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2014 Supreme(AP) 956

HIGH COURT OF ANDHRA PRADESH
K.C. BHANU & ANIS, JJ.
M. Rama Rao
Versus
Sriram City Union Finance Ltd. & Others
Civil Revision Petition No. 2506 of 2014
Decided on : 11-09-2014

Advocates Appeared:
For the Petitioner:Bhaskar Mohan, Advocate.
For the Respondents:Maheswara Rao Kuncheam, Advocate.

Headnote:

Arbitration and Conciliation Act, 1996 - Section 2 (e) - Arbitration Case - Civil Procedure Code, 1908 - Section 115 – Execution - liability of the surety is co-extensive - Petition) is directed against order - Petition filed to realize decrial amount from petitioner herein/judgment debtor by attaching his salary was allowed - Arbitration Award was passed and it has become final as petitioner who is a guarantor did not challenge said Award though contended that did not receive notice in Arbitration proceedings - Petitioner raised two points before this Court that a decree holder without proceeding against principal borrower cannot proceed against a guarantor and on that point placed reliance on a decision – Held, Petitioner that Principal Civil Court of original jurisdiction in a District got jurisdiction cannot be accepted because there is no mention in Act about jurisdiction of District Court. Principal Court of original jurisdiction will be having jurisdiction to try cases - If value of property or value of decree is less than - Senior Civil Judge will be having original jurisdiction to execute a decree - Senior Civil Judge is also Principal Civil Court of original jurisdiction because in respect of all suits where value is more than and less than Senior Civil Judge will be having jurisdiction to try cases - Petition dismissed (Para 9)

Judgment :

K.C. Bhanu, J.

1. This Civil Revision Petition, under Section 115 of the Code of Civil Procedure, 1908 (for short, ‘CPC’) is directed against the order, dated 28.02.2014, in Execution Petition No.11 of 2013 in Arbitration Case No.443 of 2010 on the file of the IV Senior Civil Judge, City Civil Court, Hyderabad, whereunder and whereby, petition filed to realize the decretal amount of Rs.1,38,668/- from petitioner herein/judgment debtor No.2 by attaching his salary, was allowed.

2. Arbitration Award was passed on 03.05.2012 and it has become final, as the petitioner herein, who is a guarantor, did not challenge the said Award though he contended that he did not receive notice in the Arbitration proceedings.

3. Learned counsel for the petitioner raised two points before this Court 1) that a decree holder, without proceeding against the principal borrower, cannot proceed against a guarantor and on that point he placed reliance on a decision reported in JAICHAND T. GANGWAL V. SHRIRAM CHITS PVT.LTD (2013 (5) ALD 425); 2) that in terms of Section 2 (e) of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’), the Court below is not Principal Civil Court of original jurisdiction in a District, therefore, the order passed by the Court below is without jurisdiction to issue warrant to attach salary of the petitioner and hence, he prays to set aside the impugned order.

4. On the other hand, learned counsel for respondent No.1 contended that the said issue has no longer res integra in view of decision of this Court reported in BHOOMATHA PARA BOILED RICE AND OIL MILL V. M/s. MAHESHWARI TRADING COMPANY AND OTHERS (2010 (1) ALT 808 (DB), wherein it was held that if the value of the award is more than Rs.1,00,000/- but does not exceed Rs.10,00,000/-, Senior Civil Judge Court got jurisdiction; that in view of unreported Division Bench judgment of this Court in Civil Revision Petition No.2980 of 2009 (Chalapathi Chit Fund Private Ltd. V. Adusumalli Malleswara Rao and others), Execution Petition can be filed against any one of the judgment debtors and therefore, the order under challenge needs no interference by this Court and hence, he prays to dismiss the Civil Revision Petition.

5. With regard to point No.1 whether decree holder can proceed against the guarantor or surety, it is not in dispute before this Court that Award was passed jointly and severally against the petitioner as well as the principal borrower. The said Award passed by the Arbitrator has become final because it has not been challenged. Section 128 of the Indian Contract Act 1872 (for short, ‘Contract Act’) reads as follows:

“Surety’s liability:- The liability of the surety is co-extensive with that of principal debtor, unless it is otherwise provided by the contract…………….”

From the above provision, it is clear that the word ‘co-extent’ is an objective for the word ‘extent’ and it can relate only to the quantum of the principal debt. Hence, surety or guarantor is equally liable to pay the principal debt.

6. Learned counsel for the petitioner placed reliance on JAICHAND’s case (1 supra) wherein it was held thus (para 6):

“The basic obligation to pay the decretal amount is with the prized subscriber. In case, the 1st respondent finds any difficulty in recovering the amount from the 2nd respondent, it can certainly take steps against other judgment debtors. An effort as such must be made against the principal debtor. The proceedings against one of the guarantors, keeping aside the principal debtor and the other sureties, would certainly give scope for the collusion between the decree holder on the one hand and some of the judgment debtors on the other. The only legal consequence of the liability being joint and several is that the discharge by one of them would enure to the benefit of others. The determination in this behalf, however, must take place in the presence of all. If the other judgment debtors are omitted from the array of the parties in the E.P














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