1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR JUDGMENT S.B. Civil First Appeal No.19/1992 (Punjab National Bank Versus Giriraj Prasad Mittal) Date of Judgment :: 26th February, 2009 PRESENT HON'BLE MR. JUSTICE NARENDRA KUMAR JAIN Mr. V.K. Tamoliya for Mr. N.K. Maloo for the appellant Mr. Sunil Samdariya for the respondent BY THE COURT: The only point involved in the present regular first appeal is as to whether the defendant no.2 Giriraj Prasad Mittal, who is respondent herein, who stood guarantor of principal borrower defendant no.1 Subedar Santokh Singh is jointly liable for dues payable by defendant no.1 to plaintiff-Bank and trial court committed an illegality while deciding issue no. 5 whereby it has been held that defendant no. 2 did not execute Ex. 9 deed of guarantee. 2. Briefly stated the facts of the case are that plaintiff-appellant filed a suit for recovery of a sum of Rs. 91,749.05/- against defendants no. 1 to 3 namely Subedar Santokh Singh, Giriraj Prasad Mittal and Sardar Manak Singh. The defendant no.1 Santokh Singh was the 2 principal borrower and defendants no. 2 and 3 stood sureties for him. The defendant no. 2 filed his written-statement, wherein it was stated that his signatures were got on some blank form by Bank Manager, and he was not aware as to whether he is guarantor or not. The trial court framed issue no. 5 as to whether the defendants no. 2 and 3 executed the guarantee deeds, as alleged in paras no. 8, 9 and 10 of the plaint. The trial court decided issue no. 5 in favour of the defendant no. 2 and, consequently, while decreeing the suit of plaintiff-appellant against defendants no. 1 and 3, dismissed the suit against defendant no.2. Being aggrieved with the same, the Bank has preferred this regular first appeal against defendant no.2 with a prayer that he was also jointly liable for payment of dues of loan amount and a decree may also be passed against him. 3. The learned counsel for the appellant contended that defendant no.2 executed the deed of guarantee Ex. 9. There are averments in the plaint in para 8 about execution of guarantee deed by defendant no.2. The defendant no. 2 admitted the execution of Ex. 9, but he only contended that his signatures were got on blank 3 papers. He read the statement of DW-2 Giriraj Prasad himself, wherein he admitted the execution of Ex. 9. He also submitted that from the statement of PW-1 Om Prakash, it is clear that Ex. 9 was executed by defendant no. 2 in his presence and in these circumstances, the trial court committed an illegality in not deciding the whole issue no. 5 in favour of plaintiff and in dismissing the plaintiff's suit against defendant no.2. 4. The only submission of learned counsel for the respondent / defendant no.2 is that as per Section 134 of the Indian Contract Act, 1872, the surety stands discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor. His contention is that the decree was passed against principal borrower way back on 9th August, 1991 and since then the said amount has not been recovered by plaintiff-Bank either by filing the execution petition or otherwise, therefore, by act of bank, the liability of respondent stood discharged and the present appeal is liable to be dismissed only on this 4 ground alone. However, he has not denied the execution of Ex. 9 by defendant no. 2 and no other submission has been advanced on his behalf. 5. I have considered th submissions of learned counsel for both the parties and examined the impugned judgment as well as the record of the trial court. 6. The only dispute in the present case is about the finding on issue no. 5. The plaintiff filed a suit for recovery against principal borrower and two sureties stood for him. The trial court decided issue no. 5 in favour of the defendant no.2 and consequently dismissed the suit against him. The suit was decreed against principal borrower defendant no. 1 and another surety Sardar Manak Singh – defendant no.3. 7. So far as pleadings of the parties in respect of issue no.5 is concerned, para 8 of the plaint and written statement filed on behalf of defendant no.2 are relevant, which are reproduced as under:- Para 8 of the Plaint: (8) That the Defendant No. 1 Sardar Santokh Singh tendered Shri Girraj Prasad Mittal – Defendant No.2, who executed agreement of guarantee in Bank Form No. PNB 295 (old) on 16th March, 1974 whereby Shri Girraj Prasad 5 Mittal agreed according to clause No. 9 that the balances confirmed by borrower or his authorised Agent shall be binding on the guarantor in the same manner and to the same extent as if the borrower or his authorised Agent was their authorised Agent to make such acknowledgments and these acknowledgments shall be binding on the guarantor. The guarantor also agreed according to the Agreement of Guarantee that the Bank can recover the amount of the loan from the guarantor without taking recourse to the principal borrower.” Para 8 of the Written Statement: “(8) That with respect to para 8 of the plaint, it is submitted that the signatures were taken on blank form by the Bank Manager from the answering defendant and it was not either explained or told that in what connection the signatures are being obtained. The answering defendant never stood as guarantor for Subedar Santokh Singh. The plaintiff is put to strict proof of each and every word of this para, which is denied. The plaintiff never approached the answering defendant in connection with the loan of Santokh Singh.” 