TaxTMI 
TaxTMI 
2015 (5) TMI 13
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....ively, were dismissed. 3. The facts material to the present case are that Respondent No.1 C.L. Vimla who is a senior citizen aged about 85 years, is the guarantor. The appellant Central Bank of India is the Bank to whom the property involved in the present case, was mortgaged. The property involved in the present case is a residential house which was purchased by the husband of C.L. Vimla, namely, C.L.Narsimhaiah Shetty, under a sale deed dated 10.06.1997. She is in possession of the property along with other family members. Her husband, during his life time, executed a Will dated 31.05.1995 bequeathing his undivided share in favor of his sons equally and while settling the property he granted life interest in favour of the guarantor. However, he has not authorized her to sell or mortgage the property. The property was mortgaged in favour of Central Bank of India (hereinafter referred to as "the Bank") for raising a loan of Rs. 17,50,000/- for family business. The business suffered loss. Consequently, as the respondents were unable to repay the mortgage amount, the Bank filed O.A. No.309/2002 before the Debt Recovery Tribunal, Bangalore. The Debt Recovery Tribunal referred the cas....
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....roceedings. An application made in this regard was dismissed on 22.2.2007. The High Court Lok Adalat held on 5.2.2007 that the guarantor not being a party to the joint memo to referring the matter to the Lok Adalat, the decree is not binding on her. While the guarantor was agitating her right in the property, the sale conducted is not valid in law, so she sought for setting aside the sale. 5. In Writ Petition No.17320 of 2007, the auction purchaser contends that he is the auction purchaser in the auction conducted by the Recovery Officer in pursuance of order passed by DRT in OA No.309 of 2002 and as per Certificate No.3264 issued by DRT on 5.10.2006. The auction purchaser has purchased the property for Rs. 3.27 crores. In pursuance of the deposit the sale was confirmed on 15.11.2006. 6. The High Court of Karnataka, in the impugned judgment, has dealt with the issues individually. The Court had framed issues on the inherent power of the Lok Adalat, the action of the Debt Recovery Tribunal (DRT) in deciding the interim applications filed by the guarantor and the possession by the auction purchaser and payment of solatium to the Central Bank of India. On the issue of the inhe....
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....tgaged property was effected under provisions of Income Tax (Certificate proceedings) Rules. The sale was effected as per Rule 60 and Rule 61. The High Court failed to appreciate that the mortgaged property comprised of a residential house, car shed, vacant portico and open space and it was not possible to sell only a portion thereof. The learned counsel for the appellant finally concluded that the High Court was not justified in rejecting the request made by the appellant that if for any reason the Court came to the conclusion that the auction of the property is to be set-aside, 20 per cent of the bid money should be awarded to the appellant Bank as solatium. 8. The learned counsel for Respondents contends that the appellant has suppressed material facts, that the award passed by the Lok Adalat was without her consent and further, the sale proceedings were null and void. Originally the partnership firm called Satyashree Silks had raised a loan of Rs. 17.5 lakhs from Central Bank of India. The Counsel for the Respondents contends that she has got nothing to do with the firm. When the matter was pending before the DRT, N. Surya Bhagavan, Respondent No.2 signed a Joint Memo for refe....
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....ature. In Ram Kishun and Ors. v. State of U.P. and Ors., (2012) 11 SCC 511, this Court has held that "in view of the provisions of Section 128 of the Contract Act, the liability of the guarantor/surety is co-extensive with that of the debtor." The only exception to the nature of the liability of the guarantor is provided in the Section itself, which is only if it stated explicitly to be otherwise in the Contract. 12. In the case of Ram Kishun (supra), this Court has also stated that it is the prerogative of the Creditor alone whether he would move against the principal debtor first or the surety, to realize the loan amount. This Court observed: "Therefore, the creditor has a right to obtain a decree against the surety and the principal debtor. The surety has no right to restrain execution of the decree against him until the creditor has exhausted his remedy against the principal debtor for the reason that it is the business of the surety/guarantor to see whether the principal debtor has paid or not. The surety does not have a right to dictate terms to the creditor as to how he should make the recovery and pursue his remedies against the principal debtor at his instance". T....
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.... were residing in the same house. We see no reason why the Respondent would not know of the joint memo, when she could have by reasonable means made herself aware of the proceedings. 16. It appears that respondent No.1 Smt. C.L. Vimla filed writ petitions one after the other, being Writ Petition No.6625 of 2006 filed on 1st June, 2006, and another writ petition, being Writ Petition No.8186 of 2006, was filed by her two sons on 20 th June, 2006. The said writ petitions were also dismissed by the High Court. Smt.C.L. Vimla had life interest of 1/6th share in the property in question. It is not in dispute that Smt.C.L. Vimla was residing with her son respondent No.3 and was under his care and custody and it appears from the facts that the said respondent No.3 categorically stated before the State Legal Services Authority on his behalf and on behalf of other defendants, including his mother, the respondent No.1, in respect of the settlement dated 20th March, 2004. We have further noticed that the Court on a number of occasions granted time to deposit the amount to meet the liabilities of the bank by the respondents. But it appears that, time and again, they have failed to comply with ....