Sunil Kumar v. Kerala State Financial Enterprises Ltd. and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **MONDAY, THE 21ST DAY OF JULY 2014/30TH ASHADHA, 1936** **WP(C).No. 17541 of 2014 (P) ----------------------------** ## **PETITIONER(S):** **--------------** **SUNIL KUMAR, AGED 42 YEARS, S/O. BAHLEYAN, AKATHOOTTU KANNIMEL, VENGARA, THODIYOOR(NORTH), KARUNAGAPPALLY.** **BY ADVS.SRI.C.RAJENDRAN SRI.K.R.RANJITH** ## **RESPONDENT(S):** **--------------** **1. THE KERALA STATE FINANCIAL ENTERPRISE LTD., REPRESENTED BY ITS MANAGING DIRECTOR "BHADRATHA", MUSEUM ROAD, TRICHUR-680 001.** **2. THE MANAGER,** **KSFE LTD., VADAYATTUKOTTA BRANCH, KOLLAM, KOLLAM DISTRICT-691 001.** **3. THE DEPUTY COLLECTOR (REVENUE RECOVERY),** - **KSFE LTD., "BHADRATHA", MUSEUM ROAD, TRICHUR-680 001.** **4. THE SPECIAL DEPUTY TAHSILDAR (REVENUE RECOVERY), KSFE LTD., ALAPPUZHA.** **5. ABDUL SATHAR** **S/O. ABDUL AZEEZ, PARAYIL VEEDU, VENGARA, KARUNAGAPPALLY-690523.** **R1,R2 BY ADV. SRI.BABU VARGHESE (SR.) R1,R2 BY ADV. SRI.ALEXANDER.C.V., SC, KERALA STATE FINANCIAL** **ENTERPRISES** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21-07-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **rvs/** _**WP(C).No. 17541 of 2014 (P)**_ ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** **----------------------** **EXT. P1 : COPY OF THE JUDGMENT DTD.8.1.2014 IN WPC NO.30116 OF 2013. EXT. P2 : COPY OF THE NOTICE DTD.31.1.2014. EXT. P3 : COPY OF THE STATEMENT SUBMITTED BY THE PETITIONER DTD.19.2.2014. EXT. P4 : COPY OF THE LETTER OF PROCEEDINGS DTD.25.2.2014. EXT. P5 : COPY OF THE REQUEST LETTER DTD.21.4.2014.** **EXT. P6 : COPY OF THE ACKNOWLEDGMENT SIGNED AND RETURNED FROM THE 4TH RESPONDENT. EXT. P7 : COPY OF THE REPLY DTD.22.4.2014.** ## **RESPONDENT(S)' EXHIBITS:** **-----------------------** **NIL.** **/true copy/** **P.A.TO JUDGE** **rvs/** ## **K. VINOD CHANDRAN, J. ===================== W.P.(C) No. 17541 of 2014 ====================== Dated this the 21[st] day of July, 2014** ## **J U D G M E N T** The petitioner is aggrieved by the recovery proceedings, initiated against the petitioner, for satisfaction of the chitty, subscribed by the 5[th] respondent. On auction the amount covered by the chitty was released to the 5[th] respondent, on the security executed by the petitioner. Admittedly, the petitioner had also executed a mortgage of 61.25 ares of property in Survey Nos. 123/4, 5, 6 and 126/1 of Thamarakulam Village of Mavelikara Taluk. The grievance is insofar as the respondent, having not proceeded against the mortgaged property and having proceeded against another property of the petitioner. 2. The petitioner was earlier before this Court challenging the said auction and by Ext.P1, the 4[th] respondent herein was directed to consider the prayer of the petitioner. In compliance with Ext.P1, Ext.P2 notice W.P.(C) No. 17541 of 2014 **2** was issued and Ext.P3 representation made by the petitioner was considered as per Ext.P4. In Ext.P4, it was specifically ordered that the recovery would be first taken against the mortgaged property and only on failure to satisfy the same, the other property of the petitioner would be attached. 3. The learned Counsel for the Financial Enterprise, submits before Court that, the property, which was mortgaged, was rendered valueless, only on the petitioner, in collusion with 5[th] respondent, having conducted illegal quarrying operations in the said property. The property as it is situated now, is water logged and would not fetch the full amount to satisfy entire arrears in the chitty transaction, is the contention. It is also submitted that, the 5[th] respondent had sought for one time settlement, the time of which had expired and now the 5[th] respondent has sought for a further period till the end of this month, for satisfaction of the entire dues. Needless to say if the 5[th] W.P.(C) No. 17541 of 2014 **3** respondent satisfies the entire dues, no proceedings could be continued against the petitioner, who is only a surety to the aforesaid chitty. 4. With respect to the contention of the petitioner; as to the 4[th] respondent proceeding against the property, which is not mortgaged, learned Counsel placed before me three decisions being: **Syndicate Bank v. Channaveerappa Beleri and others [AIR 2006 SC 1874]** , **K. Varghese v. Bhanuvikraman Unnithan [2007(2)KHC 211]** and **Shajahan T.K and Another v. District Collector, Kottayam and others [2009 KHC 1032]** . 5. In the aforecited decision of the Hon'ble Supreme Court, the question raised was with respect to the limitation for enforcement of a guarantee. The said question would not arise in the present case. In **K. Varghese** (supra), what was considered was the liability of the surety under Section 145 of the Civil Procedure Code. This Court held that, when W.P.