IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Regular Second Appeal No. 4309 of 2009 Date of Decision : November 27, 2009 Tarun Kumar ....Appellant Versus Allahabad Bank and others .....Respondents CORAM : HON'BLE MR. JUSTICE T.P.S. MANN Present : Mr. P.L.Singla, Advocate T.P.S. MANN, J. Suit filed by plaintiff-respondent No.1 for recovery of Rs.1,08,770/- jointly and severally from the defendants was decreed with costs by Civil Judge (Junior Division), Moga, on 3.1.2008. The plaintiff- bank was also held entitled to recover the said amount alongwith future interest @ 12% per annum till realization of the decretal amount. In the event of the defendants failing to pay the decretal amount, the plaintiff was entitled to recover the same by way of sale of hypothecated electronics goods mentioned in the plaint. Aggrieved of the same, defendant No.3, i.e. present appellant filed the first appeal, which has been dismissed by Additional District Judge, Moga, on 4.9.2009. Under these circumstances, the said defendant is now before this Court by way of a second appeal filed under Section 100 C.P.C. According to the plaintiff-bank, it received an application of defendant No.1 from District Industries Centre under the Prime Minister R.S.A. No. 4309 of 2009 -2- Rojgar Yojna. Vide said application, defendant No.1 applied for loan amount of Rs.95,000/- on 21.12.1995 for electronics parts for assembling of decks. The loan was duly sanctioned by the plaintiff-bank. To secure the repayment of the loan together with all interests, charges, commissions, expenses and other moneys payable, defendant No.1 executed demand promissory note for Rs.95,000/-, money consideration receipt, letter of waiver, agreement of hypothecation and letter of authority on 26.2.1996 in favour of plaintiff-bank under which he promised to abide by all the terms and conditions of the loan account and to repay the same alongwith interest @ 14% per annum with quarterly rests as per the directions of the Reserve Bank of India from time to time. In consideration of the plaintiff-bank granting advance/financial facilities, defendants No.2 and 3 stood sureties/guarantors for defendant No.1 and in that regard executed a continuing guarantee dated 26.2.1996, in favour of the plaintiff. It was made clear to them that in case of default of making of re-payment by the loanee, the recovery would be effected from them. The liability/responsibility of defendants No.2 and 3 was joint, several and co- extensive one. Loan was, accordingly, disbursed to defendant No.1. After availing the loan, defendant No.1 failed and neglected to abide by the terms and conditions agreed upon inspite of demands and notices and failed to repay the loan. Defendant No.1 had not paid the principal amount and interest. The bank approached the defendants for adjusting the bank dues, but they neither adjusted the bank dues nor deposited any amount in the account of defendant No.1. Therefore, the bank was forced to recall the R.S.A. No. 4309 of 2009 -3- advance. Accordingly, the suit was filed by the plaintiff-bank for recovery of its dues. In his written statement, defendant No.3, i.e. present appellant alleged that defendant No.1 never approached the plaintiff-bank for any loan in his presence. No document was ever executed by defendant No.1 in favour of the plaintiff-bank in the presence of defendant No.3. Defendant No.1 never promised to pay any amount or interest to the plaintiff-bank. The answering defendant never stood guarantee for any loan, repayment or interest. Infact, defendant No.1 had to open a current account with the plaintiff-bank and the answering defendant identified the said defendant in the plaintiff-bank. At no stage, the answering defendant gave his signatures as guarantor for any loan to defendant No.1. The answering defendant also did not execute any guarantee deed nor any loan disbursed to defendant No.1 in his presence. Defendants No.2 (i) and (ii) alleged that as the credit facilities were allegedly granted by the plaintiff-bank to defendant No.1 under a Government sponsored scheme, the recovery proceedings had to be initiated under the Punjab Money Recovery Act and not through a civil suit. The jurisdiction of the civil Court was barred. Moreover, under the rules framed by the Reserve Bank of India, for granting credit facilities under the Government sponsored scheme known as Prime Minister Rozgar Yojna, no