Court No. - 40
Case :- WRIT - C No. - 55147 of 2017 Petitioner :- Mangal Sen And Another Respondent :- The Additional Collector (F/R) Bareilly And 4 Others Counsel for Petitioner :- Krishna Mohan Counsel for Respondent :- C.S.C.,Hari Nath Tripathi,Sujit Kumar Rai
Hon'ble Amreshwar Pratap Sahi,J. Hon'ble Shashi Kant,J.
Heard Sri Krishna Mohan, learned counsel for the petitioner and Dr. H.N. Tripathi for the respondent no. 4.
Notices were issued to the respondent nos. 3 and 5. The office report indicates that notices were issued after steps were taken on 27.11.2017 but no one has responded so far inspite of the notices having been dispatched by registered post to the said respondents. Notices will therefore be deemed to be sufficient on the respondent nos. 3 and 5.
A counter affidavit has been filed on behalf of the respondent no. 4 where it has been stated that it is open to the bank to either proceed against the borrower or the guarantors and reliance has been placed on the Supreme Court decision in the case of Industrial Investment Bank of India Ltd. Vs. Biswanath Jhunjhunwala 2009 (9) SCC 478 paragraph nos. 16 to 27.
We have considered the submissions raised.
This is a writ petition challenging the citation of recovery issued against the petitioners dated 27th September, 2017 whereby the petitioners who are the guarantors to a loan taken by the respondent no. 3 from the respondent no.4 bank have been called upon to deposit the amount stated in the citation as against the loan liability of the respondent no. 3-bank.
The challenge raised is on the ground that it is undisputed that the respondent no. 3 is the borrower and the petitioners are the guarantors to the said loan. The matter being governed by the UP Cooperative Societies Act, 1965 and the Rules framed thereunder, the dispute reached the arbitrator in terms of Section 70 thereof and the arbitrator rendered his award on 16th May, 2017. Clause-3 of the order of the arbitrator which remains unchallenged, categorically states, that for the realization of the loan, the property already mortgaged by the borrower, namely, the respondent no. 3 shall be proceeded against and the principal amount, as well as, the interest will be realized from the proceedings to be taken against the said mortgaged property first. In the event, the amount sought to be realized is not satisfied by the sale or distress proceedings against the said property, then it shall be open to the bank to proceed against the guarantors who are the present petitioners. This Clause-3 of the award having become final between the parties, the bank could have proceeded against the respondent no. 3 borrower for its realization in terms thereof.
Learned counsel for the bank Dr. H.N. Tripathi relying on the judgment referred to hereinabove submits that liabilities of the petitioners who are the guarantors is co extensive and is not in the alternative as held by the Apex Court, and therefore, the citation of recovery does not suffer from any legal infirmity.
The aforesaid submission by Dr. Tripathi is correct on legal principles but on the facts of the present case there is an intervention through a condition put forth under the award itself where the distress proceedings had to be undertaken against the borrower first, and in the event of non-fulfilment and non satisfaction of the decretal amount, then only can the guarantors be proceeded against.
Consequently, the judgment of the Apex Court referred to hereinabove would not squarely apply on the facts of the present case in view of the aforesaid distinction that has occurred on account of the recital contained in the award which has become final between the parties.
Learned counsel submits that the proceedings have been initiated against the borrower as well. If that is so, then it is open to the bank to proceed in accordance with the award dated 16th May, 2017, and in the event, the decretal amount is not satisfied from the mortgaged property of the borrower, then in that event, the petitioners shall be liable to discharge the liability.
The writ petition, is therefore, allowed to the aforesaid extent. The impugned citation of recovery dated 27.09.2017 shall not be enforced against the petitioner until and unless the aforesaid conditions are complied with.
Order Date :- 30.5.2018 S.Chaurasia