The guarantor's liability is co-extensive with that of the principal debtor, and a compromise with the company does not relieve the guarantor of liability.

Heard Mr. Rajesh Kumar, counsel appearing for the petitioner.

2. Nobody appears on behalf of the respondent no.1.

3. So far as respondent no. 2 is concerned, he has entered appearance through Advocate by filing Vakalatnama but nobody is appearing on behalf of the respondent no. 2. It further appears from the record that no counter-affidavit has also been filed by the respondents.

4. This writ petition has been filed for the following reliefs :

“(a) For quashing the purported order dated 26.02.2002 (Annexure-14) whereby and whereunder the respondent No. 1 has arbitrarily, illegally and in wrong exercise of jurisdiction exonerated the respondent No. 2 from his liability for repayment of the loan of the petitioner-bank by ignoring or disregarding the admitted factum that the said respondent No. 2 was a guarantor in his individual capacity apart from being a director of the borrower company by the name of M/s Red ball Express Carriers Private Limited.

(b) For issuance of an appropriate writ or order or direction for the Certificate Officer, Hazaribagh to proceed against all the certificate debtors in pursuance of the Certificate Case No. 37/86-87 for realization of the petitioner bank’s dues from all the certificate debtors including the respondent No. 2;

(c) For issuance of any other appropriate writ or order or direction for doing conscionable justice to the petitioner bank.”

5. Counsel for the petitioner submits as under :

(a) That in the year, 1981 a company namely, M/s Red Ball Express Carriers Private Limited had taken term loan of Rs. 2.89 Lakhs for the purpose of carrying on transport business of the company and the petitioner-Bank had extended the loan to the said company as per the terms and conditions of the loan agreement in which the respondent no. 2, being the Director of the company, had also given a personal guarantee in individual capacity. A copy of the personal guarantee dated 29.06.1981 is annexed as Annexure-2 to this writ petition. A further agreement was signed by the respondent no. 2 so as to enable the petitioner-Bank to recover the said loan by way of public demand under the provisions of Bihar and Orissa Public Demand Recovery Act, 1914.

(b) He further submits that the account of the company was declared a non-performing asset and for a realization of outstanding amount of Rs. 6,74,365.86 as on 02.02.1987, the petitioner-Bank filed a certificate case against the borrower as well as the guarantors which was numbered as Certificate Case No. 37 of 1986-87.

(c) In the said certificate case, notices were issued to the parties and the respondent no. 2, after being noticed, appeared and filed his objection under Section 9 of Bihar and Orissa Public Demand Recovery Act, 1914 denying his liability. The respondent no. 2 had also taken the point that the certificate case itself is time-barred. He also relied upon the compromise entered into between and amongst the company and its Directors in proceeding under Section 397 of the Companies Act and as per the said compromise, the respondent no. 2 was not liable to pay the demand of the Bank.

(d) The said objection filed by the respondent no. 2 was dismissed by the Certificate Officer vide order dated 30.06.1992 as contained in Annexure-7 to the writ petition. By dismissing the objection filed by the respondent no. 2, the Certificate Officer considered the revival letter dated 19.06.1984 duly signed by authorized manager of the company and other documents to show that the certificate case filed by the petitioner-Bank was not barred by limitation.

(e) Counsel for the petitioner further submits that the borrower as well as the guarantor are jointly and severally liable to clear the dues of the bank and further from the impugned order it appears that the plea of the limitation was rejected by a reasoned order after considering the materials on record. Further, the plea of the respondent no. 2 that he is exonerated from his personal liability by virtue of certain compromise