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1999 Supreme(All) 854

IN THE HIGH COURT OF ALLAHABAD
A. K. Yog, J.
PUNJAB NATIONAL BANK - Appellant
Versus
IVTH ADDITIONAL DISTRICT JUDGE, PILIBHIT AND OTHERS - Respondents
C. M. W. P. 11130 Of 1987
Decided On : 05/28/1999

Advocates Appeared:
K.L.GROVER

The liability of a surety is co-extensive with that of the principal debtor, and if the principal debtor has no liability to repay the loan, the sureties have no obligation to pay the amount.

Headnote:

ORDER IX RULE 13 C.P.C. - SETTING ASIDE EX PARTE DECREE - ORDER IX RULE 13 C.P.C. SECTION 128 CONTRACT ACT - LIABILITY OF SURETY - SUMMARY

Fact of the Case:

Punjab National Bank filed a suit against Anwar Ahmad Khan (respondent No. 2) for recovery of a loan amount of Rs. 10,000. Defendants Nos. 2 to 5 (respondent Nos. 3 to 6) stood surety for defendant No. 1. The suit proceeded ex parte against defendant No. 1, and a decree was passed against him. Defendant No. 1 filed an application under Order IX, Rule 13 of Code of Civil Procedure for setting aside the decree. The application was allowed, and the decree was set aside against defendant No. 1 only. The guarantor defendants (respondent Nos. 3 to 6) filed a revision petition against the order setting aside the decree. The revision petition was allowed, and the decree was set aside against all the defendants.

Finding of the Court:

The court held that the decree against the guarantor defendants could not be set aside while maintaining the decree against the principal debtor. The court observed that the liability of the surety is co-extensive with that of the principal debtor, and if the principal debtor has no liability to repay the loan, the sureties have no obligation to pay the amount. The court also held that setting aside the decree against the guarantor defendants would result in inconsistent and conflicting decrees.

Issues: Whether the decree against the guarantor defendants could be set aside while maintaining the decree against the principal debtor.

Ratio Decidendi: The court relied on the following principles of law: * Order IX, Rule 13 of the Code of Civil Procedure allows a court to set aside an ex parte decree against a defendant if the defendant satisfies the court that the summons was not duly served or that the defendant was prevented by any sufficient cause from appearing when the suit was called for hearing. * Section 128 of the Indian Contract Act provides that the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.

Final Decision: The court dismissed the writ petition filed by the petitioner, upholding the order of the lower court setting aside the decree against all the defendants.

A. K. YOG, J.

( 1 ) PUNJAB National Bank (for short the Bank), a body corporate constituted under the Banking companies (Acquisition and Transfer of Undertakings) Act, 1970, having its banking branch at puranpur district Pilibhit filed Original Suit No. 66 of 1982, Punjab National Bank v. Anwar ahmad Khan and four others, for claiming a money decree on the ground that defendant No. 1, anwar Ahmad Khan (respondent No. 2) borrowed a sum of Rs. 10,000 from the plaintiff bank on the basis of a pronote, which contemplated payment of interest under the agreement, executed by the parties. Defendant Nos. 2 to 5. Akil Khan and others (respondent Nos. 3 to 6) stood surety for defendant No. 1 Anwar Ahmad Khan and deed of surety/guarantee executed by them providing that liability of Anwar Ahmad Khan (respondent No. 2) was co-extensive with that of other defendants (respondent Nos. 3 to 6) for repayment of the loan as mentioned in para 4 of the plaint. On the failure of the defendants to pay loan, plaintiff bank instituted aforementioned suit in the Court of Civil Judge. Pilibhlt : a copy of the plaint has been annexed as Annexure-1 to the petition.

( 2 ) AFOREMENTIONED suit proceeded ex parte against defendant No, 1 (Anwar Ahmad Khan ). The other defendants (respondent Nos. 3 to 6) contested the suit and filed two written statements (copies of which have been filed as Annexures-2 to 3 to the petition ). Suit was decreed ex parte against Anwar Ahmad Khan, (respondent No. 2), who filed an application under Order IX, Rule 13 of Code of Civil Procedure for setting aside of the decree and restore the suit to its original number, (copy of the application is annexed as Anncxure-4 to the petition ). After parties filed objections including affidavits, learned Civil Judge vide judgment and order dated 11th september. 1985. a11owed the application and set aside judgment and decree dated December 20. 1983 being ex parte to the extent of respondent No. 2 only and directed the suit to be restored to its original number with respect to respondent No. 2 (defendant No, 1) aione.

( 3 ) FEELING aggrieved, a Misc. Civil Revision No. 53 of 1985, Anwar Ahmad Khan and others v. Aqil Ahmad Khan, was filed by the guarantor defendants (respondent Nos. 3 to 6) ; memo of revision has been annexed as Annexure-6 to the petition. Respondent No. 1 has a11owed the aforesaid Civil Revision No. 53 of 1985 by means of judgment and order dated 3. 10. 1987, which is subject-matter of cha11enge in the present proceedings.

( 4 ) NO one has appeared on behalf of the respondents. Heard learned counsel for the petitioner.

( 5 ) BEFORE dealing with the contention raised on behalf of the petitioner, provisions of Order IX rule 13 Code of Civil Procedure and Section 128 Contract Act may be noted which are reproduced below : "order IX Rule 13. Setting aside decree ex parte against defendants.--In any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside ; and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was ca11ed on for hearing, the Court sha11 make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and sha11 appoint a day for proceeding with the suit : provided that where the decree is of such a nature that it cannot be set aside as against such defendant only, it may be set aside as against a11 or any of the other defendants also : provided further that no Court sha11 set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and. answer the plaintiffs claim. Explanation.--Where there has been an appeal against a decree passed ex parte under this rule, a




















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