           guarantee given by the State Government or<\/p>\n<p>           the Corporation in respect of a loan raised<br \/>\n           by an industrial concern; or<\/p>\n<\/blockquote>\n<blockquote><p>           (d)     to any agreement providing that any<br \/>\n           money payable thereunder to the       State<br \/>\n           Government shall be recoverable as arrears<br \/>\n           of land revenue; and such person-\n<\/p><\/blockquote>\n<blockquote><p>           (i) makes any default in repayment of the<br \/>\n           loan or advance or any instalment thereof;<\/p><\/blockquote>\n<p>           or<\/p>\n<p>           (ii)   having become    liable under    the<br \/>\n           conditions of the grant to refund the grant<\/p>\n<p>           or any portion thereof, makes any default<br \/>\n           in the refund of such grant or portion or<br \/>\n           any instalment thereof; or<\/p>\n<p>           (iii) otherwise fails to comply with the<br \/>\n           terms of the agreement,- then, in the case<br \/>\n           of State Government, such officer as may be<\/p>\n<p><span class=\"hidden_text\">                                           ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                         11<\/span><\/p>\n<p>     authorised in that behalf by the State<br \/>\n     Government by notification in the official<br \/>\n     Gazette, and in the case of the Corporation<br \/>\n     or   a Government    Company the Managing<br \/>\n     Director thereof, and in the case of a<\/p>\n<p>     banking company, the local agent thereof,<br \/>\n     by whatever name called,      may send    a<br \/>\n     certificate to the Collector, mentioning<\/p>\n<p>     the sum due from such person and requesting<br \/>\n     that such sum together with costs of the<br \/>\n     proceedings be recovered as if it were in<br \/>\n     arrear of land revenue.\n<\/p>\n<p>     (2).     The Collector on   receiving the<br \/>\n     certificate shall proceed to recover the<br \/>\n     amount stated therein as an arrear of land<br \/>\n     revenue.\n<\/p>\n<p>     (3).    No suit for the recovery of any sum<\/p>\n<p>     due as aforesaid shall lie in the civil<br \/>\n     court   against any    person referred to<\/p>\n<p>     4.<\/p>\n<p>     sub-section (1).\n<\/p>\n<p>              Savings.- (1) Nothing in section 3,<br \/>\n     shall-\n<\/p>\n<p>     (a)     affect any interest of the State<br \/>\n     Government, the Corporation, a Government<br \/>\n     company or any banking company, in any<br \/>\n     property created by any mortgage, charge,<br \/>\n     pledge or other encumbrance; or<\/p>\n<p>     (b)     bar a suit or affect any other<\/p>\n<p>     right or remedy against any person other<br \/>\n     than a person referred to in that section,<br \/>\n     in respect of a contract of indemnity or<br \/>\n     guarantee entered into a relation to an<br \/>\n     agreement referred to in that section or in<\/p>\n<p>     respect of any interest referred to in<br \/>\n     clause (a).\n<\/p>\n<p>     (2)     Where the property of any person<br \/>\n     referred to in Section 3 is subject to any<br \/>\n     mortgage,   charge, pledge or or     other<br \/>\n     encumbrance   in   favour of    the  State<\/p>\n<p>     Government, the Corporation, a Government<br \/>\n     company or banking company, then-\n<\/p>\n<p>     (a)     in every case of a pledge of goods,<br \/>\n     proceedings shall first be taken for sale<br \/>\n     of the thing pledged, and if the proceeds<br \/>\n     of such sale are less than the sum due,<\/p>\n<p><span class=\"hidden_text\">                                   ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                          12<\/span><\/p>\n<p>              then   proceedings shall be   taken   for<br \/>\n              recovery of the balance as if it were an<br \/>\n              arrear of land revenue:\n<\/p>\n<p>              Provided that where the State Government is<\/p>\n<p>              of opinion that it is necessary so to do<br \/>\n              for safeguarding the recovery of the sum<br \/>\n              due to it or to the Corporation, Government<\/p>\n<p>              company or banking company, as the case may<br \/>\n              be, it may for reasons to be recorded,<br \/>\n              direct proceedings to be taken for recovery<br \/>\n              of the sum due, as if it were an arrear of<br \/>\n              land revenue before or at the same time as<\/p>\n<p>              proceedings are taken for sale of the thing<br \/>\n              pledged;\n<\/p>\n<p>              (b)     in every case of a mortgage, charge<br \/>\n              or other encumbrance on immovable property,<br \/>\n              such property or, as the case may be, the<\/p>\n<p>              interest of the defaulter therein, shall<br \/>\n              first be sold in proceedings for recovery<\/p>\n<p>              of the sum due from that person as if it<br \/>\n              were an arrear of land revenue, and any<br \/>\n              other proceeding may be taken thereafter<br \/>\n              only if the Collector certifies that there<\/p>\n<p>              is no prospect of realization of the entire<br \/>\n              sum due through the first mentioned process<br \/>\n              within a reasonable time.&#8221;\n<\/p>\n<p>    7.        