1987 (4) TMI 492 - SC - Indian Laws

Summary

Issues involved:
The issues involved in this case are whether the appellant Bank can proceed directly against the guarantor without exhausting remedies against the mortgaged property and principal debtor, and whether the decree is a composite decree personally against the defendants and the mortgaged property.

Summary:

Issue 1: Proceeding against guarantor without exhausting remedies against mortgaged property and principal debtor

The appellant Bank sought execution of a decree against the guarantor, which was resisted on the grounds that the Bank should first proceed against the mortgaged property and principal debtor before the guarantor. The High Court upheld this plea based on a previous decision involving the same appellant Bank. The appellant relied on a Supreme Court decision in Bank of Bihar Ltd. v. Damodar Prasad, arguing that it was not necessary to exhaust remedies against the principal debtor before proceeding against the guarantor. However, the Supreme Court found that since a portion of the decreed amount was covered by the mortgage, the Bank must first proceed against the mortgaged property before the guarantor. The Court dismissed the appeal, stating that the Bank needed to take steps against the mortgaged property before executing against the guarantor.

Issue 2: Nature of the decree as a composite decree

The decree in execution was considered a composite decree, being personally against the defendants, including the respondent, and also against the mortgaged property. The Court did not delve into whether the decree was severable or not but emphasized that since a portion of the decreed amount was under the mortgage, the Bank must first proceed against the mortgaged property before the guarantor. The Court remanded the matter to the High Court after learning that the Bank had taken steps against the mortgaged property and principal debtor, allowing the appellant to plead this case before the High Court for execution against the respondent.

In conclusion, the Supreme Court upheld the decision that the Bank must exhaust remedies against the mortgaged property before proceeding against the guarantor. The matter was remanded to the High Court for further proceedings based on the Bank's actions against the mortgaged property and principal debtor.