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M/s Bal Mukand Mohinder Kumar Iron Steel Commission Agents Loha Bazar, Mandi Gobindgarh & Others v/s Punjab National & Others

Company & Directors' Information:- MUKAND LIMITED [Active] CIN = L99999MH1937PLC002726

Company & Directors' Information:- INDIA IRON AND STEEL CORPORATION LIMITED [Active] CIN = U27106DL2006PLC149653

Company & Directors' Information:- PUNJAB IRON AND STEEL COMPANY LIMITED [Active] CIN = L27109PB1963PLC002482

Company & Directors' Information:- J. J. IRON AND STEEL PRIVATE LIMITED [Active] CIN = U27106MH2008PTC188056

Company & Directors' Information:- J D IRON PRIVATE LIMITED [Active] CIN = U51420DL1996PTC079084

Company & Directors' Information:- S P IRON PRIVATE LIMITED [Active] CIN = U27106DL2005PTC136441

Company & Directors' Information:- A M R IRON AND STEEL PRIVATE LIMITED [Active] CIN = U27100MH2003PTC140824

Company & Directors' Information:- NATIONAL IRON AND STEEL CO LTD [Strike Off] CIN = U27103WB1934PLC008101

Company & Directors' Information:- K L IRON AND STEEL PRIVATE LIMITED [Active] CIN = U27310UP2012PTC051496

Company & Directors' Information:- M K IRON PRIVATE LIMITED [Active] CIN = U27109CH1997PTC019501

Company & Directors' Information:- AGENTS INDIA LTD [Strike Off] CIN = U20203WB1952PLC020203

Company & Directors' Information:- J P IRON AND STEEL LTD [Active] CIN = U27106PB1994PLC014838

Company & Directors' Information:- P P IRON & STEEL PVT LTD [Active] CIN = U27109WB2005PTC106080

Company & Directors' Information:- G K IRON AND STEEL COMPANY LIMITED [Active] CIN = U13100KA2005PLC065824

Company & Directors' Information:- O P G IRON & STEEL PRIVATE LIMITED [Active] CIN = U27109WB2005PTC103315

Company & Directors' Information:- R R C AND F AGENTS PVT LTD [Active] CIN = U45202CH2005PTC029330

Company & Directors' Information:- A. G. IRON & STEEL PRIVATE LIMITED [Active] CIN = U27310WB2008PTC123843

Company & Directors' Information:- L D AGENTS PVT LTD [Active] CIN = U51909WB1991PTC050742

Company & Directors' Information:- G R IRON & STEEL PVT LTD [Active] CIN = U51909WB1991PTC053653

Company & Directors' Information:- H P IRON PRIVATE LIMITED [Active] CIN = U27100DL2009PTC191318

Company & Directors' Information:- D A IRON AND STEEL COMPANY PVT LTD [Strike Off] CIN = U27103PB1994PTC014497

Company & Directors' Information:- P S IRON AND STEEL PRIVATE LIMITED [Active] CIN = U51909PB2000PTC023340

Company & Directors' Information:- S D COMMISSION AGENTS PRIVATE LIMITED [Strike Off] CIN = U51109WB1998PTC087497

Company & Directors' Information:- A B S BAZAR PRIVATE LIMITED [Strike Off] CIN = U52599WB2003PTC095645

Company & Directors' Information:- NATIONAL STEEL CORPORATION LTD [Strike Off] CIN = U27100WB1942PLC020862

Company & Directors' Information:- M. L. IRON PRIVATE LIMITED [Active] CIN = U27101DL2011PTC220421

Company & Directors' Information:- P K IRON PVT LTD [Strike Off] CIN = U34300WB1981PTC034415

Company & Directors' Information:- INDIA BAZAR PRIVATE LIMITED [Dissolved] CIN = U99999MH1950PLC008232

Company & Directors' Information:- M A N AGENTS PRIVATE LIMITED [Strike Off] CIN = U74899DL1989PTC035096

Company & Directors' Information:- GOBINDGARH STEEL PVT LTD [Strike Off] CIN = U27104PB1983PTC005561

Company & Directors' Information:- B AND B (AGENTS) PRIVATE LIMITED [Strike Off] CIN = U51102KA1982PTC005053

Company & Directors' Information:- V M IRON PRIVATE LIMITED [Strike Off] CIN = U51909PN2012PTC142963

Company & Directors' Information:- C M D IRON & STEEL PRIVATE LIMITED [Strike Off] CIN = U52100UP2013PTC057889

Company & Directors' Information:- K M D IRON & STEEL PRIVATE LIMITED [Strike Off] CIN = U52300UP2013PTC055973

Company & Directors' Information:- COMMISSION AGENTS PVT LTD [Active] CIN = U51109WB1937PTC009134

Company & Directors' Information:- D N IRON AND STEEL PRIVATE LIMITED [Strike Off] CIN = U27310DL2004PTC126698

Company & Directors' Information:- E-MANDI PRIVATE LIMITED [Active] CIN = U52209DL2016PTC291168

Company & Directors' Information:- VERSUS IRON AND STEEL PRIVATE LIMITED [Strike Off] CIN = U27109MH1997PTC109497

    Regular Second Appeal No. 1154 of 1985 (O&M)

    Decided On, 06 December 2013

    At, High Court of Punjab and Haryana


    For the Appellants: J.S. Toor, Advocate. For the Respondents: H.N. Mehtani, Advocate.

