(Per : HONOURABLE MR.JUSTICE A. J. DESAI)
1. This Letters Patent Appeal under Clause 15 of Letters Patent is arising from the judgment dated 8.11.2011 passed by learned Single Judge in Special Civil Application No.2420 of 2004.
2. The present appellant who was defendant No.6 in original Lavad Suit No.523 of 1987 filed before the Board of Nominees at Anand, challenged the decree passed by the Board of Nominees in the said suit as well as judgment passed by Gujarat State Co-operative Tribunal in Appeal No.236 of 2001 dated 2.8.2003 dismissing the same as well as the order passed in Review Application No.52 of 2003 dated 8.10.2003 before the learned Single Judge. After hearing the parties the learned Single Judge dismissed the said petition by a reasoned judgment.
3. The brief facts leading to the present case in nutshell are as under:
3.1 Respondent No.1 Nadiad Mercantile Cooperative Bank Ltd. - original plaintiff instituted Lavad Suit No.523/1987 in the court of learned Board of Nominees, Anand against the petitioner and others for recovery of Rs.37,09,817.89 ps., the amount which was advanced to original defendant No.1 - Patel Das Corporation. It appears that the amount was advanced against the pledged goods of Rs.20 lacs. The petitioner stood as a guarantor/surety. That in the said suit, an application Exh.6 was submitted by the plaintiff permitting them to sale the pledged goods by public auction which was allowed by the learned Board of Nominees, Anand. The said order was challenged by respondent No.2 herein - original defendant No.1 - original loanee, before the Gujarat State Cooperative Tribunal by way of Revision Application No.84/1987, which came to be allowed by the learned Tribunal by judgment and order dated 07.09.1987, however, the Tribunal directed the learned Board of Nominees to get inventory done through Court Commissioner and thereafter pass appropriate order. That except original defendant No.6, no other defendants filed reply. It appears that thereafter learned Board of Nominees passed the order permitting the Bank to get the pledged goods disposed of and pursuant to the same, the pledged goods came to be disposed of for Rs.6,85,333/-. That thereafter application Exh.57 came to be filed by the respondent Bank on 16.09.1988 for attachment before judgment against original defendant No.7 praying for an order of attachment before judgment to take the property of defendant No.7 situated at Sardar Patel Colony, Ahmedabad. It appears that in the said application Exh.57, the respondent Bank had asked for surety of Rs.50 lacs from defendant No.7 failing which to take the aforesaid property in attachment before judgment. It is the case on behalf of the appellant that the said application came to be dismissed by the learned Board of Nominees by recording its finding that the goods were sold only for Rs.6,85,333/- which was on much lower side and that there was negligence on the part of Bank in not properly maintaining the goods. It appears that thereafter the aforesaid Lavad Suit No.523/1987 filed by the respondent Bank came to be allowed by the learned Board of Nominees by judgment and award dated 07.02.2001. That before the said judgment and award was passed, the evidence of the plaintiff was recorded at Exh.88 and nobody remained present on behalf of the appellant (defendant no.6) and other defendants. No written statement was filed by the present appellant (defendant no.6). Original plaintiff (respondent no.1) led its evidence and examined witness at Exh.88. On that day, neither appellant nor any of the defendant remained present personally or through advocate to cross-examine the said witness. Thereafter right of the appellant and other defendants to lead the evidence came to be closed and thereafter the impugned judgment and award came to be passed by the learned Board of Nominees. Being aggrieved by the judgment and award passed by the learned Board of Nominees dated 07.02.2001 in Lavad Suit No.523/1987, the appellant and one another Madhukant Jethalal Taktawalla (original defendant No.7) preferred Appeal No.236/2001 before the Tribunal who by its judgment and order dated 02.08.2003 was pleased to dismiss the said appeal. That thereafter the petitioner preferred Review Application No.52/2003 which also came to be dismissed by the Tribunal. The appellant challenge the said judgments passed by trial court as well as appellate court by way of above-referred petition.
3.2 The learned Single Judge after recording the arguments advanced before him, observed that the present appellant i.e. original defendant no.6 had not contested the suit at all. He had not filed any written statement nor led any evidence. On the other hand, original plaintiff - respondent No.1 has proved his case by leading the evidence and examining the witnesses at Exh.88 which has not been challenged by the appellant - petitioner and other defendants by way of cross-examining the said witness. The right of the appellant-petitioner to lead the evidence was closed which attained finality.
4. Learned counsel Mr.Shirish Joshi has contended that application Exh.57 was filed by the original plaintiff under the provisions of Order 38 of Civil Procedure Code for attachment before judgment for the properties of original defendant no.7. By order dated 15.9.1999 the Board of Nominees, Anand dismissed the said application. While dismissing the application Exh.57, certain observations have been made about the procedure adopted by the Court Commissioner for selling the goods which were placed for the loan amount. This order was not challenged by either of the parties before any higher forum. After the order below Exh.57, the suit proceeded further and the present appellant did not examine either himself or any other witnesses on his behalf, and after considering the order below Exh.57 the Board of Nominees decreed the suit. It was held that, if the Court Commissioner has not followed the procedure, the plaintiff shall not suffer for the same and only the Court Commissioner is responsible for the misconduct if any committed by him for selling the goods which was placed for the said loan amount.
