IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.7251 of 2009 HARIDWAR UPADHYAYA Versus THE STATE OF BIHAR & ORS ----------- 2 3.7.2009 Heard counsel for the petitioner and the State as well as counsel appearing on behalf of the Canara Bank. The petitioner prays for quashing of the auction notice dated 6.6.2009 issued by the Authorised Officer, Canara Bank, Boring Road, Patna. The petitioner happens to be the father of the borrower J.K.Upadhyaya, proprietor of M/s Jai Hari Traders. It is not in dispute that the Bank granted cash credit facility to the borrower and the total liability against him as on 31.5.2009 was Rs.16,15,181.29 plus interest from 1.11.2007 and incidental expenses till the date of closure of the account. It appears that against the aforesaid loan the petitioner stood as guarantor and he created equitable mortgage in favour of the Bank by depositing documents of his immovable property, the details of which is mentioned in column no.7 of the sale notice. Learned counsel for the Bank submits that the notice under section 13(1) of the Sarfaesi Act, 2002 has been given both to the borrower and the guarantor and thereafter the Bank proceeded under rule 8(6) and 9 of the Sarfaesi Rules. Learned counsel for the petitioner submits that the Bank had not acted fairly as at the first instance it should have attached the 2 hypothecated goods of the J.K.Traders and recover its dues. In case it was not able to recover its dues then it could have proceeded against the guarantor. He further submits that the petitioner has filed his objection on 20.6.2008, as contained in Annexure-3. However, the aforesaid fact has been disputed by the Bank. It is well settled that the liability of the borrower and the guarantor is co-extensive. The Bank has discretion either to proceed against the borrower or the guarantor. However, the discretion has to be exercised judiciously and not in arbitrary manner. It was open to the Bank to consider the objection of the borrower and the guarantor and thereafter it could decide whether to proceed against the borrower or the guarantor depending upon the facts of the case. The Hon’ble Apex Court in the case of Ashok Mahajan Vs State of U.P. & Ors, 2006 A.I.R. SCW 4925 observed that action against the guarantor is taken after efforts to realize the due amount from the principal debtor is not satisfied. The aforesaid view was rendered by the Hon’ble Apex Court in case of U.P.Public Money (Recovery of Dues) Act (23 of 1972). Further more, this court in the case of Shyam Kishore Prasad & anr Vs Bank of Baroda & Ors, 2009(1) P.L.J.R. 619 observed that though the Bank has discretion in chosing the property or the person from amongst many available to it for the purposes of satisfying its debits. However, this discretion is neither absolute nor unfettered and the same has to be exercised based on sound principles and in transparent manner giving no party a cause to 3 KHAN complain. In the backdrop of the aforesaid principle, this court is of the view that the Bank would be at liberty to hear the petitioner as well as the borrower and after considering their bonafide stand may dispose of their objection(s) in accordance with law. Learned counsel for the petitioner submits that he would file his objection by 7.7.2009 and the counsel for the Bank submits that the same would be disposed of within a week thereafter. In view of the aforesaid circumstances, this court disposes of this writ petition in aforesaid terms. Till then, no coercive steps would be taken pursuant to the sale notice as contained in Annexure-1. It would be open to the Bank to realize the incidental expenses also from the borrower or from the guarantor. (S.P.Singh,J)