9911796707
TMI Blog1982 (5) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ever was higher. supplementary agreement was executed between the Manufacturers Ltd. and the Jute Mills on October 3, 1973, making some modifications in the original agreement. 3. On July 2, 1973, the plaintiff sanctioned a term loan facility of ₹ 60 lakhs in factor of the Manufacturers Ltd. repayable by twelve six- monthly Installments of ₹ 5 lakhs each. Besides the principal amount, the bank was also entitled to be paid interest at 3 per cent over the Reserve Bank of India rate subject to a minimum of 12.5 per cent per annum. In the event of default in any payment of the principal or commitment fee/charge or of interest on the loan, the entire amount remaining due and unpaid on the date of the said default was to become due and payable to the plaintiff immediately. The term loan agreement was executed between the bank and the Manufacturers Ltd. on November 21, 1973. On November 22, 1973, the Manufacturers Ltd. also deposited the documents of title relating to their textile unit at Kalpi Road, Kanpur, and thereby mortgaging to the plaintiff all the properties of the textile unit to secure repayment of the aforesaid loan of ₹ 60 lakhs. On November 21, 1973, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was directed and empowered to take appropriate steps at the earliest to dispose of all mortgage property in one or more lots and to pay the sale proceeds of all assets so disposed directly to the plaintiff-bank towards satisfaction of the decretal amount. No sale was, however, to be effected without the prior consent of the plaintiff. It contained certain other terms which are not very relevant. A copy of the application is Ex. D-8. A decree in terms of the compromise was passed by the learned Second Civil Judge, Kanpur, on October 15, 1977 (Ex. D-4). The receiver, admittedly, sold the plant and machinery of the Manufacturers Ltd. for a sum of ₹ 45,50,101 in favor of M/s. C. Patel Co. (P.) Ltd. The sale was, admittedly, confirmed by the court. A sum of about ₹ 8 lakhs is state to have been deposited by the auction purchaser with the receiver. The learned Second Civil Judge, Kanpur, vide his order dated December 4, 1978, directed the receiver to deliver the aforesaid plant and machinery to the auction purchaser. Necessity for direction, it appears, arose because the permission of the Textile Commissioner, which was necessary for effecting delivery, was not forthcoming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s remedies against the principals. The Jute Mills further agreed that between the plaintiff and the Jute Mills, the latter was to be considered as principal debtor to the plaintiff to the extent mentioned in the guarantee deed i.e., ₹ 60 lakhs, in respect of all advances made and to be made and of all facilities granted and to be granted by the bank to the Manufacturers Ltd. The Jute Mills also waived their rights of suretyship which were in any way inconsistent with the provisions contained in the guarantee deed. For all these reasons, the plaintiff was entitled to the amount claimed with future interest at 12.5% per annum. It was also averred that Mr. Naresh M. Bahl, an assistant manager of the bank, had signed and verified the plaint. He was the principal officer of the plaintiff at New Delhi branch and he was also a duly constituted attorney of the plaintiff and was authorised to sign, verify and file suits and other pleadings for and on behalf of the plaintiff. 10. Leave to defend having ultimately been granted, the Jute Mills filed a written statement resisting the suit. The allegations that the Jute Mills also approached the plaintiff for a term loan facility of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 45,50,101. The acts done by the plaintiff, it was alleged, were inconsistent with the rights of the defendant-Jute Mills as surety or guarantor. The plaintiff had failed and neglected to take effective steps for realisation of the price of the plant and machinery after the sale thereof which had been confirmed and that the plaintiff was not entitled decree or the costs of that suit. It was also averred that this court had no territorial jurisdiction to try the case, because the plaintiff, while obtaining leave under O. 2, r. 2, CPC, in the Kanpur suit, had represented that the suit on the basis of the mortgage would be instituted, if at all, against this defendant in that court only. It was also pleaded that the plaint did not disclose any cause of action for claiming the amount of costs. It was also averred that, according to averments made in paras. 7, 8, 9 and 10 of the plaint, the defendant was a co-obligor with the Manufacturers Ltd. and, Therefore, the suit was misconceived and not maintainable. 