third party guarantee was to be obtained while granting the loan. The guarantee, if any, obtained by the bank from defendant No.2 (since R.S.A. No. 4309 of 2009 -4- deceased and represented by his legal heirs), was illegal and violative of the rules framed by the Reserve Bank of India. Both the learned Courts below held that defendant No.1 had taken a loan of Rs.95,000/- from the plaintiff-bank on 21.11.1995 and promised to abide by all the rules and regulations of the bank and also agreed to repay the loan amount alongwith interest @ 14% per annum, but he failed to perform his part. Defendants No.2 and 3, who stood sureties/guarantors for defendant No.1 were liable to repay the aforementioned amount, their liability being joint, several and co-extensive one. Accordingly, the plaintiff-bank was held entitled to recover Rs.1,08,770/- alongwith future interest @ 12% per annum from the defendants, jointly and severally. The plaintiff-bank had examined PW1 Amrik Singh Chohan, Manager, who proved the loan documents executed by the defendants in its favour. According to him, defendant No.1 applied for loan of Rs.95,000/- by submitting an application to District Industries Centre under the Prime Minister Rojgar Yojna. The request of defendant No.1 was accepted and the loan was sanctioned for starting business of electronics goods for assembling of decks. Accordingly, defendant No.1 executed loan documents to avail of the loan facilities. Defendants No.2 and 3 stood as guarantors for repayment of the loan amount by executing guarantee deeds Ex.P8 and P9 respectively. In view of the fact that the loan amount was not repaid, the outstanding amount swelled to Rs.1,08,770/- as per statement of R.S.A. No. 4309 of 2009 -5- account Ex.P15, which was due from the defendants and the same included interest calculated upto 21.9.1998. The plea of the defendant-appellant that no guarantee was required to be furnished for granting loan upto Rs.1,00,000/- and he never executed any such guarantee deed, but his signatures were obtained to identify defendant No.1, who wanted to open an account with the plaintiff- bank, cannot be accepted as the guarantee deed Ex.P9 executed by the defendant-appellant stands duly proved on the file. The deed bore the signatures of the appellant on each and every page and all the instructions were on the demand promissory note. The appellant is a literate and expected to affix his signatures only after going through contents of the documents. It cannot be believed that his signatures were taken on blank documents or that he had signed for the limited purpose of identifying defendant No.1 for opening a bank account. It may be that no guarantee deed was required to be furnished by the defendant-appellant as the loan amount sanctioned was less than Rs.1,00,000/- yet the instructions issued in that regard were only recommendation and not mandatory. The defendant-appellant knowingly furnished the guarantee for the repayment of the loan amount and his liability alongwith that of defendants No.1 and 2 was joint and several. It has also been submitted that the plaintiff-bank did not preserve the hypothecated goods and, therefore, it cannot get the amount R.S.A. No. 4309 of 2009 -6- reimbursed from the guarantors. It is the choice of the plaintiff to go after the loanee and/or the guarantors besides taking steps to sell the hypothecated goods so as to recover the outstanding dues, but there is no requirement that the plaintiff cannot chase the guarantors without first attempting to recover the amount from the loanee and/or selling the hypothecated goods. Both the Courts below, after appreciating the evidence in its proper prospective, came to the conclusion that the defendant-appellant furnished the bank guarantee so as to secure the interest of the plaintiff- bank to recover the loan amount alongwith the interest. Therefore, these findings cannot be termed to be either perverse or suffering from any illegality or infirmity. Moreover, these findings are immune from challenge in a second appeal, which is maintainable only on some substantial question of law and not otherwise. None of the questions of law, as formulated by the appellant and mentioned in para 4 of the grounds of appeal, much less any substantial question of law, requires determination. Being devoid of any merit, the appeal is, hereby, dismissed in limine. ( T.P.S. MANN ) November 27, 2009 JUDGE ajay-1