In        that Act, there is a specific provision<\/p>\n<p>    that   if       the     property     is     mortgaged,      charged,<\/p>\n<p>    pledged        or     other encumbrances made in favour                of<\/p>\n<p>    the     State          Government,        the   Corporation,            a<\/p>\n<p>    Government company or banking company then in that<\/p>\n<p>    case, proceedings shall first be taken for sale of<\/p>\n<p>    the thing pledged and if the proceeds of such sale<\/p>\n<p>    are    less than the sum due, then proceedings shall<\/p>\n<p>    be taken for recovery of the balance as if it were<\/p>\n<p>    an arrear of land revenue and thereafter remaining<\/p>\n<p>    amount to be recovered from the guarantor.                      In any<\/p>\n<p><span class=\"hidden_text\">                                                      ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                            13<\/span><\/p>\n<p>    case,     the     said     Act    is not       applicable       in     the<\/p>\n<p>    present       case.      In the present case, the appellant<\/p>\n<p>    &#8211;     original defendant No.            2 stood as a        guarantor<\/p>\n<p>    as     per Indian Contract Act, 1872.              As per          Indian<\/p>\n<p>    Contract        Act, 1872 bank can execute decree either<\/p>\n<p>    against         principal        borrower        and\/or         against<\/p>\n<p>    guarantor        as per their choice.           It is the duty of<\/p>\n<p>    the     surety     to pay the decretal amount.                On     such<\/p>\n<p>    payment he will be subrogated to the rights of the<\/p>\n<p>    creditor        under section 140 of the Indian Contract<\/p>\n<p>    Act,     and he may then recover the amount from                       the<\/p>\n<p>    principal<\/p>\n<p>                      debtor.        The    very      object      of       the<\/p>\n<p>    guarantee        is defeated if the creditor is asked to<\/p>\n<p>    postpone        his remedies against the surety.                  In the<\/p>\n<p>    present       case, the creditor is banking company.                      A<\/p>\n<p>    guarantee        is a collateral security usually                  taken<\/p>\n<p>    by     the banker.        The security will become              useless<\/p>\n<p>    if     his rights against the surety can be so easily<\/p>\n<p>    cut     down.     Therefore, in any case, the               appellant<\/p>\n<p>    is also liable alongwith the principal borrower as<\/p>\n<p>    per     the     judgment and decree passed by the                   trial<\/p>\n<p>    Court on 26-04-1994.\n<\/p>\n<p>    8.        Apex    Court in the matter of State Bank                      of<\/p>\n<p>    India    vs     M\/s   Indexport        Registered        and      others<\/p>\n<p>    reported in 1992 (3) SCC 159 held as under :\n<\/p>\n<p><span class=\"hidden_text\">                                                        ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                 14<\/span><\/p>\n<blockquote><p>          &#8220;Civil Procedure Code, 1908 &#8211; Or.21, Rr.30,<br \/>\n          46, 46-A, 46-B, 46-F, 50, 72-A;        Or.34,<\/p>\n<p>          Rr.4,5 and S.47 &#8211; Execution of money decree<br \/>\n          in favour of bank      &#8211; Composite decree<br \/>\n          comprising   a money     decree    personally<\/p>\n<p>          against all the defendant-judgment debtors<br \/>\n          viz. the firm, its partners, guarantor and<br \/>\n          also a mortgage decree against one of the<br \/>\n          partners in respect of his shop mortgaged<br \/>\n          by him to secure loan from the bank &#8211; Held,<\/p>\n<p>          decree-holder bank can execute the decree<br \/>\n          first   against the      guarantor    without<br \/>\n          proceeding against the mortgaged property &#8211;<br \/>\n          Guarantor can be sued without even suing<br \/>\n          the   principal   debtor     &#8211;   Guarantor&#8217;s<br \/>\n          liability is co-extensive with that of the<\/p>\n<p>          principal debtor<\/p>\n<p>          Contract Act, 1872, S.     128.\n<\/p><\/blockquote>\n<blockquote><p>          Civil Procedure Code, 1908 &#8211; No           executing<br \/>\n          court can go beyond the decree.&#8221;\n<\/p><\/blockquote>\n<p>    .     Relevant   portion    of Para 10 of       the      said<\/p>\n<p>    judgment reads as under :\n<\/p>\n<blockquote><p>          &#8221; The decree does not put any fetter on the<br \/>\n          right of the decree holder to execute it<br \/>\n          against any party, whether as a money<\/p>\n<p>          decree   or as a mortgage decree.       The<br \/>\n          execution of the money decree is not made<br \/>\n          dependent on first applying for execution<br \/>\n          of the mortgage decree. The choice is left<br \/>\n          entirely with the     decree holder.    The<br \/>\n          question arises whether a decree which is<br \/>\n          framed as a composite decree, as a matter<\/p>\n<p>          of law, must be      executed against the<br \/>\n          mortgage property first or can a money<br \/>\n          decree, which covers whole or part of the<br \/>\n          decretal amount covering mortgage decree<br \/>\n          can be executed earlier. There is nothing<br \/>\n          in law which provides such a composite<br \/>\n          decree to be first executed only against<\/p>\n<p><span class=\"hidden_text\">                                            ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                   15<\/span><\/p>\n<p>             the property.