Case Facts:
IN THE HIGH COURT OF JUDICATURE AT PATNA Criminal Miscellaneous No.1050 of 2011 ====================================================== 1. Ghanshyam Pd. Srivastawa S/O Late Nagendra Prasad The Assistant General Manager, State Bank Of India, S.P.B. Branch, Gandhi Maidan, P.S- Gandhi Maidan In The Town And District Of Patna. .... .... Petitioner/s Versus 1. The State Of Bihar 2. Shivkumar Sinha S/O Late Jagdish Singh Resident Of 101 Dev Arun Appartment, Bhikhana Pahari, Bankipur, P.S- Pirbahore, Patna. .... .... Opposite Party/s ====================================================== Appearance : For the Petitioner/s : Mr. Chitranjan Sinha, Sr. Advocate. Mr. Santosh Kumar Singh, Advocate. For the Opposite Party No.2: Mr. Gajendra Kumar Jha, Mr. Surya Kant Jha, Advocate. For the State : : Mr. Ganesh Prasad Singh, A.P.P. ====================================================== CORAM: HONOURABLE MR. JUSTICE SHIVAJI PANDEY ORAL ORDER 3 09-10-2012 Heard learned counsel for the petitioner, learned counsel for the State and learned counsel for opposite party no.2. 2. This application has been filed for quashing the order dated 2.7.2010, passed in Complaint Case No. 791© of 2010 by the Judicial Magistrate, Ist Class, Patna by which he has taken cognizance against the petitioner under [STATUTE] . 3. Brief facts of this case are that on 29.3.2010 the opposite party no.2 filed a compliant petition vide Complaint Case No.791© of 2010 in the court of the Chief Patna High Court Cr.Misc. No.1050 of 2011 (3) dt.09-10-2012 2 Judicial Magistrate, Patna against the petitioner and other accused persons, namely, Branch Manager, Life Insurance Corporation of India, Patna Branch and made an allegation that they have committed an offence under [STATUTE] . From the complaint petition it appears that the complainant was a guarantor and pledged his L.I.C. Policies bearing nos. 512134416 and 511526192 respectively against the car loan of Rs.2,50,000/- given to the borrower, namely, Ashok Kumar Singh. It has been stated that the complainant entrusted a cheque to his L.I.C. agent for depositing the premium amount of police no. 511526192 with the L.I.C. but the said agent returned back cheque to the complainant informing him that the office of the L.I.C. had declined to accept the cheque. The complainant enquired into the matter and came to know that the Branch Manager, State Bank of India forfeited the L.I.C. policies of the complainant due to default of payment of installments by borrower. It has been stated that the said amount of Rs.2,37,955/- had been adjusted against the car loan which was given to one Ashok Kumar Singh. The court below has taken cognizance against the petitioner under [STATUTE] . Patna High Court Cr.Misc. No.1050 of 2011 (3) dt.09-10-2012 3 4. The basic question in this case arises for consideration as to whether the Bank was justified in adjusting the said amount of loan from the L.I.C. policy of the complainant against loan which was given to Ashok Kumar Singh as per Section 128 of the Indian Contract Act, 1872 which is as follows: “128. Surety’s liability.- The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.” 5. From the reading of the aforesaid section it appears that the money which was due for loan can be recovered either from the borrower or guarantor and the liability to pay the amount of loan is co-extensive against borrower as well as guarantor. 6. Learned counsel for the petitioner has submitted, the loan amount as per Section 128 of the Indian Contract Act and also as per term of agreement, is co- extensive against borrower and guarantor and in support of his contention he has relied on the following judgments: (i)The Bank of Bihar Ltd. Vrs. Damodar Prasad and another, reported in A.I.R.1969 SC 297 (ii) Union Bank of India Vs. Manku Narayana, reported in A.I.R.1987 SC 1078, Patna High Court Cr.Misc. No.1050 of 2011 (3) dt.09-10-2012 4 1078, paragraph no.4 (iii)State Bank of India Vs. Messrs. Indexport Registered and others, reported in A.I.R.1992 SC 1740, paragraph no.22 (iv) Radhey Shyam Gupta Vs. Punjab National bank & another, reported in 2008 SCW 8284 (v) Ram Kishun & others Vs. State of U.P. and others, reported in A.I.R. 2012 SC 2288 and (vi)Industrial Investment Bank of India Ltd. Vs. Biswanath Jhunjhunwala, reported in 2009(6) Supreme 171, paragraph no.14. He further submits that in view of aforesaid legal position the Bank was right to adjust the said amount from the L.I.C. policies which were pledged against the loan amount given to Ashok Kumar Singh and the Bank Manager has not committed any illegality in adjusting the same. 7. Learned counsel for opposite party no.2 has submitted that it was the duty of the Bank to recover the said amount first from the borrower and if the borrower failed to pay the loan amount then only Bank could have turned towards the guarantor. 8. In the case of Industrial Investment Bank of India Ltd(supra) the Hon’ble Supreme Court in paragraph no.30 of the judgment has held as follows: “30. The legal position as crystallized by a series of cases of this court is clear that the Patna High Court Cr.Misc. No.1050 of 2011 (3) dt.09-10-2012 5 liability of the guarantor and principle debtors are co-extensive 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 O.A. 156 of 1997” 9. In the case of State Bank of India (supra) the Hon’ble Supreme Court in paragraph 13 has held as follows: “In the present case before us the decree does not postpone the execution. The decree is simultaneous and it is jointly and severally against all the defendants including

Applicable IPC Section: 406

Statute Text:
Section 406 of the Indian Penal Code. Criminal breach of trust. Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.