5. Same contention has been raised before the learned Single Judge as well as before this Court in this appeal. We are of the opinion that the learned Single Judge has rightly observed in para 5.1 which reads as under:
"As stated herein above, the only contention on behalf of the petitioner is that while deciding the application Exh.57 - attachment before judgment against original defendant No.7, there were some observations by the learned Board of Nominees that the pledged goods were sold at a lower price and there was some negligence on the part of the officers of the Bank in not properly maintaining the goods and relying upon the same, it is requested to quash and set aside the impugned judgment and award. It is required to be noted that if according to the petitioner the goods were not properly maintained and there was negligence on the part of the officers of the Bank due to which some lesser amount was realized, in that case the petitioner was required to lead the evidence to prove the damage and negligence and only thereafter the petitioner could have contended to pass the judgment and award for full amount. As stated herein above, the petitioner has not led any evidence at all. Under the circumstances, solely on some observations made by the learned Board of Nominees while deciding application Exh.57, it cannot be said that the learned Board of Nominees has committed any error and/or any illegality in passing the judgment and award which came to be confirmed by the Appellate Tribunal. At the cost of repetition, again it is required to be noted that admittedly petitioner - original defendant No.6 has never contested the suit either by filing the written statement and/or by leading the evidence and even cross-examining the witness who was examined on behalf of the plaintiff. Under the circumstances, no case is made out to interfere with the impugned orders passed by both the Courts below while exercising powers under Article 227 of the Constitution of India."
6. In support of his contention, learned counsel Mr.Shirish Joshi has relied upon the judgment of Hon'ble Apex Court in the case of the State Bank of Saurashtra vs Chitranjan Rangnath Raja and another, as reported in AIR 1980 SC 1528 particularly paras 17, 18 and 19 which are reproduced as under:
"17.
A bare perusal of clause 13 would show that it provides for continuing the guarantee where the principal debtor is an association of persons and for continuance of the guarantee in the event of death, retirement, etc. of one of such association of persons or the guarantee remaining intact and effective and legally enforceable irrespective of some defect arising from the internal management of such association of persons. We fail to see how it can render any assistance to the Bank.
18. First security, namely, the pledged goods are lost to the Bank and the concurrent finding again incontrovertible is that the pledged goods were lost on account of the negligence of the creditor Bank. Whole of the security was lost and, therefore, the surety would be discharged in entirety because it is crystal clear that the principal debtor had agreed and had in fact pledged 5000 tins of oil which even if sold at the then current market price would have satisfied the Bank's entire claim. Accordingly, the surety would be discharged in entirety.
19. It is difficult to entertain a contention that S.141 would not be attracted and the surety would not be discharged even if it is found that a creditor has taken more than one security on the basis of which advance was made and the surety gave personal guarantee on the good faith of other security being offered by the principal debtor which itself may be a consideration for the surety offering his personal guarantee and the creditor by its own negligence lost one of the securities. Acceptance of such a contention would tantamount to putting a premium on the negligence of the creditor to the detriment of the surety who is usually described as a preferred debtor. Should a Court by its construction of such letter of guarantee enable the creditor to act negligently and yet be not in any manner accountable? Was the guarantee a guarantee against proper performance of the contract evidencing advance of loan and methods of its repayment, or a guarantee covering Bank's utter disregard of its responsibility or to use the words of the High Court, the Bank's utter negligence in failing to exercise the care of a prudent man which one would expect in management of one's own affairs?"
7. Learned counsel Mr.Shirish Joshi has also placed reliance on Section 141 of Indian Contract Act, 1872 which reads as under:
"Sec.141 Surety's right to benefit of creditor's securities :- A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses, or without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security."
8. Learned counsel Mr.Shirish Joshi has urged that, if the plaintiff would actually taken care of and shown the right price, then the appellant would not be liable to pay anything, but, on the contrary he would be entitled to reimburse the amount. We are not able to accept this submission in peculiar facts and circumstances of the case since the present appellant has neither examined himself nor examined any witnesses like Court Commissioner or other responsible persons for selling the goods at a lower price. As stated hereinabove, the present appellant has neither filed any written statement nor examined any witnesses in support of his contention, therefore we do not accept this submission.
9. For the aforesaid reasons, we do not find any merits in this Letters Patent Appeal and the Letters Patent Appeal fails and is accordingly dismissed.
10. In view of dismissal of Letters Patent Appeal, Civil Application No.357 of 2012 and Civil Application No.358 of 2012 stands also dismissed.
(V.M.
SAHAI, J.) (A.J.DESAI, J.) syed/ Top