11. On the pleadings of the parties, the following issues were settled : (1) Whether the plaint has been singed, verified and the suit has been filed by a duly authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his favor by Mr. A. H. Williams. He had brought the original power of attorney with him. Exhibit P-40 was its photocopy. He also produced Ex. P-41, photocopy of the power of attorney in favor of Mr. A. H. Williams duly authenticated by the notary public. Later on, the original power of attorney in favor of Mr. A. H. Williams was produced on record. It was exhibited as Ex. P-42A. In cross-examination, he stated that he did not remember as to who executed the power of attorney in favor of Mr. Williams. He did not know the procedure prescribed under the articles for the purpose of delegating the authority on behalf of the bank. He did not know whether any resolution had been passed by the board of directors to execute a power of attorney in favor of Mr. Williams. He did not know what was the quorum required for a meeting for passing such a resolution. It was suggested to him that no resolution was ever passed for executing the power of attorney in favor of Mr. Williams and, in reply, he stated that there must have been a resolution, but he had no knowledge about it, nor had he seen it nor could he give its particulars. 13. Exhibit P-40 is a photocopy of the power of attorney execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the clerk of the county of New York, State of New York, USA. The authentication by the aforesaid notary public reads as under : In the city country and State of New York, USA, on this 27th day of February, 1976, before me a notary public in and for the State and country of New York, USA, and the undersigned resident witnesses, legally qualified and personally known to me, appeared : (1) Walter R. Humphrey (hereinafter referred to as 'the Executing Officer'), a banker domiciled in Central Islip, New York, and holding the office of vice-president in First National City Bank (hereinafter referred to as 'the bank'), a national banking association duly constituted, registered and in existence in accordance with the laws of the USA now in force, and (2) Carl W. Desch, a banker domiciled in Garden City, New York, the cashier of the bank (hereinafter referred to as, in his capacity of, 'cashier'). 16. I, the notary public, being as attorney-at-law, as hereinbelow stated, do hereby certify and attest : A. That the executing officer and the cashier are of full age, competent to act in the premises to me personally known and that they are authorise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im by the board of directors, the chairman, the president, or the chairman of the executive committee . 2. The board of directors of the bank, at its organization meeting, duly held with a legal quorum on March 18, 1975, elected the executing officer as a vice-president and the cashier as such, of the bank, and such elections have continued, and are now in full force and effect. 3. That the cashier stated to me that under article IV, section 12 of the bye-laws of the bank as hereinbefore in C set forth, the executing officer has had duly conferred on him the power to execute this power of attorney. D. That the bank exists in perpetuity in accordance with the laws of the United States of America. E. That I am a notary public in the State of New York, residing in New York country of that State, and, as such, notary public, am duly authorised to act as such in the county of New York, that I am also an attorney at-law, duly authorise to practice as such in the State of New York, and that I have my office at No. 399, Park Avenue, in the City and County of New York, that the executing office and the cashier are now in the exercise of their respective offices as hereinbefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would thus be presumed that it was executed by the plaintiff-bank. He also contended that there was a lot of difference between authentication and attestation . Authentication was a step forward than attestation . The former meant that the power of attorney was in proper form of law which would mean that the officers executing it on behalf of the bank were duly authorised to do so. 20. Section 85 of the Evidence Act reads as under : Presumption as to powers of attorney. - The court shall presume that every document purporting to be a power of attorney, and to have been executed before, and authenticated by, a notary public, or any court, judge, magistrate, Indian Consul or Vice-Consul, or representative of the Central Government, was so executed and authenticated. 