SupremeToday Landscape Ad
Back
Next
Judicial Analysis Court Copy Headnote Facts Arguments Court observation
Listen Audio Icon Pause Audio Icon
judgment-img

1986 Supreme(SC) 38

SUPREME COURT OF INDIA
E.S. VENKATARAMIAH AND M.P. THAKKAR, JJ.
State Bank of India, Appellant
Versus
 M/s. Saksaria Sugar Mills Ltd. and others, Respondents.
Civil Appeals Nos. 569-70 of 1986
 Decided on 14-2-1986.
Advocates appeared
Dr. Y.S. Chitale, Sr. Advocate with Mr. S. A. Shroff, Advocate with him for Appellant; Mr. Yogeshwar Prasad, Sr. Advocate and Mr. S.R. Srivastava, Advocate with him, for Respondents.

Advocates:
S.A.SHROFF, S.R.SHRIVASTAVA, Y.S.Chitale, YOGESHAR PRASAD

Headnote:

Sugar Undertakings (Taking Over of Management) Act, 1978 – Section 7 – Indian Contract Act, 1872 – Section 128 - Security of goods produced - Equitable mortgage title deeds – Civil Appellant State Bank of India, had allowed cash credit facility to Sugar Mills Ltd., respondent security of goods produced at the sugar factory belonging to respondent Respondent had also deposited in Bombay office of State Bank of India by way of equitable mortgage title deeds of its immovable properties to secure amount advanced under the said cash credit facility – Respondents and Brothers had agreed to be the guarantors for repayment of any amount due from respondent said cash credit account. Since there was default in repayment of amount due cash credit account State Bank of India instituted a suit in Suit file of Additional District Judge, Gonda for recovery against respondents who were described as defendants plaint praying for a decree in terms and further consequential directions – Held, High Court erred in overlooking words "other than those relating to secured liabilities to banks and financial institutions" referred to in notification which had the effect of excluding the mortgage in State Bank of India from the scope of the notification issued – High Court further erred in not noticing that even when a notification is, issued suspending operation of any agreement or assurances of property to which a notified sugar undertaking or the person owning is a party any proceeding against the guarantor would remain unaffected by issuance of such a notification save as provided in contract liability of the surety is coextensive with that of principal debtor sureties thus became liable to pay entire amount liability was immediate and it was not deferred creditor exhausted his remedies against the principal debtor not say that when a notification is issued remedies against guarantors also stand suspended – Appeals allowed.

JUDGMENT

VENKATARAMIAH, J. :— These appeals by special leave are filed against the order dated May 25, 1984 passed by the High Court of Allahabad in Civil Revision No. 136 of 1982 and the order dated February 22, 1985 in C.M.A. No. 644(M) of 1984 on the file of that Court.

2. The appellant, the State Bank of India, had allowed cash credit facility to M/s. Saksaria Sugar Mills Ltd., respondent No. 1 herein, on the security of the goods produced at the sugar factory belonging to respondent No. 1. Respondent No. 1 had also deposited in the Bombay office of the State Bank of India on February 2, 1962 by way of equitable mortgage the title deeds of its immovable properties to secure the amount advanced under the said cash credit facility. Respondents Nos. 2 to 5 M/s. Govind Ram and Brothers, Shri K. G. Saksaria, Shri G. L. Vaid and Shri R. K. Saksaria had agreed to be the guarantors for the repayment of any amount due from respondent No. 1 under the said cash credit account. Since there was default in repayment of the amount due under the said cash credit account the State Bank of India instituted a suit in Suit No. 18 of 1980 on the file of the Additional District Judge, Gonda for recovery of a sum of Rs. 54,89,822.99 as on March 6, 1980 against respondents Nos. 1 to 5 who were described as defendants Nos. 1 to 5 in the plaint praying for a decree in terms of O. 34, R. 4, C.P.C., and further consequential directions. In the meanwhile by virtue of an order made by the Central Government under the Sugar Undertakings (Taking Over of Management) Act, 1978 (Act No. 49 of 1978) (hereinafter referred to as the Act) the sugar undertaking belonging to respondent No. 1 had been taken over by the Central Government and one Raghubir Singh had been appointed as the Custodian of the said undertaking. The State Bank of India, therefore, impleaded Raghubir Singh and the Union of India also as defendants Nos. 6 and 7 in the suit. In the suit respondents Nos. 1 to 5 pleaded inter alia that the trial Court had no territorial jurisdiction to try the suit and that the suit was not maintainable and at any rate the suit was liable to be stayed in view of the provisions of the Act. The trial Court had framed two issues arising out of the above pleas. The defendants filed an application before the trial Court on September 6, 1982 requesting it to decide first the above two issues relating to its jurisdiction and its competence to proceed with the suit. After hearing the parties the trial court found that it had jurisdiction to try the suit as the properties given as security were situated within its jurisdiction and that there was no impediment to proceed with the trial notwithstanding the fact that the management of the mill of respondent No. 1 had been taken over by the Central Government under the Act. Aggrieved by the said decision of the trial court, respondent No. 1 filed a revision petition in Civil Revision No. 136 of 1982 before the High Court of Allahabad. The High Court allowed the revision petition holding that the trial of suit in so far as relief No. 1 namely the prayer for decree for Rs. 54,89,822.99 against respondents Nos. I to 5 was concerned was liable to be stayed by virtue of the provisions of the Act. The High Court, however, directed that the trial of the suit with regard to all other matters may proceed. Since the only relief prayed in the suit was in respect of the recovery of Rs. 54,89,822,99 from respondents Nos. 1 to 5 in accordance with the provisions of O. 34, R. 4, C.P.C. and that had been stayed, the State Bank of India applied to the High Court by filing an application No. C.M.A. 644(M) of 1984 for clarification as to what other matter could be tried in the suit. That Application was rejected by the High Court by its order dated February 22. 1985 holding that the provisions of O. 34, R. 4, C.P.C. were quite clear and it was for the court below to proceed in accordance with law. The High Court was of opinion that the order n


















Click Here to Read the rest of this document
1
2
3
4
5
6
7
8
9
10
11
SupremeToday Portrait Ad
supreme today icon
logo-black

An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers

Please visit our Training & Support
Center or Contact Us for assistance

qr

Scan Me!

India’s Legal research and Law Firm App, Download now!

For Daily Legal Updates, Join us on :

whatsapp-icon Back to top