SCA/497/2008 1/7 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 497 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= USHABEN YOGESHBHAI SHAH & 3 - Petitioner(s) Versus TEXTILE TRADERS COOPERATIVE BANK LIMITED & 1 - Respondent(s) ========================================================= Appearance : MR MB GANDHI for Petitioner(s) : 1 - 4.MR CHINMAY M GANDHI for Petitioner(s) : 1 - 4. MR SN THAKKAR for Respondent(s) : 1, DS AFF.NOT FILED (N) for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 13/02/2008 ORAL JUDGMENT 1. The short facts of the case appear to be that as SCA/497/2008 2/7 JUDGMENT per the petitioner the respondent No. 2 had taken loan from the respondent No. 1 and as the payment was not made, the suit was filed by the respondent No. 1 bank for recovering of the amount and in the said suit the petitioner was joined as the guarantor by the plaintiff -respondent No. 1 bank. 2. It appears that the petitioner had appeared in the suit, but the principal borrower respondent No. 2 herein, had neither appeared nor filed any reply. The petitioner submitted Application Exhibit Nos. 128, 129 and 130 in the suit for discharge, and the Nominees vide order dated 22.11.2006, allowed the application mainly on the ground that plaintiff-bank did not take appropriate action for maintaining the stock, and there is also alteration in the loan agreement, and the terms of repayment by the bank without consent and therefore, the petitioner in capacity as the surety were discharged. The respondent bank preferred Revision Application No. 538 of 2006, before the tribunal. It may be stated that after the order SCA/497/2008 3/7 JUDGMENT passed by the Nominees for discharge below Application Exhibit Nos. 128, 129 and 130, the Nominees further proceeded with the Summary Suit No. 120 of 2003, and partly allowed the suit by passing the award against the principal borrower respondent No. 2 herein, for the amount of Rs. 33,98,440.23 with interest, whereas for the petitioner as the order was already passed for discharge, no award was passed. 3. The tribunal ultimately heard the revision and found that the order passed by the Nominees for discharging the petitioner hereinabove, was illegal, and it was also found by the tribunal that the Nominees had taken premature decision in haste without permitting parties to lead on evidence and therefore, ultimately the tribunal allowed the revision application, and set aside the order passed by the Nominees below the aforesaid interim application for discharge, and it is under these circumstances, the present petition before this Court. 4. Heard Mr. Gandhi learned Counsel appearing for the petitioner and Mr. Thakkar learned Counsel SCA/497/2008 4/7 JUDGMENT appearing for the respondent No. 1. The notice was sent to the respondent No. 2, but it has come back with the endorsement as left. However it also appears that the main contest before the tribunal was between the petitioner and the respondent No. 1 -bank and therefore, in view of the direction given hereinafter, the presence of the respondent No. 2 may not be required. 5. The perusal of the impugned order passed by the tribunal shows that the tribunal has found that the order passed by the Nominees is premature, and is in haste without giving opportunity to lead evidence, and cross-examination. The aforesaid exercise of the discretion for interfering with the order passed by the Nominees, in view of the reasons recorded by the tribunal cannot be said as perverse, which may be called for interference by this Court under Article 227 of the Constitution. However, the matter does not end but even if the tribunal was of the view that the order passed by the Nominees is erroneous, and was to be set aside, the tribunal ought not to have ended in SCA/497/2008 5/7 JUDGMENT exercising of its jurisdiction, but further was required to examine the matter for restoration of the suit, and for allowing the parties to give opportunity for leading evidence and also for cross-examination. 6. As such whether the surety would stand discharged on account of non-compliance of the terms, and conditions of the loan agreement by the bank with the principal borrower, or that whether there is any alteration in the contract of loan agreement, or repayment thereof or that whether there is any novitio of the contract etc., are essentially question of facts, which can be concluded only if parties are given opportunity to lead evidence, and cross- examination. The Nominee had stayed proceedings against the petitioner, on account of the order passed below interim application. Therefore, if the tribunal had found that the order passed by the Nominees below interim application is illegal, consequential order for staying of the proceedings by the Nominees, would not only be required to be upset, but tribunal ought to have SCA/497/2008 6/7 JUDGMENT further exercised the jurisdiction for restoration of the suit qua the petitioner for full-fledged trial by the Nominees. 7. As the aforesaid powers have not been exercised, it can be said that the jurisdictional error is committed by the tribunal. Such jurisdictional error by the tribunal if not cured, would result into great injustice to the petitioners and respondent bank inasmuch as the proceedings of the suit are concluded by the Nominees, unless they are restored and the Nominees will not be in a position to retry the suit against the petitioner, who are joined as the guarantor. Therefore, by interim order when the petitioners were discharged, even if such interim order are reversed or modified, consequence of restoration of the suit of permitting parties to lead evidence, was required to be ordered by the tribunal while finally decided the Revision Application. 8. In view of the above, the order of the tribunal for setting aside the orders passed by the Nominees dated 22.11.2006 and 29.11.2006 are not SCA/497/2008 7/7 JUDGMENT interfered with. However, it is further directed that the suit No. 120 of 2003 shall be restored to the file of the Nominees, so far as it relates to defendant No. 2 to 5, and it is further directed that the Nominees shall give opportunity of leading evidence to the bank, as well as to the defendant Nos. 2 to 5, and shall pass appropriate orders in accordance with law preferably within a period of six months from the receipt of the order of this Court. 9. The petition is partly allowed to the aforesaid extent. Rule made absolute accordingly. No order as to cost. It is made clear that rights and contentions of both the sides shall remain open. (JAYANT PATEL, J.) Suresh*