21. For raising a presumption under this section, the twin requirements to be fulfilled are : (1) that the document in question must purport to be a power of attorney, and (2) that it must purport to have been executed before and authenticated by a notary public, or any court, judge, magistrate, Indian consul, or vice-consul, or representative of to Central Government. Exhibit P-42A is a document wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If that party is a company corporated in India or in any other country, it would be further required to prove that the person or persons executing the power executing the power of attorney on its behalf had been duly authorised by means of a resolution duly passed in accordance with law and the articles of association. The purpose of s. 85, in my view, is to eliminate all this cumbersome evidence in case such a power of attorney is executed before and authenticated by a notary public, or other authorities mentioned therein. If evidence to prove these facts except the fact of execution by the executant was insisted upon, most of the purpose of s. 85 would be frustrated specially in these days of prevalent international trade. 25. This very question came up for consideration before this court in National Grindlays Bank v. Radio Electronics Corporation P. Ltd. [1978] RLR 217. After detailed discussion, Gill J., upon examining the various authorities and meaning of the word authentication , held as under : In my view section 85 (of Evidence Act) does not draw any distinction between the kind of documents, viz : Power of attorney executed by an individual and the one e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney is to prove that such power of attorney is invalid or that the person acting on the basis of such power of attorney is not duly authorised. 27. The decision of Gill J., referred to above, was followed. 28. In National and Grindlays Bank Ltd. v. World Science News, AIR1976Delhi263 , the question whether the fact that the person who had executed the power of attorney on behalf of a body corporate had the authority to do so was to be the presumption or not, was not urged or decided as such, but on the production of a similar power of attorney duly authenticated by a notary public and relying on s. 85 of the Evidence Act, the onus to prove whether the suit had been instituted by a duly authorised person was placed on the defendant. The relevant observation at page 264 read as under : The document is the present case is a power of attorney and again on the face of it shows to have been executed before, and authenticated by, a notary public. In view of section 85 of the Evidence Act, the court has to presume that it was so executed and authenticated. Once the original document is produced purporting to be a power of attorney so executed and attested as stated in s. 85 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reference to original documents and not to copies thereof. It was further held that if the document happened to be signed by the agent of the person against whom the presumption is sought to be raised and there is no other proof that he was an agent, s. 90 does not authorised the raising of a presumption as to the existence of the authority on the part of the agent to represent that person. Much help cannot be obtained from this decision for the simple reason that the extent of presumption which has to be raised under s. 85 was not involved in that case. Section 90 empowers the court to presume in the case of a thirty years' old document, the signature and every other part of such document, which purports to be in the handwriting of any particular person, is in that person's handwriting, and, in the case of a document executed or attested, that it was duly executed and attested by the persons by whom it purports to be executed or attested. In certain circumstances, that signatures and every other part of that document, which purported to be in the handwriting of any particular person, was in that person's handwriting and, in the case of a document executed or attes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to prove those facts but only to show the act of notarisation. Those statements do show that the notary public had satisfied himself about the authority of the executants of the power of attorney. 36. It was also contended that the contention canvassed on behalf of the plaintiff, if accepted, may result in absurdities inasmuch as anybody may execute a power of attorney purported to be on behalf of a legal person and get it notarised and then the person in whose favor it has been executed may execute similar power of attorney and so on, which was likely to create chaos. There is no merit in this contention for the simple reason that the presumption raised is a rebuttable presumption. 37. I, consequently, hold that Mr. M. M. Bahl was competent to sign and verify the plaint and file the suit. Issue is decided in favor of the plaintiff. 