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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) whether the defendant had executed the guarantee and was liable for the suit claim; (ii) whether the decree could direct the plaintiff to proceed first against the principal debtor and his properties before enforcing the decree against the guarantor.
Issue (i): whether the defendant had executed the guarantee and was liable for the suit claim.
Analysis: The disputed signature on the guarantee could be compared with an admitted contemporaneous signature under Section 73 of the Indian Evidence Act, 1872. The defendant had admitted his signature in a relevant document containing his property details, and that admission was treated as the best evidence. The comparison of the admitted and disputed signatures showed no dissimilarity. The guarantee document and the accompanying material established that the defendant had stood as surety for the loan advanced to the principal debtor.
Conclusion: The issue was decided against the defendant and in favour of the plaintiff bank.
Issue (ii): whether the decree could direct the plaintiff to proceed first against the principal debtor and his properties before enforcing the decree against the guarantor.
Analysis: Under Section 128 of the Indian Contract Act, 1872, the liability of the surety is co-extensive with that of the principal debtor unless the contract provides otherwise. A creditor is not bound to exhaust remedies against the principal debtor or his properties before proceeding against the surety. The trial court's condition postponing execution against the guarantor was contrary to law.
Conclusion: The issue was decided in favour of the plaintiff bank and against the defendant.
Final Conclusion: The decree was modified by deleting the condition that required prior recourse against the principal debtor, while sustaining the finding that the guarantor was liable for the suit claim.
Ratio Decidendi: A court may compare a disputed signature with a genuine contemporaneous admitted signature under Section 73 of the Indian Evidence Act, 1872, and a surety's liability is co-extensive with that of the principal debtor under Section 128 of the Indian Contract Act, 1872, so the creditor need not first proceed against the principal debtor before enforcing the guarantee.
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