IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22-2-2010 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE T.MATHIVANAN O.S.A.Nos.52 and 53 of 2010 and M.P.Nos.1 and 1 of 2010 A.K.Kandaswamy .. Appellant in both appeals vs Upasana Finance Ltd., 96/1, Luz Church Road Mylapore Madras 4 rep. By its President S.Ramakrishnan .. Respondent in both appeals OSA No.52/2010 preferred under Order XXXVI Rule 11 of O.S. Rules read with Clause 15 of the Letters Patent against the order of this Court dated 17.12.2007 made in A.No.3620 of 2007 in C.S.No.280 of 1997. OSA No.53/2010 preferred under Order XXXVI Rule 11 of O.S. Rules read with Clause 15 of the Letters Patent against the order of this Court dated 25.7.2008 made in A.No.2666 of 2008 in C.S.No.344 of 1997. For Appellant : Mr.T.Aravindakshan COMMON JUDGMENT (Judgment of the Court was delivered by M.CHOCKALINGAM, J.) These intracourt appeals challenge two orders of the learned Single Judge of this Court made in A.No.3620 of 2007 filed under Order 38 Rule 5 of C.P.C. seeking a direction to the second defendant, the appellant herein, to furnish security to the extent of the suit claim failing which to attach the property mentioned in the Schedule, and in A.No.2666 of 2008 filed by the second defendant in C.S.No.344 of 1997 challenging an order of the learned Master of this Court. 2.The Court heard the learned Counsel for the appellant who seeks admission of the appeals alleging that it is a matter to be enquired. https://hcservices.ecourts.gov.in/hcservices/ 3.After hearing the learned Counsel and looking into the materials available and in particular, the orders under challenge, this Court is of the considered opinion that the appeals do not require admission in the hands of this Court. 4.As could be seen from the materials available, C.S.No.280 of 1997 was filed seeking a money decree for a sum of Rs.33,88,910/- along with interest alleging that the second defendant who is the Managing Director of the first defendant Sri Ranga Alloys Ltd., along with the third defendant approached the plaintiff for grant of finance under the leasing facility; that they approached the plaintiff to arrange for lease finance in respect of the purchase of equipments; that the first defendant which was under liquidation, produced the proforma invoice; that the plaintiff agreed to grant the lease finance in respect of the equipments to a limit of Rs.25 lakhs on condition as found in the lease finance agreement that the sale invoice should be raised in the name of the plaintiff and the first defendant should pay a lease rent of Rs.27.50 per Rs.1000/-; that the agreement was entered into between the first defendant which was under liquidation, and it was duly signed by the third defendant; that the second defendant during the relevant period was the Managing Director; that the total amount which was due and payable to the plaintiff was Rs.41,03,550.60; that as per the agreement, the monthly instalment was Rs.68,393/- for 59 months; that it is further added that the second defendant who was the Managing Director, has given a personal guarantee in respect of the amount due and payable by the first defendant; and that when the suit was laid and pending for quite a longtime, the instant application was filed against the second defendant to furnish security and in default, to attach the property which was mentioned in the Schedule. 5.The second defendant against whom the said interim relief was sought for, has also filed his counter. 6.The learned Single Judge after hearing both sides, took the view that it is a fit case where the second defendant, the appellant herein, should be directed to furnish security. 7.C.S.No.344 of 1997 was filed seeking a money decree for a sum of Rs.14,56,000/- along with interest. The same was decreed ex-parte on 23.2.1999. Thereafter, the defendants 1 and 2 filed an application in A.No.3988 of 1999 seeking condonation of delay of 239 days in filing an application to set aside the ex-parte decree. The same was dismissed. Thereafter, the second defendant did not pursue the matter, and hence, the decree has become final. The decree holder filed E.P.No.88 of 2005 seeking transmission of the decree to the Sub Court, Tiruppur, for the purpose of execution. It was ordered on 3.5.2005. Thereafter, the second defendant filed an application in Diary No.7334 of 2007 seeking cancellation of the certificate issued by the Registry. It was posted before the learned Master for maintainability. The learned Master rejected that application. Aggrieved over the same, the second defendant has brought forth OSA 53 of 2010. 8.The learned Counsel advancing arguments on behalf of the appellant in OSA 52/2010 inter alia made two submissions. Firstly, https://hcservices.ecourts.gov.in/hcservices/ the lease finance agreement was entered into between the first defendant and the plaintiff. It is true that the second defendant was the Managing Director of the first defendant company, and the third defendant has signed the agreement on behalf of the first defendant. Secondly, there was an endorsement made by the plaintiff that he is not pressing the suit insofar as the first defendant was concerned, and the suit has actually been dismissed as against the first defendant. 9.The learned Counsel would urge that as far as the first defendant is concerned, it was actually dismissed on the endorsement made by the plaintiff; that in the instant case, the liability of the defendants 2 and 3 on the one hand and that of the first defendant on the other was parallel, and under the circumstances, even the suit should be dismissed. 