38. Issue No. 2 : The plaintiff, inter alia, has claimed a sum of ₹ 6,36,580 towards costs incurred by it in the suit filed in the Court of Second Civil Judge, Kanpur, for enforcement of the mortgage created by the Manufacturers Ltd., in its favor. For the purpose of recording a finding, if the plaint disclose a cause of action regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Kanpur suit of enforcing the mortgage created in its favor, the plaintiff has averred that the said suit on the basis of the mortgage would be instituted, if at all, against the present defendant, only at Kanpur. These allegations, even if correct, make no difference. First of all, according to the defendant, it was not a party to those proceedings. That order, Therefore, does not affect its rights and, consequently, would not create rights in its favor. Moreover, it is not a suit for enforcing the mortgage. It is a suit under O. 37 for recovery of the money as observed earlier. As a matter of fact, this issue was not pressed. The issue is decided against the defendant. 41. Issues Nos. 3, 4 and 7, 12 and 14 : The claim in the present suit is based on a deed of guarantee (Ex P-14) admittedly executed by the defendant-Jute Mills in favor of the plaintiff. The plaintiff's case in the plaint is that the request for loan was made to it by the Manufacturers Ltd. and the defendant-Jute Mills. Loan was sanctioned in favor of both of them. The relationship created under the deed of guarantee between the plaintiff and the defendant was that of a creditor and principal debtor and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaintiff that it had not recovered any money under the said decree passed by the Kanpur Court. This allegation as such was not denied in the written statement. It was, however, pleaded that in pursuance of the decree passed by the said court on October 15, 1977, the machinery and plant had been sold for ₹ 45,50,101 and because of the said sale which had been confirmed by the court, the defendant's liability, if any, stood discharged. There is no specific plea in the written statement that any amount out of this sale amount or otherwise had been paid to the plaintiff in execution of the said decree. I have already observed that the payment had been stayed by the Allahabad High Court on a petition filed by Ram Achhvavar Sigh against the Manufacturers Ltd., vide its order dated March 10, 1980, copy Ex. D-6. It has been proved that the plaintiff-bank has not been paid anything is execution of the decree against the Manufacturers Ltd. Thus, in my view, there is a clear default on the part of the principal debtor giving rise to the liability of the surety. As a matter of fact, this fact was not much disputed. 45. The plea of the defendant, however, is that this liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of the suit till the date of the decree and, thereafter, on the decretal amount till payment, at 12.5% Per annum. The plaintiff also prayed for a final decree for the sale of the mortgage property comprising the Manufacturers Ltd.'s factory, land, building, plant and machinery installed/affixed and/or lying therein together with affixations and fittings, etc., at Kamlapat Road, Kanpur, U.P., in the event of the said Manufacturers Ltd. failing to comply with the preliminary decree. 49. Ex. D-8 is the copy of the application made under O. 23, rule 2, CPC, by the parties in the said suit. According to the document, the parties to the suit agreed to compromise the suit on the following terms : (i) That the suit be decreed and final mortgage decree be passed in favor of the plaintiff for ₹ 55,27,570 with interest from the date of the suit till final repayment @ 12.5% per annum. Further, costs of the suit be awarded to the plaintiff as prayed for. (ii) That Shri S. K. Kapoor, advocate, advocate, District Government Counsel (Civil), Kanpur, be appointed receiver to take immediate possession of defendant-company's properties including land, buildings, plant an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree following, can it be said that the plaintiff in that case had made a composition with the principal debtor within the meaning of s. 135. Obviously, no such conclusion can be drawn unless it is the result of a fraud or collusion. An honest defendant is not supposed to contest the suit when there is no defense open to him. In the present case, the terms contained in the application under). 23, r. 3, CPC, amount to admitting the claim of the plaintiff in toto. Such a consent decree would not be covered by the provisions of s. 135. Filing a suit by the creditor against the principal debtor and obtaining a decree for the full amount would not by any stretch of imagination amount to composition resulting in the discharge of liability of the surety. It would not make the slightest difference if the decree is a consent decree, especially in this case when the creditor by way of the consent decree got 100% relief. Ordinarily, the plaintiff would have been entitled to a preliminary mortgage decree for the amount in suit, but it obtained a final decree, such a decree has not in any way impaired or prejudiced the right of the defendant-surety and, in my considered opinion, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btor which arise out of the transaction which gives rise to the right or liability : he is, Therefore, on payment of the amount due by the principal debtor, entitled to be put in the same position in which the creditor stood in relation to the principal debtor. 