1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Chamber Summons No.511 of 2008 IN Summary Suit No.1532 of 1999 Bank of Baroda .. .. Plaintiff v/s. New India Assurance Co. Ltd. .. Defendant And Dr.Syed Ahmed Ferozie & anr. .. Applicants Ms.Aarti Banerji i/by Little & Co. for Plaintiff. Mr.Tushar Goradia for Information Asset Reconstruction Co.Pvt.Ltd. , consignee of Plaintiffs. Mr.Rahul Narichania with Kannan Thevar i/by Mulla & Mulla for Defendant. Mr.Chirag Balsara with Mr.Ajaz Diamondwala i/by Divya Shah Associates for Applicant. ----- CORAM : SMT.ROSHAN DALVI, J. Dated : 11th February 2009 P.C. : 1.This Chamber Summons is taken out by the Applicants to be joined as a party Defendants in the Suit. The Applicants claim to be a proper parties upon having a legal interest in the subject-matter of the Suit. The Applicants claim that they would be directly affected by the decree passed in this Suit. 2. The Applicants are guarantors in respect of the loan taken 2 by the Company in which they were Directors, from the Plaintiff in this Suit. The Plaintiffs have instituted a proceeding for recovery of the loan in the Debts Recovery Tribunal (DRT). A recovery certificate has been obtained. That certificate has been sought to be executed, interalia, against the Applicants herein. Under that loan, the Company in which the Applicants are the Directors offered a security and 2 Insurance Policies obtained by that Company from the Defendants in this Suit. The Insurance Policies came to be assigned to the bank. The Insurance Policies were in respect of a certain ship. The ship sank. The Defendants have refused to honour the claim on the Insurance Policies. The Plaintiff has made the claim under those Policies which is disputed by the Defendants. 3.It is contended by the Applicants that if this Suit is dismissed, the Plaintiff would proceed under the recovery certificate already obtained by the Plaintiff before the DRT in which the Applicants as the guarantors have the liability of co-extensive with the principal-debtor i.e. the Company who had taken the Insurance Policies which came to be assigned to the Plaintiff-bank. Conversely, if the Suit is decreed, the Plaintiff-bank would be entitled to claim the insured amount from the Defendants. The Applicants as the guarantors 3 would, in that case, have the security offered by the principal-debtor used for the payment of the decretal amount under the loan. 4.The Applicants are entitled to have the benefit of the creditors' security under Section 141 of the Indian Contract Act. The security in the loan is the Insurance Policy. The claim in the Suit is based upon the Insurance Policy. Hence, the Applicants' liability upon the guarantee for the payment of the debt assigned to the Plaintiff-bank is directly concerned with the issues in this Suit. 5. It is contended on behalf of the Defendants that the Applicants must discharge the guarantee by payment upon which the Applicants would have right to claim under the Insurance Policy by performance of the clauses in the Policies which the Plaintiff-bank would have against the principal-debtor under Section 142 of the Indian Contract Act. However, that section would apply only upon payment by the guarantor. The payment by the Applicants, as the guarantors, would be made only after the Applicants derive benefit of the creditor' s security and the debt is lessened to the extent of such benefit. This Suit being concerned with the security offered to the Plaintiff-bank under the insurance 4 policy which the Plaintiff-bank would have to encash before proceeding against the Applicants as the guarantors personally, the Applicants are entitled to be made a party Defendants to the Suit. It is seen that the Applicants have interest in the security which is offered which is the subject- matter of the Suit and hence would fall under the parameters laid down in the cases Sumtbai & ors. vs. Paras Finance Co., (2007) 10 SCC 82 and Aliji Momonji & Co. vs. Lalji Mavji & ors., (1996) 5 SCC 379. 6.The case of New Redbank Tea Co.Pvt.Ltd., (1994) 1 SCC 402 is relied upon by Mr.Narichania on behalf of the Defendants to show that for the purpose of adding a party Defendant in the Suit not an indirect or commercial interest but a direct interest of a party is to be seen. The aforesaid facts show the direct interest of the Applicants in the Insurance Policy which is the subject-matter of the Suit. 7. Adding the Applicants as a party Defendants would not also enlarge the issues in the Suit and hence, the Applicants would also fall within the parameters for judicial discretion laid down in the case of Ramesh Hirachand Kundanmal vs. Municipal Corporation of Greater Bombay & ors., (1992) 2 SCC 524. 5 8.Consequently, the Chamber Summons is made absolute in terms of prayers (a) and (b). 9.The Plaintiff shall amend the Plaint to bring the Applicants on record of the Suit as Defendant No.2 and carry out all consequential amendments. The Plaintiff shall serve a copy of the amended Plaint upon the Advocate for the Defendants as well as the Applicants. The Applicants waive service. 10.This order is stayed for 2 weeks. (SMT.ROSHAN DALVI, J.)