THE HON’BLE SRI JUSTICE V.V.S.RAO SECOND APPEAL No.1377 OF 2010 Dated:15.07.2011 Between: M/s.Margadarsi Chit Fund Limited, Having its registered office at Fateh Maidan Road, Opp.Police Control Room, Hyderabad Having among other Branches a Branch at Kakinada, Represented by its Manager, Kakinada .. Appellant And Yaga Suri Babu and others .. Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO SECOND APPEAL No.1377 OF 2010 JUDGMENT: The appellant – chit fund company filed O.S.No.1704 of 2003 for recovery of a sum of Rs.69,972/- against defendants 1 to 5. The Court of II Additional Junior Civil Judge, Kakinada, dismissed the same on 21.02.2007 recording a finding that the appellant did not maintain the accounts properly and that they failed to show the proof that the entire amount was paid to the first defendant. The trial Court also held that the guarantee agreement was not proved by the appellant. On appeal, the appellant was successful in obtaining a decree for the suit claim only against the first defendant – principal debtor. Their appeal, being A.S.No.164 of 2009, was partly allowed by the Court of the II Additional Senior Civil Judge, Kakinada, against the first defendant only. Aggrieved thereby, the present Second Appeal is filed insofar as the first appellate Court denied the decree against the guarantors/defendants 2 to 5. By referring the parties as they are arrayed in the trial Court, the brief fact of the matter is noticed as follows. The first defendant joined as a member of the chit in May, 2000. The total value of the chit is Rs.2,50,000/- to be paid in 50 monthly instalments at Rs.5,000/- per month. The first defendant became a prized bidder for an amount of Rs.1,37,500/-. After obtaining the promissory note and the guarantee agreement from defendants 2 to 5, the first defendant was paid Rs.1,31,090/-. He, however, committed default in payment of instalments and therefore after issuing notice the suit was instituted against them. The first defendant opposed the suit alleging that the entire amount was not released to him; that an amount of Rs.90,000/- was kept with them on the ground that the said amount was guarantee for the balance of chit instalments. The Junior Executive and Assistant Manager of the plaintiff company were examined as PWs.1 and 2 and Exs.A1 to A22 were marked. The first defendant himself examined as DW.1 and marked Ex.B1. The trial Court dismissed the suit holding that the amounts were not paid by the first defendant to the plaintiff and that Ex.A4 - guarantee agreement was not accepted by the plaintiff. Relying on the evidence of PWs.1 and 2, the first appellate Court also came to the same conclusion that though defendants 2 to 5 signed Ex.A4 - guarantee agreement the plaintiff did not accept the same and for that reason they did not release the entire amount to the first defendant. The appeal as noticed was only partly allowed and decreed the suit only against the first defendant. The counsel for the appellant would submit that unless and until there is discharge of defendants 2 to 5, the plaintiff cannot be denied a joint and several decree against defendants 1 to 5. He would submit that under Section 125 of the Contract Act, 1872, the liability of the sureties is coextensive to the principal debtors and when once the liability of the first defendant is accepted, the defendants 2 to 5 cannot be allowed to escape their liability. This Court has thoroughly perused the judgment of the trial Court as well as the appellate Court. As found by the Courts below, PW.1 - the Junior Executive admitted that Ex.A4 - guarantee agreement was not satisfactory and that as defendants 2 to 5 already stood guarantee in another chit. For this reason, part of the amount payable to the first defendant was kept in a deposit in Margadarsi Financiers. This would highly probablise the case of the defendants that the plaintiff itself did not complete the transaction. Even if Ex.A4 is signed by defendants 2 to 5, they cannot be made liable under the same. Whether there was a valid binding guarantee agreement between the plaintiff, first defendant and defendants 2 to 5, is a question of fact. The finding on this aspect recorded by the first appellate Court is sound and does not warrant any interference. The Second Appeal is misconceived and is, accordingly, dismissed. There shall be no order as to costs. _______________ (V.V.S. RAO, J) 15.07.2011 KH