&#8221;\n<\/p><\/blockquote>\n<p>    .        Para   22   of   the said   judgment     reads        as<\/p>\n<p>    under:\n<\/p>\n<blockquote><p>             &#8220;22.    The decree for money is a simple<br \/>\n             decree     against     the   judgment-debtors<\/p>\n<p>             including the guarantor and in no way<br \/>\n             subject to the execution of the mortgage<br \/>\n             decree against judgment-debtor 2. If on<br \/>\n             principle a guarantor could be sued without<br \/>\n             even suing the principal debtor there is no<br \/>\n             reason, even if the decretal amount is<\/p>\n<p>             covered by the mortgaged decree, to force<br \/>\n             the decree-holder to proceed against the<br \/>\n             mortgaged<\/p>\n<p>                           property first    and then to<br \/>\n             proceed against the guarantor. It appears<br \/>\n             that above-quoted observations in Manku<br \/>\n             Narayan     case are not     based   on   any<\/p>\n<p>             established     principle of     law   and\/or<br \/>\n             reasons, and in fact, are contrary to law.<br \/>\n             It, of course depends on the facts of each<br \/>\n             case how the composite decree is drawn up.<br \/>\n             But if the composite decree is a decree<br \/>\n             which is both a personal decree as well as<\/p>\n<p>             a mortgage decree, without any limitation<br \/>\n             on its execution, the decree-holder, in<\/p>\n<p>             principle,     cannot be    forced to first<br \/>\n             exhaust the remedy by way of execution of<br \/>\n             the mortgage decree alone and told that<br \/>\n             only    if    the     amount   recovered   is<br \/>\n             insufficient, he can be permitted to take<\/p>\n<p>             recourse to the execution of the personal<br \/>\n             decree.     For a simple mortgage decree as<br \/>\n             prescribed in Form No. 5 of Appendix &#8216;D&#8217;<br \/>\n             of the Code of Civil Procedure it could be<br \/>\n             so because the decree provides like that.<br \/>\n             It is only when the sum realised on sale of<br \/>\n             the mortgaged property is insufficient then<\/p>\n<p>             the judgment-debtor can be proceeded with<br \/>\n             personally.     But the observations of the<br \/>\n             Court in Manku Narayana case that even if<br \/>\n             the    two portions of      the decree    are<br \/>\n             severable and merely because a portion of<br \/>\n             the decretal amount is covered by the<br \/>\n             mortgage decree, the decree-holder, per<\/p>\n<p><span class=\"hidden_text\">                                              ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span><br \/>\n<span class=\"hidden_text\">                                         16<\/span><\/p>\n<p>              force has to proceed against the mortgaged<br \/>\n              property first are not      based on   any<br \/>\n              principle of law. With all due respect to<br \/>\n              the learned Judges, in the light of the<br \/>\n              observations made by us earlier, we are<\/p>\n<p>              constrained to observe that Manku Narayana<br \/>\n              case was not correctly decided.&#8221;\n<\/p><\/blockquote>\n<p>    9.        It is not necessary to go in to other facts<\/p>\n<p>    of    the      present      case    because   learned       Counsel<\/p>\n<p>    appearing       on     behalf of the appellant        restricted<\/p>\n<p>    his argument only on the point that action against<\/p>\n<p>    the    guarantor       cannot be taken until property                of<\/p>\n<p>    the principal debtor is first sold.\n<\/p>\n<p>    10.       In    view       of the above mentioned facts            and<\/p>\n<p>    circumstances,         I    do not find any merits          in     the<\/p>\n<p>    present        First Appeal.       First Appeal is      dismissed<\/p>\n<p>    with no order as to costs.\n<\/p>\n<p>                                             [ K.K. TATED, J.]<\/p>\n<p>    sut\/u\/APR09\/fa5.95<\/p>\n<p><span class=\"hidden_text\">                                                    ::: Downloaded on &#8211; 09\/06\/2013 14:33:41 :::<\/span>\n <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bombay High Court Whether Reporters Of Local Papers &#8230; vs Punjab National Bank on 28 April, 2009 Bench: K. K. Tated 1 FIRST APPEAL NO.05 OF 1995 Date of decision 28th April, 2009. For approval and signature. THE HONOURABLE SHRI JUSTICE K.K. TATED. 1. Whether Reporters of Local Papers } may be allowed to see [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,8],"tags":[],"class_list":["post-105601","post","type-post","status-publish","format-standard","hentry","category-bombay-high-court","category-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Whether Reporters Of Local Papers ... vs Punjab National Bank on 28 April, 2009 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/whether-reporters-of-local-papers-vs-punjab-national-bank-on-28-april-2009\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Whether Reporters Of Local Papers ... vs Punjab National Bank on 28 April, 2009 - Free Judgements of Supreme Court &amp; 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