55. Similar observations have been made in Amrit Lal Govardhan Lalan v. State Bank of Travancore, [1968]3SCR724 . 56. It is admitted in para. 16 of the plaint itself that on November 22, 1973, the Manufactures Ltd. had deposited documents of title relating to their textile unit at Kalpi Road, Juhi Khurd, Kanpur, and thereby mortgaged in favor of the plaintiff all the said properties of the textile unit to secure the repayment of the loan of ₹ 60 lakhs. Thus, by virtue of the provisions contained in s. 141, the defendant- Jute Mills, the surety, was entitled to the benefit of this mortgage. 57. Mortgage , according to s. 58 of the Transfer of Property Act, 1882, is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or the performance of an engagement which may give rise to a pecuniary liability. The plaintiff-creditor, Therefore, had the righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n thereof, is in no way inconsistent with these rights of the surety. The defendant-surety would be entitled to the benefit of sale, i.e., sale money of the plant and machinery. There is no suggestion that the sale was not bona fide or there was any negligence on the part of the receiver or the plaintiff in conducting the sale of the plant and machinery of the Manufacturers Ltd. In such a situation, I am of the considered view that the creditor had neither lost nor parted with a part of the security which it had against the principal debtor, i.e., the Manufacturers Ltd. 59. The contention of Mr. Anil Divan, learned counsel appearing for the defendant, is that the surety was entitled to the security in exactly the same condition in which it existed at the time when the contract of surety was entered into. The part of the security, i.e., machinery and plant, has been sold and, Therefore, the part of the security was not intact or in the same position and, consequently, the defendant- surety would stand discharged. Reliance was placed on Pledge v. Buss, 123 Revised Reports 281. The relevant observations at p. 283 read as under : The law is now well established, that a person h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of the debt is entitled to all the securities of the creditor, whether he is aware of their existence or not, even thought they were given after the contract of suretyship, if the creditor who has had, or ought to have had, them in his full possession or power, loses them or permits them to get into the possession of the debtor, or does not make them effectual by giving proper notice, the surety to the extent of such security will be discharged. A surety, moreover, will be released if the creditor by reason of what he has done, cannot, on payment by the surety, give him the securities in exactly the same condition as they formerly stood in his hands'. 62. This rule of law not help the defendant at all. By obtaining a decree and getting the part of the mortgaged property sold in execution thereof, it cannot be said that the creditor had put security out of its power to hand over to the surety. On payment, the defendant-surety can stand in the shoes of the creditor and take the place of creditor- decree-holder in that case. 63. Decisions in Amrit Lal, [1968]3SCR724 and the State Bank of Saurashtra v. Chitaranjan Rangnath Raja, [1980]3SCR915 , do not apply to the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The filing of the suit and obtaining the mortgage decree in getting the mortgage property sold does not amount to a clog on the equity of redemption or affects the statutory right of the surety to redeem the property for the reasons already recorded. 67. Similarly, the decision in Mehrban Khan v. Makhna [1930] 11 Lah 251; AIR PC 142, has no application to the facts of the present case. 68. For all these reasons, I am of the considered opinion that the defendant-surety does not stand discharged on account of the said acts on the part of the plaintiff-creditor. 69. It was then contended on behalf of the defendant that the defendant- surety was a necessary party in the Kanpur suit and by not adding it as a party to that suit, its right had been impaired. Non-joinder of the necessary party in the Kanpur suit, in my opinion, would not affect the present case, so far as the rights of the plaintiff are concerned. It may be stated that under O.1,r. 13, CPC, all objections on account of non-joinder of the parties are required to be taken at the earliest possible opportunity and in parties are required to the taken at the earliest possible opportunity and in all case where issues a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to give time to or not to use the principals without our previous assent thereto, or (e) by any other act, omission, dealings or arrangement between the principals, their successors and assigns and the bank, its successors and assigns, whereby we or of us as sureties for the principals would have been so discharged or exonerated. 