The main legal point established in the judgment is that the nature of a document, whether a guarantee bond or an indemnity bond, and the applicability of the summary procedure under Order XXXVII of the Code of Civil Procedure for suits seeking recovery of debts based on written contracts.

V.K. Jain, J.

1. This appeal is directed against the judgment and decree dated 3rd March, 2012 whereby the application of the appellant for grant of leave to contest was dismissed and a decree for recovery of Rs.5,93,099/- along with simple interest on that amount at the rate of 9% per annum was passed against the appellant and three others. The facts giving rise to the filing of this appeal can be summarized as under:-

RameshKumar Gupta, proprietor of New Orient Transport Company, which was defendant No.1 in the suit and is respondent No.2 in this appeal, had a current account with the plaintiff/respondent No.1 – Punjab & Sind Bank and in that account, he availed overdraft facility on payment of interest at the rate of 6.5% per annum above the Reserve Bank of India rate subject to minimum rate of 16.5% per annum with quarterly rests. He also requested respondent No.1 bank to purchase three cheques of Rs.1,25,000/-, Rs.1,05,000/- and Rs.1,25,000/- respectively drawn by M/s. Quality Handloom in his favour. The cheques were purchased by the bank and the amount was credited to the account of respondent No.2/defendant No.1 on his assurance that the cheques were genuine and would be cleared by the drawee on being presented. The cheques when presented by the Bank were returned with endorsement “Refer to Drawer”. There was thus a debit balance of Rs.3,64,038.39 in the current account which defendant No.1/respondent No.2 had with respondent No.1 bank. In August, 1989, he requested the Bank for the adhoc loan facility to the extent of debit of Rs.3,64,038.39 in his current account and the request was granted by the bank. He executed a promissory note for that amount. However, he failed to regularize the current account and, therefore, was asked by the bank to pay the amount which was debited in his account. He, however, failed to honour the demand of the bank and then another demand notice dated 24.10.1989 was issued to him demanding a sum of Rs.3,65,473.89. He again availed facility to the extent of Rs.3,50,376.03 in the current account and executed promissory note dated 05.04.1992 and also executed various other documents in favour of the bank. He agreed to pay the sum due to the bank, on demand from it, along with interest at the rate 10.75% above the RBI rate, with a minimum of 22.75% p.a., with quarterly rests. It is alleged by the plaintiff/respondent No.1 bank that defendant No.1/respondent No.2 also had executed and delivered a letter of guarantee, guaranteeing the repayment of entire amount advanced to defendant No.1/respondent No.2 with all interests and charges with continuity, till the liability of the defendant No.1/respondent No.2 subsists. Two other defendants created an equitable mortgage of the immovable property in favour of plaintiff bank by depositing title deeds. Defendant No.1/respondent No.2 issued 30 cheques of Rs.10,000/- each of their concern M/s. Sahil Golden Transport Company which also were dishonoured when presented to the bank. A sum of Rs.5,39,099/- was due to the plaintiff Bank at the time of filing of suit which came to be decreed by impugned order.

2. The contention of the learned counsel for the appellant is that the document referred as a guarantee bond by the plaintiff bank is in fact an indemnity bond. He has contended that a suit based on indemnity bond cannot be filed under Order 37 of the Code of Civil Procedure. In support of his contention, he has relied upon the decision of the Supreme Court in State Bank of Saurashtra vs. Ashit Shipping Services (P) Ltd. And Another (2002) 4 SCC 736.

3. A perusal of the decision relied upon by the learned counsel for the appellant would show that in the case of Supreme Court, the first respondent was working as an agent for a Company for a vessel which arrived at Kandla port carrying logs of timber. The second respondent sent a bond to the first respondent which inter alia provided as follows:-

“1. To Indemnify you and hold harmless in respect