JUDGMENT - SHAH A.P., J.:---This appeal is preferred against the judgment and decree dated 4-12-2002 passed by Deshmukh, J., in Summons for Judgment No. 466 of 2000 in Summary Suit No. 2005 of 1999.

2. The appellant is defendant and respondent is plaintiff -SICOM. Respondent had entered into an agreement dated 101-1995 with Lloyd Finance Ltd., hereinafter referred to as the "company". Under that contract an amount of Rs. 10 crores was advanced as a loan to the company. It was repayable in two instalments of Rs. 5 crores each commencing at the end of two years from the date of distribution of the said loan. The loan was disbursed on 10-1-1995. Accordingly, the said loan was repayable in two equal instalments of Rs. 5 crores each, on 5-1-1997 and 5-1-1998. The company paid first instalment i.e. Rs. 5 crores on the due date. However, the company committed default in payment of second instalment. One of the terms of the agreement between the respondent and the company was that the appellant gives an irrevocable and personal guarantee to the respondent guaranteeing repayment of the said loan. The guarantee agreement was accordingly executed between the appellant and the respondent on 10-1-1995. The company as a security has pleaded its share with the respondent. According to the respondent, as default has been committed by the company, the amount has become recoverable as per the agreement and hence the summary suit has been filed by the respondent against the appellant. In reply to the summons for judgment taken out by the respondent, the appellant has inter alia contended (i) that the suit is bad for non-joinder of the necessary party i.e. the company; (ii) that since the respondent has not instituted any suit against the company, present suit cannot be maintained by the respondents; (iii) that respondent has not enforced its security and has also not called for additional security to which it was entitled under the agreement between the respondent and the company, present suit is therefore not maintainable; (iv) that the loan is secured by pledging shares, therefore, the present summary suit is not maintainable; and (v) that charging of additional interest is charging penal interest and, therefore, the summary suit is not maintainable. The learned Single Judge has held that various defences raised by the appellant have no substance and have been raised to avoid the liability to pay huge amounts which are due to a public sector undertaking by the appellant. Consequently the learned Single Judge has decreed the suit in terms of prayer Clauses (a) and (e) of the suit.

3. Mr. Dwarkadas, learned Counsel appearing for the appellant has not seriously pressed the first defence that the suit is bad for non-joinder of necessary party i.e. the company. It is obvious that the respondents gets an independent cause of action in view of the contract of guarantee against the appellant, and therefore, the company is not necessary party. This is the settled legal position in view of the decisions of the Supreme Court in (State of Maharashtra and another v. M/s. National Construction Company, Bombay and another)1, A.I.R. 1996 S.C. 2367 and (Hindustan Construction Co. Ltd. v. State of Bihar and another)2, A.I.R. 1999 S.C. 3710, where the Supreme Court has in terms held that the contract of guarantee is a contract independent of the underlying contract and so far as the rights between the creditor and the guarantor are concerned, they are governed by the contract of guarantee and the plaintiffs gets an independent cause of action against the guarantor.

4. Mr. Dwarkadas submitted that clauses in the contract of guarantee, which permitted institution of a suit against the appellant without instituting the suit against the company are contrary to the provisions of sections 135 and 137 of the Contract Act. Mr. Dwarkadas further submitted that by virtue of Clause 2(o) of the Contract of guarantee shares of the company were pledged with the respondent and i

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