10. The guarantee shall remain in full force and effect for the ultimate balance of your dues against the principals in terms of the loan agreement and this will not be vitiated by any indulgence or time granted by you to us and/or to the principals and/or your obtaining any promissory notes and/or other securities and/or guarantees from the time to time. This guarantee shall also not be vitiated by any act of omission or commission on your part and/or on the part of the principals under the loan agreement and this guarantee shall also remain in full force and effect notwithstanding any changes in the constitution of your bank and/or the principals and/or ourselves and notwithstanding the winding up of the principals and/or ourselves. 71. These clauses contain the consent envisaged under ss. 135 and 141. Such a consent, in my view, could be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills, where a contrary view has been taken. In this case, it was held in clear terms that the provisions of s. 133 were not subject to a contract to the contrary between the parties to the contract. The said section was in unqualified terms. It was not necessary to put in the words : notwithstanding any contract to the contrary in this section, because wherever the Legislature wanted that the terms of the contract between the parties should take precedent over the provisions of any section, the words in the absence of any contract to the contrary or in the absence of any special contract have been inserted in that particular section as has been done in ss. 152 and 163 of the Contract Act and, there fore, this right could not be waived. With utmost respect, I have not been able to persuade myself to accept this view. In my opinion, there was no necessity for the Legislature to provide the words in the absence of any contract in s. 133 or 141, because the sections themselves speck of consent of the surety, regarding variance in the terms of the contract between the principal debtor and the creditor, composition with the principal debtor, etc. In the presence of the words wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who represented the Manufacturers Ltd., as well as the defendant-Jute Mills. The suit at Kanpur was decreed on the basis of the compromise arrived at between the bank, Dr. Gaur Hari Singhania and Mr. P. D. Singhania. He also stated that the name of the receiver was suggested by Dr. Gaur Hari Singhania to which the bank greed. After the receiver had taken possession of the assets of the Manufacturers Ltd. in pursuance of Kanpur court decree, the bank with Dr. Gaur Hari Singhania pressed the receiver to advertise for sale of the plant and machinery of the Manufacturers Ltd. and the receiver accepted the offer regarding the sale of the plant and the machinery for ₹ 45, 50,101 with the consent of all the parties, namely, the bank Mr. P. D. Singhania and Dr. Gaur Hari Singhania, who represented the Jute Mills. 77. In rebuttal, Dr. Gaur Hari Singhania, appearing as DE-1, deposed that there were never any discussion between the Jute Mills, the Manufacturers Ltd. and the bank, regarding the compromise of the Kanpur suit. The receiver was not appointed at his suggestion. There was no discussion regarding the advertisement and sale of the property of the Manufacturers Ltd. In cross- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir presence. The document was to be executed in favor of the U.P. Financial Corporation. I fail to understand as to how this resolution authorised Dr. Gaur Hari Singhania or Mr. P. D. Singhania to give the requisite consent on behalf of the Jute Mills. Similarly, the resolution July 20, 1973 (copy Ex. P-45), authorised Dr. Gaur Hari Singhania as director of the Jute Mills to deposit with the plaintiff- bank title deeds of the properties to create and equitable mortgage. The power to give the requisite consent cannot be spelled out from this resolution. 82. I would also add here that the plaintiff has not raised any specific plea in the plaint regarding the alleged consent by the defendant the sale of the plant and machinery, etc., except the terms of the agreement contained in Ex. P-14. 