FA/1196/1988 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 1196 of 1988 For Approval and Signature: HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? No 5 Whether it is to be circulated to the civil judge? No ========================================================= STATE BANK OF SAURASHTRA - Appellant(s) Versus D M MEHTA & 2 - Defendant(s) ========================================================= Appearance : MR JD AJMERA for Appellant(s) : 1, NOTICE SERVED for Defendant(s) : 1, 3, None for Defendant(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE M.R. SHAH Date : 19/06/2008 ORAL JUDGMENT 1. Present appeal under Section 96 of the Code of Civil Procedure is filed by the appellant – FA/1196/1988 2/6 JUDGMENT original plaintiff challenging the judgment and decree dated 03.01.1986 passed by the learned Civil Judge (S.D.)., Porbander in Summary Suit No.4 of 1985 dismissing the said summary suit against the original defendant Nos.4 to 6 who were guarantors. 2. The plaintiff filed suit to recover an amount of Rs.6,93,238.93 paise with cost and interest against all the defendants on the basis of the Hundis. It was summary suit filed by the plaintiff. Defendants Nos.4 to 6 -respondents herein were joined as party defendants who were guarantors of defendant No.3. Defendant No.2 was the drawer in case of need. Defendant No.3 was given commercial credit by process of purchasing said hundi drawn by defendant No.3 in favour of the Bank on defendant No.1. Said Hundi were payable on or before 45 days after presentation with interest at the rate of 21.50% per annum. It was the case on behalf of the plaintiff that defendant was the payee and lawful holder in due course of said hundis and same were forwarded by the plaintiff – Bank to its Branch for realization. Original defendant accepted unqualifiedly that on the date of FA/1196/1988 3/6 JUDGMENT maturity the said hundis were presented to defendant No.1 for payment. But it was refused as note - notice of dishonour was served to defendant No.3. The suit hundis were again presented with defendant No.1 for payment but he refused. Thereafter said hundis were personally presented by the Notary public to defendant No.2 – drawer in case of need which was also dishonoured. Thereafter notice of dishonour was served upon defendant No.2, but no payment was made. Hence, the plaintiff filed suit to recovery the amount by way of filing the aforesaid summary suit. 3. Though served, nobody appeared on behalf of defendant No.2. On behalf of defendant Nos.3 to 6, application for leave to defend under Order XXXVII Rule 3(5) of the C.P.C. was filed. Defendant No.3's application for leave to defendant was rejected whereas defendant Nos. 4 to 6 application for leave to defend was allowed. The learned trial Court has framed the issues at Exh.34. The learned Civil Judge (S.D.), Porbander in a very cryptic one paragraph judgment and order dismissed the suit so far as defendant Nos.4 to 6 are concerned and decreed the FA/1196/1988 4/6 JUDGMENT suit against defendant Nos.1 and 2. The learned Civil Judge(S.D.), Porbander accordingly granted summons for judgment against defendant Nos.1,2 and 3. The learned trial Court in paragraph-4 while dismissing the suit against defendant Nos.4 to 6 has observed that defendant Nos.4 to 6 are Directors of the Company and the Company is liable, however, without considering the fact that defendant Nos.4 to 6 stood as guarantors in their individual capacity dismissed the suit. Being aggrieved and dissatisfied with the judgment and decree passed by the learned Civil Judge (S.D.), Porbander dated 03.01.1986 passed in Summary Suit No.4 of 1985 in dismissing the suit against defendant Nos.4 to 6 – respondents herein, the appellant – plaintiff has preferred present First Appeal. 4. Mr.J.D.Ajmera, learned Advocate has appeared on behalf of the appellant. Though served, nobody appears on behalf of the respondents herein – defendant Nos.4 to 6. 5. I have gone through the judgment and order passed by the learned trial Court dismissing the suit FA/1196/1988 5/6 JUDGMENT against the respondents – original defendant Nos.4 to 6. Impugned judgment and order passed by the learned trial Court cannot sustain for a minute. The learned trial Court has passed a very cryptic order in one paragraph only and dismissed the suit against defendant Nos.4 to 6 by observing that defendant Nos.4 to 6 were Directors of the Company, therefore, they cannot be held individual liable. I have gone through the Record and Proceedings of the case and it appears that defendant Nos.4 to 6 were joined as defendants in their individual capacity as guarantors and not as Directors of the Company. The learned trial Court has not considered and/or dealt with the said aspect at all. Looking to the deposition of the witness examined on behalf of the plaintiff and other documents, it is found that defendant Nos.4 to 6 stood as guarantors and have given guarantee in their individual capacity. When respondents herein – defendant Nos.4 to 6 stood as guarantors and when decree came to be passed against the Company i.e. principal debtor, necessary consequence would be to pass decree against the guarantors also. FA/1196/1988 6/6 JUDGMENT 6. Under the circumstances, impugned judgment and decree passed by the learned trial Court dismissing the suit against the respondents herein – defendant Nos.4 to 6 deserves to be quashed and set aside and accordingly, it is quashed and set aside. Judgment and decree dated 03.01.1986 passed by the learned Civil Judge (S.D.), Porbander in Summary Suit No.4 of 1985 in dismissing the suit against defendant Nos.4 to 6 – respondents herein is hereby quashed and set aside. Summary Suit No.4 of 1985 is hereby decreed against original defendant Nos.4 to 6 – respondents herein also and the appellant – original plaintiff is entitled to recover the said amount of Rs.6,93,238.93 paise with 21.50% interest per annum from 01.02.1985 till realization from original defendant No.s 4 to 6 also. The appeal is accordingly allowed. In the facts and circumstances, there shall be no order as to costs. [M.R.Shah,J.] satish