The main legal point established in the judgment is that the surety's liability is coextensive with that of the principal debtor, allowing the creditor to proceed against the surety without first exhausting remedies against the principal debtor.

JUDGMENT :

R. Pongiappan, J.

(Prayer: Writ Petition has been filed under Article 226 of the Constitution of India, praying for the issuance of a writ of mandamus, forbearing the respondent herein from proceeding against the property of the petitioner measuring an extent of 944 sq.ft. bearing Old Door No.2/24, New Door No.94, Jayavinayagar Koil Street, Jaganathapuram, Chetpet, Chennai – 600 031, without first recovering their dues by selling the mortgaged property of the principal borrower.)

1. The petitioner has filed the present writ petition, for a writ of mandamus, forbearing the respondent from proceeding against the property of the petitioner, measuring an extent of 944 sq.ft., bearing Old Door No.2/24, New Door No.94, Jayavinayagar Koil Street, Jaganathapuram, Chetpet, Chennai–600 031, without first recovering their dues by selling the mortgaged property of the principal borrower.

2. Brief facts leading to the filing of the Writ Petition are that, the husband of the petitioner, namely, P.Durairaj, is carrying on business in the name and style of G.K.Engineers. For the development of his business, he has mortgaged the property, measuring an extent of 3054 sq.ft. together with building thereon, measuring an extent of 3044 sq.ft. at Door No.42, Bajanai Koil Street, Mel Aynambakkam, Chennai and availed a cash credit facility for a sum of Rs.15,00,000/- as loan from the respondent Bank in the year 2007. For the loan availed by her husband, the petitioner herein stood as the personal guarantor without mortgaging any property or offer any security towards the loan.

3. When at the time of repaying the loan along with interest, there was a sudden loss in business and the project run by the husband of the petitioner was abruptly stopped due to some third party disputes and as such, there were some defaults in the payment of interest. In view of the default committed, the cash credit loan account was declared as NPA in the year 2009 and thereafter, the respondent Bank took possession of the property belonging to the husband of the petitioner on 16.09.2009 by issuing possession notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act [hereinafter referred to as ‘SARFAESI Act’].

4. Pursuant to the same, on 10.11.2010, the respondent Bank issued an auction notice and brought the property for sale. Inspite of the proceedings taken by the Bank, periodic payments were being made to the loan account and the Bank did not proceed with the auction sale. Thereafter, the respondent Bank approached the Debts Recovery Tribunal-III, Chennai by filing O.A.No.155 of 2013 making a claim for recovery of Rs.87,37,531/-. The Tribunal issued the Recovery Certificate in DRN No.223 of 2013 dated 24.10.2013 for a sum of Rs.91,30,117.90. Based on the Recovery Certificate, a notice dated 25.10.2013 was issued for the recovery of amount. Even in the Lok Adalat, due to some crisis, the settlement of Rs.56,00,000/- was not able to be paid to the Bank by the husband of the petitioner. The property which, the husband of the petitioner had mortgaged with the respondent Bank is a building consisting of 3044 sq.ft. and the rents have not been received from the building for nearly 6 to 7 years due to the auction taken by the Bank and as a result of which, the dues were not able to be repaid in time.

5. Thereafter, the respondent Bank issued auction notice dated 21.01.2017 stating that the outstanding dues is to the tune of Rs.1,70,74,224.50/- but the reserve price for auction was fixed only at Rs.49,50,000/-. The petitioner did not know how the outstanding amount was arrived at Rs.92,46,571.50 as on 23.12.2013, which was settled in the Lok Adalat for a sum of Rs.56,00,000/-, suddenly shot upto Rs.1,70,74,224.50 as on 21.01.2017. Even after issuing the auction notice as a second time, the respondent Bank did not proceed with the auction and the property was not auctioned.

6. All of a sudden, the respondent Bank has approa