83. It has also been argued that the plaintiff has claimed the amount in the suit on the plea of the existence of the relationship of creditor and principal debtor between the plaintiff and the defendant and it cannot be allowed to claim an amount on the basis of the relationship of creditor and surety. This contention is fallacious. The suit is based on the deed of guarantee (Ex. P-14). It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o its claim, it had incurred ₹ 2,21,570 towards costs after the passing of the decree. To prove this fact, the plaintiff examined Mr. H. K. Dhadhwal (PW-3), Manager, Citibank, Parliament Street, New Delhi. He deposed that the had brought the original ledger, photocopy, Ex. PW-3/1, relating to the account of the Manufacturers Ltd. and that a sum of ₹ 2,21,570 had been incurred in the suit after the decree which included the remuneration paid to the receiver @ ₹ 1,500 per month and the payments made to watch and ward staff. I see no reason to disbelieve his statement. It is correct that the requisite vouchers, though available, have not been proved but his statement finds corroboration from the entries in the ledger. It may be added that in the written statement, the correctness of this fact was not disputed. All that was disputed was the right of the plaintiff to realise this amount from the defendant. thus, the liability of the principal debtor on the date of the filing of the suit was ₹ 77,10,733.67, the amount claimed in the plaint. 90. It is an admitted fact that the receiver appointed under the content decree by the kanpur court has since sold the pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof on the strength or or under the said loan alone or jointly with others, and in whatever capacity whether as principals or contingent, including all liabilities, if any, in respect of advances, letters of credit, cheques, hundis, bills, notes, drafts and other negotiable or non-negotiable instruments drawn, accepted, endorsed, or guaranteed by the principals, and in respect of interest with monthly rests, commission and other usual or reasonable banking charges and in respect of all costs, charges and expenses which you may incur in paying any rent, rates, taxes, duties, calls, Installments, legal or other professional charges, or other outgoings whether for the insurance immovable or any chattels or actionable claims of scrip securities or title deeds pledged or to be pledged or mortgaged, to be mortgaged or assigned or to be assigned to or deposited with you as security for the due payment and discharge of the principals' liability to you. 93. And following are the general conditions :-... 4. We hereby confirm and declare that notwithstanding anything herein contained, we have agreed with you, that although as between the principal and ourselves, we are to be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the defendant-surety guaranteed the due payment and discharge of all the principals ' liabilities in respect of the principals, interest, commission, costs, ect. This para. thus covers the entire liability which the principal debtor has towards the creditor, However, clause 4 limits that liability. The relevant portion of this clause says : 4. We hereby confirm and declare that notwithstanding anything herein contained, we have agreed with you, that although as between the principal and ourselves, we are to be considered as sureties only for the principals yet as between your bank and ourselves, we are to be considered as principals debtors to your Bank to the extent mentioned above, viz., ₹ 60 lakhs, in respect of all advances made and to made and to be made and of all facilities granted and to be granted by your Bank to the principals,......... (emphasis Here printed in italics supplied) 96. A plain reading of the terms contained in this clause is first that it over ides the terms contained in another clause of the document. this is clear from the words to the extent mentioned above, viz., ₹ 60 lakhs , show that the liability was limited to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deed of guarantee. there is no plea or proof or usage of trade. It was conceded by the learned counsel for the plaintiff that the provisions of the Interest Act were not attached. 100. Now, it has to be seen whether circumstances existed to invoke equitable jurisdiction to allow interest. The circumstances relied upon are : (1) that it was a commercial transaction; (2) the creditor was a bank and it was its business to advance loans on interest and on all its transactions the payment of interest was involved; and (3) that under the deed of guarantee, the liability of the surety was arise first when notice in writing was given to it by the bank requiring it to pay and that such a notice has been given as far back as October 27, 1976, copy annexure VII to the plaint. The defendant did not make the payment in spite of the notice. 101. These circumstances would not help the plaintiff much in claim against the surety. 102. In any case, in Maine and New Brunswick Electrical Power Co. Ltd. v. Alice M. Hart, AIR 1929 PC 185, it was held that when once a contract has been executed, then apart from cases where rescission on the ground of fraud is sought, there remains nothing to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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