PRAVESH KUMAR v. THE STATE OF BIHAR

VAISHALI THROUGH ITS PROPRIETOR SRI PAWAN KUMAR THAKUR.

#9. SRI ONKAR NATH SRIVASTAA SON OF NOT KNOWN, RESIDENT OF PRATAPTAND, P.S. BHAGWANPUR, DISTRICT VAISHALI. __________ For the petitioner : Mr. Gautam Kejriwal, Advocate For the I.O.C . : M/s. Kali Das Chatterji, Amlesh Kumar Verma For the respondent Bank : Smt. Nilu Agarwal, Advocate For the State :Smt. Shail Kumari, SC 23 Mr. Chandra Bhushan Prasad, AC to SC 23 2

6.8.2009 Heard counsel for the petitioner and learned counsel for Indian Oil Corporation as well as learned counsel for the Bank. In the instant writ petition the petitioner prays for issuance of writ of prohibition restraining the respondent District Magistrate, Vaishali from taking possession of stock of LPG cylinders lying at the godown of respondent no.8 M/s Singhara Indane Service for handing it over to the Indian Oil Corporation. It appears that respondent no.8 M/s Singhara Indane Service was having a distributorship of LPG from the Indian Oil Corporation and 2 it had approached the State Bank of India ADB Branch, Hajipur, respondent no.7 for financial assistance and accordingly both cash credit and term loan facility was sanctioned. The petitioner being a friend of respondent no.8 agreed to become a guarantor and in the process the petitioner mortgaged his land as collateral security. The entire stock of respondent no.8 was hypothecated to the respondent Bank. The respondent firm was regular in payment of the loan till November 2005. However, in November 2005 the business of respondent no.8 firm was slackened due to death of its proprietor Nand Kishore Thakur and thereafter the business was taken over by his son Pawan Kumar Thakur who did not take sufficient interest in the affairs as a result of which the loan mounted and the Bank declared the accounts of the firm as non- performing asset on 31.3.2004 and proceeded for recovery of the outstanding dues from the respondent firm by instituting an O.A. No.45 of 2006 before the Debts Recovery Tribunal, Patna. In the aforesaid case, both respondent no.8 and the petitioner have been made co- defendants. The Bank, however, did not choose to make Indian Oil Corporation as defendant. According to counsel for the Indian Oil Corporation as the respondent no.8 was not carrying business effectively, it sought to terminate the dealership and to repossess the cylinders which it had handed over to the firm pursuant to the agreement. He submits that the cylinders were given to the respondent no.8 and not to the present petitioner. The dilemma of the guarantor can be understandable. The 3 guarantor at times is faced with helplessness to persuade non-responsive borrower to pursue his business effectively. As per Section 138 of the Contract Act, the liability of guarantor is co-extensive with the borrower. The anxiety of the petitioner is that once the Indian Oil Corporation would take over the LPG cylinders which are the first charge of the Bank, there would be difficulty in liquidating the debt by the borrower and again the burden can fall on the guarantor for even meeting the aforesaid loss as well. In this respect, it is relevant to quote section 139 of the Contract Act which reads as follows: “139. Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy- If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged”. The petitioner submits that legal norms require that the creditors ought to have informed the petitioner that he has hypothecated the goods of someone else towards grant of cash credit facility. However, the aforesaid aspect can only be thrashed out in an appropriate proceeding or in the suit pending before D.R.T. Thus the remedy of the petitioner in the facts and circumstances of the case would be more before the Debts Recovery Tribunal, Patna where O.A.No.45 of 2006 filed by the respondent Bank is pending against him as well as respondent no.8. It would also be open to the petitioner to move the Indian Oil Corporation as well as the District Magistrate, Vaishali raising his objection over the action of taking over 4 the cylinders. In case the petitioner files an application before the Indian Oil Corporation (Respondent no.5) within two weeks from today, raising all points as urged in this writ petition, it would dispose of the same within a period of three weeks from the date of its receipt. In the meantime, the status quo, as existing today, shall be maintained for the aforesaid period and respondent no.8 in no manner will transfer or dispose of the LPG cylinders in question. With the aforesaid observations and directions, this writ petition