The guarantor's liability is co-extensive with that of the principal debtor under Section 128 of the Indian Contract Act, and the guarantor's liability is immediate and not deferred until the creditor exhausts remedies against the principal debtor.

JUDGMENT

Tarlok Singh Chauhan, J. - The instant petition has been filed for grant of following substantive relief:

"that the impugned orders (Annexure P-3 dated 19.8.2016, Annexure P-5 dated 6.2./7.1.2020 and Annexure P-6 dated 29.6.2021) may kindly be quashed and set aside."

2. The petitioner stood guarantor for payment of loan amounting to Rs.5,55,000/- for none other than his son, Jagdish Kumar, respondent No.4. Since respondent No.4 defaulted in payment of the monthly installment of Rs.8500/-, therefore, the respondent-Bank resorted to the arbitration proceedings, wherein the petitioner stated that he was willing to pay principal amount of Rs.3,97,000/- as Rs.1,58,000/- has already been paid as margin money to the Bank before sanctioning of loan amount.

3. It is averred that the petitioner was surprised to go through the order passed by the learned Arbitrator on 19.8.2016, i.e. the date on which his statement was recorded, wherein the petitioner has been specifically held liable to pay principal amount of Rs.7,00,000/- along with simple interest @ 15% till 31.5.2018 and direction has been issued to the employer of the petitioner to deduct Rs.10,000/- per month from the salary and deposit in the account of respondent-Bank.

4. Aggrieved by the order passed by the Arbitrator, the petitioner filed a petition under Section 227 of the Constitution of India before this Court, which was registered as CMPMO No. 444/2016. This Court initially stayed the order of Arbitrator and vide order dated 1.5.2017 disposed of the petition reserving liberty to the petitioner to resort to such remedy as is available to him under H.P. Cooperative Societies Act.

5. In terms of liberty granted by this Court, the petitioner approached the appellate authority, i.e. Additional Registrar, H.P. Cooperative Societies, who, vide final order dated 6.2.2020 proceeded to dismiss the appeal thereby upholding the award. It is against this award that the petitioner has filed the instant petition for grant of the reliefs, as quoted above.

6. It is vehemently argued by Mr. V.D. Khidtta, learned counsel for the petitioner, that the impugned orders holding liable the petitioner to pay the loan amount are contrary to the law, therefore, deserve to be quashed and set aside.

7. We find no merit in the aforesaid contention for more than one reason.

8. It is more than settled that the guarantor's liability is co-extensive with that of the principal debtor under Section 128 of the Indian Contract Act, unless it is otherwise provided by the contract.

9. The Three-Judge Bench of the Hon'ble Supreme Court in State Bank of India vs M/s Indexport Registered and others, (1992) 3 SCC 159, has held as under:

"[12] The Court further held that such directions are neither justified under Order XX Rule 11(1) or under the inherent powers of the Court under Section 151 of the Code of Civil Procedure to direct postponement of the execution of the decree.

[13] In the present case before us the decree does not postpone the execution. The decree is simultaneous and it is jointly and severally against all the defendants including the guarantors. It is the right of the decree holder to proceed with it in a way he likes. Section 128 of the Indian Contract Act itself provides that "the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.

[14] In Pollock and Mulla on Indian contract and Specific Relief Act, Tenth edition, at page 728 it is observed thus:

"Co-extensive.- Surety's liability is co-extensive with that of the principal debtor.

A surety's liability to pay the debt is not removed by reason of the creditor's omission to sue the principal debtor. The creditor is not bound to exhaust his remedy against the principal before suing the surety, and a suit may be maintained against the surety though the principal has not been sued."

[15] In Chitty on Contracts 24th Edition Volume 2 at page 1031 paragraph 4831 it is stated as under:-

"Pri