10.Added further the learned Counsel that in the instant case, the suit is actually pending for about a decade; that there was an occasion for the learned Single Judge to consider an application and issue an order that the evidence could be recorded early; that when the matter was taken up by the learned Master, the learned Master of this Court took the view that since the application for attachment before judgment is pending, recording of evidence could not be proceeded with; and that under the circumstances, the appellant is not in a better position to put forth his case. 11.Added further the learned Counsel that even all the materials were placed as security at the time of the lease finance agreement in respect of which a Commissioner was appointed, and he has also taken an inventory; that the value of the materials has been more than that of the suit claim; that under the circumstances, there was no need for issuing a direction to furnish security or for passing an order of attachment, and hence, the application should have been dismissed. 12.After hearing the learned Counsel for the appellant and looking into the materials available, this Court is unable to appreciate either of the contentions. As far as the first contention is concerned, it is a question to be decided at the time of trial. It is not in controversy that an agreement of lease finance was entered into by the first defendant under liquidation, and during that period, the third defendant has signed the agreement. The second defendant was actually the Managing Director of the first defendant company. The defendants 2 and 3 have given their personal guarantees on the strength of which the amount has actually been financed. It is well settled proposition of law that in a given case where the loan is advanced to the principal debtor pursuant to which guarantors are also available, the creditor could not be compelled to proceed first against the principal debtor and only thereafter against the guarantors. Now, in the case on hand, during the relevant period, the first defendant itself was under liquidation. It is true that the defendants 2 and 3 have given their personal guarantees. But, at the same time, it should not be forgotten that it would be co-extensive. Though the first defendant company is under liquidation, the liability is not wiped out, and in fact, the liability continues. Therefore, pointing to the fact that the first defendant is under liquidation and there was actually an endorsement https://hcservices.ecourts.gov.in/hcservices/ made by the plaintiff that the suit need not be proceeded against the first defendant, the defendants 2 and 3 cannot come forward with a defence to state that they cannot be proceeded with. It is also pertinent to point out that whether the suit has to be proceeded against the defendants 2 and 3 is to be decided at the time of the trial in the suit. In such circumstances, this Court is of the considered opinion that a necessity arose for filing the application for attachment before judgment. 13.In the instant case, when the suit was pending originally there was an appeal preferred from an interlocutory order. The Division Bench of this Court had an occasion to consider the situation and issued a direction for payment of the instalment amounts. The said order was made against the second defendant also. But, it has not been followed by them and no instalment was paid. At this juncture, there arose a necessity for filing the application, according to the plaintiff. As could be seen from the averments, there were specific averments made that the second defendant has taken steps to alienate the property in order to defeat the plaintiff. Now the contention put forth by the learned Counsel for the appellant that the original security what was given for raising the amount, would suffice or be more cannot be a reason. Once there was an order given by the Division Bench for the payment of the instalment amount, and it was not followed, it is also a point to be taken into account. In such circumstances, the learned Single Judge after putting forth his attention on all the materials available, has taken a correct view that it is a fit case where security has got to be furnished, and accordingly it has been done. This Court finds nothing to disturb the order of the learned Single Judge. 14.As far as OSA 53 of 2010 is concerned, the learned Counsel for the appellant would submit that the decree was amended without the knowledge of the applicant. As rightly pointed out by the learned Single Judge, the appellant has not challenged either the original decree or the amendment to the decree. That apart, the application filed by the appellant for condoning the delay in preferring an application to set aside the ex-parte decree was dismissed eight years ago. In such circumstances, the learned Single Judge was perfectly correct in dismissing the said application. 15.Accordingly, both these original side appeals are dismissed confirming the order of the learned Single Judge. The parties will bear their costs. Consequently, connected MPs are also dismissed. Sd/- Asst. Registrar //true copy// Sub Asst.Registrar nsv https://hcservices.ecourts.gov.in/hcservices/ To The Sub Assistant Registrar, Original Side, High Court, Madras. OSA Nos.52 and 53 of 2010 KSJ {CO} TP/2.3.2010. https://hcservices.ecourts.gov.in/hcservices/