The liability of the surety is co-extensive with that of the principal debtor, and the decree-holder cannot be forced to first exhaust the remedy by way of execution of the mortgage decree alone.

JUDGMENT

Shankar Ganapathi Pandit, J. - The petitioner, a financial institution is before this Court challenging the order dated 03.04.2018 passed in Ex. No. 711/2009 on the file of the City Civil Judge at Bengaluru (Annexure-A), wherein the application filed by respondent No. 2-Judgment Debtor No. 2 under Section 151 of the CPC was allowed and the decree-holder, petitioner herein is directed to exhaust remedy against the Judgment Debtor No. 1.

2. Heard the learned counsel for petitioner and learned counsel for respondent No. 2. Perused the writ petition papers.

3. Learned counsel for the petitioner submits that the petitioner has filed Execution case No. 711/2009 to execute the decree (Annexure-D) dated 08.04.2008 in dispute No. AR/15/ANML/52/ABN/07-08.

4. Respondent guarantors particularly respondent No. 2 on appearance filed an application under Section 151 of CPC to stay the attachment of moveable warrant against him. Accepting the application of the petitioner, the Execution Court directed the petitioner/decree-holder to exhaust remedy as against Judgment Debtor No. 1. Aggrieved by the same, the petitioner is before this Court.

5. Learned counsel for the petitioner would submit that it is for the decree-holder to execute the decree either against the principal borrower or against guarantors and in that regard, he relies upon the decision of the Hon'ble Apex Court in the case of State Bank Of India vs. Messrs. Index Port Registered and Others reported in AIR 1992 SC 1740 in support of his contention. Thus, he prays for allowing the writ petition.

6. Per contra, learned counsel for respondent No. 2 submits that respondent No. 2 is the guarantor and respondent No. 1 is the borrower. The petitioner/decree-holder has not proceeded against respondent-borrower and other guarantors, which according to him is arbitrary and unreasonable. Thus, he justifies the order passed by the Execution Court.

7. The trial Court committed an error in allowing the application of respondent No. 2/Judgment Debtor No. 2 and in directing the petitioner/decree-holder to exhaust remedy against the judgment debtor No. 1. The trial court has not looked into Section 128 of the Contract Act wherein it is clear that the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. Respondent No. 2 has not prayed otherwise by producing contract. In that circumstances, the liability of surety is co-extensive with principal debtor.

8. The Hon'ble Apex court in the case of State Bank Of India v. Messrs. Index Port Registered and Others stated supra at paragraph No. 22, has held as follows:

"22. The decree for money is a simple decree against the judgment-debtors, including the guarantor and in no way subject to the execution of the mortgage decree against the judgment debtor No. 2. If on principle a guarantor could be sued without even the principal debtor there is no reason, even if the decretal amount is covered by the mortgaged decree, to force the decree-holder to proceed against the mortgaged property first and then to proceed against the guarantor. It appears the above quoted observations in Manku Narayana's case (AIR 1987 SC 1078) (supra) are not based on any established principle of law and/or reasons, and in fact, are contrary to law. It, of course, depends on the facts of each case how the composite decree is drawn up. But if the composite decree is a decree which is both a personal decree as well as a mortgage decree, without any limitation on its execution, the decree holder, in principle, cannot be forced to first exhaust the remedy by way of execution of the mortgage decree alone and told that only if the amount recovered is insufficient, he can be permitted to take recourse to the execution of the personal decree. For a simple mortgage decree as prescribed in Form No. 5 of Appendix D of the Code of Civil Procedure it could be so because the decree provides like that. It is only when the sum rea