Judgment Text

K. Kannan, J. (Oral)

1. The following substantial questions of law arise for consideration in the second:-

i) Whether the agreement of the creditor Bank with the principal debtor subsequent to the grant of decree providing for making the payment in installment for repaying the loan discharge the liability of the surety?

ii) Whether the surety is discharged also by the fact that the creditor had given up the security of the principal debtor without the concurrence of the surety?

2. The defendant, who was the guarantor for the discharge of debt contracted by the co-defendant, is the appellant before this Court. The counsel would raise before me two issues of law, namely, that the Bank had allowed the security availed to them, namely, the goods for factories of the principal debtor to be lost and hence, it resulted in discharge of the surety. The counsel would point out to me that the goods in the godowns had been lifted by some persons and the Bank had not exercised sufficient caution when it was having the keys of the godown and consequently, surety is discharged.

3. The other objection is with reference to an event that had taken place subsequent to the decree which was passed on 31.03.1981 when the principal debtor undertook with the Bank on 17.01.1987 to pay the money in installments at Rs. 4,500/- per month and that if he committed any default, the Bank would be at liberty to recover the remaining amount. This amounted to compounding with the principal debtor by a creditor that would operate to discharge a surety's liability.

4. Learned counsel would refer me to the judgment of the Supreme Court in State Bank of Saurashtra Versus Chitranjan Rangnath Raja and another-AIR 1980 Supreme Court 1528 where the Supreme Court was holding that if the pledged goods had been lost due to the Bank's negligence, surety would be discharged to the extent of such security lost. The counsel would also refer me to a decision of this Court in State Bank of India Versus M/s Quality Bread Factory, Batala and others-AIR 1983 Punjab and Haryana 244 where the Court was reiterating the same position that hypothecated goods lost by negligence of the pledgee would discharge the surety. Union of India, Ministry of Food and Agriculture (Dept. of Food), New Delhi Versus Pearl Hosiery Mills and others-AIR 1961 Punjab 281 (Vol.48, C.85)(1) refers to effect of variation in terms of original contract between the debtor and creditor without the consent of surety as contemplated under Section 133 of the Contract Act and vacate the liability of the surety.

5. In this case, the issue of the effect of the goods under the direct control of the Bank had been considered by a specific issue No.10. The trial Court held that some of the goods in their godown were reported to have been pilfered, but the Court considered the evidence brought on record that the shortage of material had occurred notwithstanding the fact that the Bank had actually employed a Chowkidar at the premises to safeguard the goods. It appears that there had been also a complaint lodged for the shortfall in the goods at the godown from one N.N. Dwivedi and he had given it in writing that he was responsible for the loss. The witness himself came to Court to say that the writing was under a threat by the Bank that they would otherwise give a complaint to the police against him. The Court on examination of the witnesses had come to a conclusion under issue No.10 that there had been no negligence on the part of the Bank for any loss of the goods. This finding was again affirmed at the appellate Court. Goods which were lost, which were part of the security only by the negligence of the creditor could discharge a surety but the finding in this case has been that there was no negligence that could be attributed to the Bank for the loss. That ought to conclude the issue of fact in this Court and the plaintiff cannot, therefore, find any justification for placing reliance on judgments which were instances of proven negligence against the creditor Bank to discharge its liability.

6. Even the compounding of the loan by allowing a principal debtor some time to pay in installments ought not to be taken to avail to creditor the benefit of either Section 133 that refers to variance in terms of contract or Section 135 by discharge on the ground of discharge of release of the principal debtor. The provisions contemplate situation of actions prior to suit and cannot include a post decretal situation where the judgment debtor is granted time for making payment in installments. It cannot amount to compounding of debt as contem

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plated under Section 135. Nor can this mean a variance of a contract, for, after the decree, what is enforced, is not the contract, but it is the decree that obtains fulfillment through an adjudication and any benefit given to the judgment debtor ought to be taken only as legally permissible so long as such a contract is not against public policy or against terms of any law. 7. I do not find that there is any merit in appeal filed by the defendant. The appeal is vexatious and it is dismissed with costs.