A continuing guarantee under Section 129 of the Indian Contract Act extends liability until the debt is fully paid, and the limitation period begins from the demand notice date, not from prior loans.

JUDGMENT :

HEMANT M. PRACHCHHAK, J.

1. Present first appeal is filed by the appellant (original plaintiff) against the judgment and decree dated 19.05.1983 passed by the learned Judge, Court No.3, City Civil Court, Ahmedabad (hereinafter be referred to as “the trial Court”) in Civil Suit No. 912 of 1977 whereby the trial Court dismissed the suit.

2. Facts of the present case are that the said suit was filed against respondent No.1 and late Shri Chandulal Pitambardas Parikh, who died during the pendency of the suit and is now represented by respondents No.1, 2 and 3 as legal representative of Shri Chandulal Pitambardas Parikh and Shri Kanchanbhai Chandulal Parikh as the Guarantor and the National Textile Corporation Limited, New Delhi (respondent No.5) for recovery of an amount of Rs.19,20,886.93 paise with interest at the rate of 9 1/2% per annum on Rs.9,50,000/- till payment and costs.

2.1 The appellant states that the said suit against respondent No.1 had abated. The appellant had conceded before the trial Court that the claim against repsondent No.5 could not be pressed and, therefore, no decree against it could be passed at the trial of the suit. That the respondents have filed their written statements before the trial Court opposing the suit.

2.2 The trial Court has, after hearing the both sides and considering the evidence on record, framed the following issues at Exhibit 61:-

(1) Has the suit been filed within the period of limitation?

(2) Is the suit contrary to and barred by the provisions - 1. the stick tetile undertaking (Nationalization) Act, 1974, 2. the Industries (Development and Regulations) Act, 1951 and 3. the Bombay Relief Undertakings (Special Provision) Act, 1958 ?

(3) Does the suit suffer from the vice of misjoinder of parties as contended by defendants no.2 and 3 ?

(4) Does the suit suffer from the vice of non-joinder of parties on account of plaintiff having not joined the authorized controller and the Government of India as party defendants to the suit as contended by defendants nos.2 and 3 ?

(5) Do defendants no.2 and 3 prove that on account of the provisions of the Sick Textile Undertakings (Nationalization) Act, 1974, all the aspects of the undertaking of defendant no.1 having vested at first in the Central Government and thereafter in defendant no.4 and then in defendants no.5 and 6l they as guarantors have been released from their liability to the plaintiff ?

(6) Do defendants no.2 and 3 prove that their liability as guarantors has come to an end on the administration of the mills of defendant no.1 having been taken over by the authorized controller ?

(7) Do defendants no.2 and 3 prove that the deed of guarantee executed by them is without consideration ?

(8) Do defendants no. 2 and 3 prove that the plaintiff was negligent in taking proper and necessary timely steps for realization of its dues and that, therefore, they as guarantors have been discharged from their liability ?

(9) Do the defendants no.2 and 3 prove that the plaintiff has committed acts and omissions inconsistent with their rights with the result that their eventual remedy against defendant no.1 has been impaired and that, therefore, they as guarantors have been discharged from their liability ?

(10) Do defendants no.2 and 3 prove that the only remedy now open to the plaintiff is to approach the Commissioner for payment appointed under the Sick Textile Undertakings (Nationalization) Act, 1974 ?

(11) Does the plaintiff prove that the defendants or any of them owe to it Rs.19,20,886.95 as claimed in the plaint ?

(12) What order and decree ?

2.3 The trial Court has, on appreciation of evidence, answered issues No.1 to 10 in negative and iss