IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.14647 of 2010 Date of Decision: 21.11.2011 Ram Pal ...Petitioner Versus Haryana Financial Corporation and others ...Respondents CORAM: HON’BLE MR. JUSTICE HEMANT GUPTA HON’BLE MR. JUSTICE G.S.SANDHAWALIA Present: Mr. D.S.Patwalia, Advocate, for the petitioner. Mr. Kamal Sehgal & Mr. Rajesh Hooda, Advocates, for the respondents. HEMANT GUPTA, J.(Oral) Challenge in the present writ petition is to the notice dated 08.03.2010 (Annexure P-4) served upon the petitioner under Section 32(G) of the State Financial Corporation Act, 1951 (for short ‘the Act’), being guarantor of the loan availed by respondent No.5 and its partners. It is the case of the petitioner that respondent No.5 – M/s S.K.Wood Products has availed three term loans from the Haryana Financial Corporation i.e. first term loan of Rs.19.54 lac; second term loan of Rs.15.25 lac and third term loan of Rs.8.40 lacs. It is asserted by the petitioner that he is the only guarantor in respect of first term loan and not in respect of second and third term loans. It is also pointed out that the property of the principal debtor was sold in the year 2006 which sale realized a sum of Rs.35 lacs and one of the properties of the petitioner was sold in the year 2007 realizing a sum of Rs.24 CWP No.14647 of 2010 lacs. Therefore, there is no other property, which was mortgaged and is available for sale in proceedings under Section 32(G) of the Act. In reply, the respondents have controverted the stand of the petitioner and have produced on record the deed of guarantees dated 01.08.1994, 28.04.1995 and 14.11.1996 in respect of first, second and third term loans respectively. In all the three documents, the petitioner is a guarantor. It is clearly averred therein that the petitioner has submitted a personal guarantee. Since the petitioner has furnished his personal guarantee, therefore, the Corporation is at liberty to recover the amount of dues from the petitioner not only against his properties but also against his person as well from the principal debtor. The argument that the principal debtor has other property from which the Corporation can recover its dues is not tenable for the reason that liability of the guarantor is co-extensive with that of a principal debtor. It is for the creditor to take steps for the realization of its dues against the principal debtor or the guarantor, as laid down by the Hon’ble Supreme Court in State Bank of India Vs. M/s Indexport Registered and others AIR 1992 SC 1740. The Hon’ble Supreme Cout held to the following effect: “13. …The decree is simultaneous and it is jointly and severally against all the defendants including the guarantor. It is the right of the decree holder to proceed with it in a way he likes. Section 128 of the Indian Contract Act itself provides that “the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.” 14. In pollock & Mulla on Indian Contract and Specific Relief Act, Tenth Edition, at page 728, it is observed thus : “Co-extensive – Surety’s liability is co-extensive with that of the principal debtor. A surety’s liability to pay the debt is not removed by reason of the creditor’s omission to sue the principal debtor. The creditor is not bound to exhaust his remedy against the principal before suing the 2 CWP No.14647 of 2010 surety, and a suit may be maintained against the surety though the principal has not been sued.” Another argument raised by the learned counsel for the petitioner is that there is considerable delay on the part of the Corporation to realize its dues, therefore, the burden of interest on such delayed realization cannot be passed on to the petitioner. We do not find any merit in the said argument as well. The question; whether there is delay or not is a question of fact as well as to the fact whether such delay can mitigate the default amount payable by the petitioner. The petitioner has not submitted his reply to the show cause notice served under Section 32(G) of the Act. It is for the Corporation to consider the question of delay, if any, on the part of the Corporation or delaying tactics by the principal borrower or by the guarantor and to see whether the liability of the interest is not required to be passed on the petitioner or not. In view of the above, we do not find any merit in the present writ petition. The same is accordingly dismissed. (HEMANT GUPTA) JUDGE 21.11.2011 (G.S.SANDHAWALIA) Vimal JUDGE 3