Case: State Bank Of India Vs. M/S. Indexport

This appeal is directed against the judgment of the High Court of Delhi dated 23rd May, 1990, whereby the High Court was pleased to dismiss the revision petition filed by the appellant-bank against the judgment of the Additional District Judge, Delhi, dated 5th May, 1989, whereby the Additional District Judge, Delhi, relying upon the decision of this court in Union Bank of India v. Manku Narayana 1987 (62) CC 1, dismissed the Execution Application No. 39 of 1985 against respondent No. 4appellant, one of the nationalised banks, is a decree-holder. Indexport Registered, respondent No. 1, is a partnership firm. Shri Janesh war Kumar Jain, respondent No. 2, was a partner of respondent No. 1 along with one Shri Ajay Kishan Mehta (since deceased and now represented by his mother, Smt. Savitri Devi, respondent No. 3). Shri Ram Kishan, respondent No. 4, is theappellant-bank had granted to respondent No. 1 a packing credit facility to the extent of Rs. 1, 00, 000 and respondent No. 4 had executed a deed of guarantee in favour of the appellant-bank. Shri Ajay Kishan Mehta, having died prior to the filing of the suit, Smt. Savitri Devi was impleaded in place of her deceased son as his legal representative. As a security, respondent No. 2 had also created an equitable mortgage of his shop situated in Rori Bazar, Sirsa, Haryana, in favour of the appellant.The appellant was obliged to file a suit against the respondents for a money decree for Rs. 33, 705.22. The appellant also prayed for a preliminary decree against respondent No. 2 with a direction that if he commits default in payment, a final decree be passed against him with permission to the appellant to apply for a personal decree against him for any deficiency after the sale of the mortgaged property. The suit was contested by the respondents. In paragraph 12 of its judgment, while deciding issue No. 7 relating to the relief, the learned trial court observed asIn view of my findings recorded above, the present suit succeeds and decreeing the same, I hereby pass a decree in favour of the plaintiff for recovery of Rs. 33, 705.22 with costs. The defendants shall pay future interest at the rate of 7 per cent. per annum (as agreed in the letter Ex. PAPW 5/4) from the date of the institution of the suit till its realisation. The plaintiff-bank shall also be entitled to the amount by way of sale of the shop in case the decretal amount is not paid within a period of three months from today, the decree in question will also be deemed to be a personal decree against all the defendants, but, however, the decree will be executable against defendant, No. 3 qua the estate inherited by her from Ajay Kishan Mehta. Decree-sheet be prepared and the file be consigned to the record room."an application of the appellant-bank the execution of the decree was transferred to Delhi and on notice being issued by the court of the Additional District Judge, Delhi, guarantor-respondent No. 4 filed objections. The main objection was that no steps were taken against the mortgaged property, i.e., the shop, and no action by way of execution could be taken for proceeding against the guarantor till the mortgaged shop is sold and it is only if the realisation from the sale of the shop is deficient that the balance could be recovered from the judgment-debtors personally.The Additional District Judge, Delhi, following the decision of this court in Union Bank of India v. Manku Narayana 1987 (62) CC 1, took the view that it is a composite decree, personally against the principal debtor and the guarantor and also against the mortgaged property of defendant No. 2, and, therefore, since it is a composite decree and the mortgaged property is also involved, the decree-holder should have proceeded first against the mortgaged shop and since it has not done so, the execution application against the objector (guarantor) does not lie. The decree-holder challenged this decision dated May 5, 1989, by way of a revision petition before the High Court and the High Court also, following the decision of this court in Manku Narayanas case 1987 (62) CC 1, dismissed the revision petition and it is against this decision that the present appeal arises.

Court's reasoning:
The decree for money is a simple decree against the judgment-debtors including the guarantor and in no way subject to the execution of the mortgage decree against judgment-debtor No. 2. If on principle a guarantor could be sued without even suing the principal debtor there is no reason, even if the decretal amount is covered by the mortgage decree, to force the decree-holder to proceed against the mortgaged property first and then to proceed against the guarantor. It appears that the above-quoted observations in Union Bank of India v. Manku Narayana 1987 (62) CC 1, are not based on any established principle of law and/or reasons, and in fact, are contrary to law. It, of course, depends on the facts of each case how the composite decree is drawn up. But if the composite decree is a decree which is both a personal decree as well as a mortgage decree, without any limitation on its execution, the decree-holder, in principle, cannot be forced to first exhaust the remedy by way of execution of the mortgage decree alone and told that only if the amount recovered is insufficient, he can be permitted to take recourse to the execution of the personal decree. For a simple mortgage decree as prescribed in Form No. 5 of Appendix D to the Code Civil Procedure, it could be so because the degree provides like that It is only when the sum realised on sale of the mortgaged property is insufficient that the judgment-debtor can be proceeded against personally. But the observations of the court in Union Bank of India v. Manku Narayana 1987 (62) CC 1, that even if the two portions of the decree are severable and merely because a portion of the decretal amount is covered by the mortgage decree, the decree-holder per force has to proceed against the mortgaged property first" are not based on any principle of law. With all due respect to the learned judges, in the light of the observations made by us earlier, we are constrained to observe that Manku Narayanas case [l987] 1987 (62) CC 1 was tot correctlywill be noticed that we are dealing with the matter at the execution stage and are not concerned with the correctness or otherwise of the decree under execution. Therefore, this submission of learned counsel has got noof Madhya Pradesh v. Kaluram, 1967 AIR(SC) 1105. This again has no relevance as it relates to the question when the security getsof Bihar v. State of Bihar 1971 (41) CC 591 (SC). This was a case of pledge of goods and, therefore, has no relevance to the facts of the presentSethia v. Ivan E. John 1977 (1) SCR 853. This again was a case relating to dissolution of partnership and for rendition ofBank of Saurashtra v. Chitranjan Rangnath Raja 1981 (51) CC 618 (SC). It will be noticed that in this case the plea was taken in the suit and the matter was not relating to the execution, of theBank of India v. Saksaria Sugar Mills Ltd. 1986 (59) CC 861 (SC). In this case, even when the sugar mills Were taken over, it was held that the banks rights as secured creditors and their remedies were not affected.Deep Chand v. Punjab National Bank, I 1990 BC 50. This case again related to the interpretation of the decree and has no relevance to the facts of the presentSudhendu Narain Deb v. Mrs. Renuka Biswas 1991 (4) JT 320 ; 1992 (1) SCC 206. This again has no application to the question posed beforeguarantor in the present suit never took any plea to the effect that his liability is only contingent if the remedies against the principal debtors fail to satisfy the dues of the decree-holder. If such a plea had been taken and the court trying the suit had considered the plea and given any finding in favour of the guarantor, then it would have been a different position. But, in the present case, on the face of the decree, which has become final, the court cannot construe it otherwise than according its tenor. No executing court can go beyond the decree. All such pleas as to the rights which the guarantor had, had to be taken during trial and not after the decree while execution is being levied.