8. The above para 8 of the written statement makes it clear that execution of Ex. 9 by defendant no. 2 was admitted. The only submission is that his signatures were taken on blank form by Bank Manager. However, during the course of arguments, the learned counsel for the respondent has also not disputed the execution of Ex. 9; guarantee deed, by defendant no.2. PW-1, Om Prakash Vyas, in whose presence the defendant n.2 signed Ex. 9, 6 guarantee deed, has proved that in his presence the letter of guarantee Ex. 9 was written and signed by defendant no.2 Giriraj Prasad Mittal. The statement of defendant no.2 Giriraj Prasad is very relevant to be referred here. In the examination-in-chief itself, Giriraj Prasad stated that at the time of getting his signature on the blank form, he was not told that his signatures are taken on surety bonds, but he was told that they are relating to loan. This statement makes it clear that he was fully aware that he is signing the form relating to loan. In his cross-examination, he admitted that he knows very well that if any blank paper is signed, then it may create some liability. Ex. 9 makes it clear that defendant no.2 put his signature in english itself, meaning thereby he was knowing english also, therefore, from the statement of DW-2, it is clear that he was fully aware while signing Ex. 9 that he is signing on agreement of guarantee in respect of loan advanced by plaintiff-bank to defendant no.1 Santokh Singh. In this connection, Section 128 of the Indian Contract Act is relevant, wherein it is prescribed that liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise 7 provided by the contract. Therefore, liability of surety – defendant no.2 was co-extensive in the present case with the principal borrower i.e. defendant no.1 and, in my view, trial court committed serious illegality in dismissing the suit of the plaintiff against defendant no.2. 9. In State Bank of India Versus Sher Singh (AIR 2009 Uttarakhand 7), the Single Bench of the Uttarakhand High Court considered the provisions of Section 118 of the Negotiable Instruments Act and held that when debtor states that Bank Manager had fraudulently obtained his signature on blank documents and where the debtor was not an illiterate person, bank's documents were printed in hindi and english both scripts, it cannot be presumed that debtor has made his signatures over those documents without understanding their effect, the presumption under Section 118 goes in favour of the bank. Para 11 of the judgment is reproduced as under: “11. The plaintiff Bank has filed original documents which includes Copy of the Account, Promissory Note dated 22-3-1991 (Ex. 1) D.P. Note Delivery Letter dated 22.3.1991 (Ex.2), sanctioning letter dated 22.3.1991 (Ex.3) and Agreement for Hypothecation and Guarantee (Ex.4). Defendant Sher Singh has admitted his signatures on these documents. However, he stated 8 that the Bank Manager has fraudulently obtained his signatures on these documents. Sher Singh is not an illiterate person. It appears that at least he could read or write Hindi very well. The Bank's documents are printed in Hindi and English both scripts. Thus it cannot be presumed that the: defendant has made his signatures over those documents without understanding their effect. Thus presumption under section 118 of the Negotiable Instruments Act goes in favour of the plaintiff. Presumption under section 118 of the Act is although rebuttable presumption but the defendant has failed to rebut that presumption by adducing reliable evidence.” 10. So far as present case is concerned, it is clear that Ex. 9, which is printed in english, bears the signature of defendant no.2 in english language itself. DW-2 Girraj Prasad admitted in his cross-examination that he knows that when a person signs on blank form or papers, then his liability may arise under the said documents. Therefore, it cannot be presumed that debtor has made his signatures over those documents without understanding their effect. The trial court did not appreciate the evidence available on record properly and wrongly decided issue no.5 in favour of the defendant no.2. 11. This Court in the case of Mst. Budhi versus Balmukand (1984 RLW 343) held that once the execution of document is proved, the 9 contents will follow. Para 13 of the judgment is reproduced as under: “13. As has been discussed above, the evidence adduced by the plaintiff dispels all doubts about the execution of Ex. 1. It is well settled that once the execution of a document is proved, the contents will follow. The contention that the agreement set up by the plaintiff and the execution of Ex. 1 do not stand proved is barren and holds no ground.” 12. So far as present case is concerned, the execution of Ex. 9, deed of guarantee, executed by defendant no.2 has not been disputed even during the course of arguments by learned counsel for the respondent, therefore, as per settled law it is presumed that contents of Ex. 9 were in the knowledge of defendant no.2 and the execution of Ex. 9 is fully proved and defendant no.2 is liable for the dues of bank as a guarantor of defendant no.1. 13. So far as the submissions of learned counsel for the respondent about Section 134 of the Indian Contract Act is concerned, the same is not applicable in the present case on facts and law both. The respondent has not filed any application in this court to show that there is any act or omission of the bank which may amount to discharge of liability of the surety. His oral contention is that as per his 10 knowledge, no execution petition was filed in the trial court to execute the decree against defendant no. 1. However, he has not filed any application or affidavit or any document on record to show that no efforts were made for recovery of the amount under the impugned decree by bank against defendant no.1-principal borrower. Apart-from above factual aspect, the contention of learned counsel for the respondent cannot be accepted legally also for the reason that the plaintiff challenged the finding on issue no.5 by way of this appeal, which was filed way back in November, 1991 and at present the said argument is not available to the respondent in this appeal. The act or omission of Bank is required to be considered on the date of filing of suit or date of judgment. Therefore, I do not find any force in the submissions of learned counsel for the respondent. 14. In view of above discussions, I am of the view that trial court committed a serious illegality in deciding issue no.5 in favour of defendant no.2 and the same is decided against him and consequently, it is held that defendant no.2 / respondent herein, was jointly liable to make payment of dues of loan of Bank and decree 11 is also liable to be passed against him along- with defendants no. 1 and 3. 15. Consequently the appeal is allowed. The impugned judgment and decree dated 9th August, 1991 passed by the Additional District & Sessions Judge no. 2 Ajmer is modified and it is directed that the suit of plaintiff for the amount in question is decreed against all the defendants i.e. defendants no.1 to 3 and not against defendant no.1 and 3 alone, as decreed by the trial court. The remaining order and decree of the trial court is upheld. 16. So far as this appeal is concerned, the cost is made easy. (NARENDRA KUMAR JAIN),J. DK