(C) No. 17541 of 2014 **4** a third party has executed a surety bond, he shall be deemed to be a party within the meaning of Section 47 and a separate suit is not necessary for enforcing that loan. The learned Counsel would rely on sub-clause (i) and (ii) of Section 145, to contend that the surety is liable only to the extent of the security. The plea urged is that the surety is liable only to the extent of the mortgaged property. Section 145 of the CPC reads as under: S.145 of the Code of Civil Procedure provides for enforecement of liability of surety. It reads thus: '145. Where any person has furnished security or given a gurantee:- (a) for the performance of any decree of any part thereof or (b) for the restitution of any property taken in execution of a decree, or © for the payment of any money, or for the fulfilment of any condition imposed on any person, under an order of the Court in any suit or in any proceeding consequent thereon, the decree or order may be executed in the manner herein provided for the execution of decrees, namely: (i) if he has rendered himself personally liable, against him to that extent; (ii) if he has furnished any property as security, by sale of such property to the extent of the security; (iii) if the case falls both under clauses (i) and (ii), then to the extent specified in those clauses, and such person shall be deemed to be a party within the meaning of S.47: Provided that such notice as the Court in each case thinks sufficient has been given to the surety'. ## 6. The 'extent' noticed is with respect to the liability for W.P.(C) No. 17541 of 2014 **5** which the surety has furnished security or a gurantee and cannot be read as confining the recovery only against the collatteral security offered. The petitioner herein has furnished security bond to the extent of the liability of the 5[th] respondent to the first respondent, in the chitty transaction. The Financial Enterprise also is not intending to recover from the petitioner any amounts in excess of that, which has been availed of by the 5[th] respondent, and which is remaining due along with interest in the chitty transaction, maintained with the 1[st] respondent. 7. This Court cannot understand the dictum laid down in the aforesaid decision, as the recovery proceedings being confined, to the property mortgaged. It is trite that even if there is no mortgage effected, a creditor could institute a suit for recovery and attach the properties of a debtor for satisfying the dues and proceed against it for recovery of the decree debt, if eventually a decree is passed. When an institution is notified under Section 71 of the Kerala W.P.(C) No. 17541 of 2014 **6** Revenue Recovery Act, 1968, the dues to the said institution can be recovered as per the provisions of the Act deeming it to be public revenue due on land. The Act also provides for attachment of the properties and such attachment is not confined to the property mortgaged by the surety or by the original borrower. 8. Yet another decision placed on record, **Shajahan T.K** , (supra), deals with a surety bond executed under the General Sales Tax Act, 1963 (Kerala), wherein, the surety bond specifies the extent of the liability and the State does not get any right to proceed for any amounts, in excess of that provided in the surety bond; even if the defaulter's liability exceeds such amounts. Both the said decisions are also not applicable to the facts of the above case. 9. In the instant case, it has to be noticed that Ext.P4 passed by the 4[th] respondent, is in compliance of Ext.P1 judgment. Ext.P4 specifically orders that, the recovery W.P.(C) No. 17541 of 2014 **7** would first proceed against the mortgaged property, and only on no satisfaction being possible, from the sale of such property, could there be a recovery proceeded against another property of the petitioner. However, the petitioner's contention that any other property would not be liable for proceedings under the Act, for realization of the debts due to the respondent Financial Enterprises, is to be negatived. 10. The submission made by the learned Counsel appearing for the Financial Enterprises that the 5[th] respondent has been given time up to 31.07.2014 to settle the loan amount is also to be taken into consideration. In such circumstance, the Writ Petition is disposed of directing the recovery proceedings to be kept in abeyance till 31.07.2014 and if the debt is satisfied, the same shall not further be proceeded against the petitioner. However, if no satisfaction is recorded, the respondent authority would be entitled to first proceed against the mortgaged property of W.P.(C) No. 17541 of 2014 **8** the petitioner and on no satisfaction being recorded, would also be entitled to proceed against any other property of the original debtor being the 5[th] respondent or the guarantorthe petitioner herein. The Writ Petition is disposed of, with the above directions. **Sd/-** **K. VINOD CHANDRAN, JUDGE** SB