1. In this Miscellaneous Appeal the appellant Bank (applicant in the Court below) has challenged the Order dated 28.9.1998 passed by the Debts Recovery Tribunal (DRT), Chennai.
2. I will again refer to the order later.
3. In this appeal respondent No. 1 is the. 5th defendant in the Court below. R-2 is D-1, R-3 is D-2, R-4 is D-3, R-5 is the 4th defendant in the Court below.
4. The 5th defendant (R-1 in this appeal) filed IA-205 before the DRT, Chennai, D-5 is a guarantor.
5. D-5 has prayed in IA-205/97 that the appellant Bank be directed to release the original title deeds of the properties of the 5th defendant, namely, 5 grounds of vacant land in R.S No. 114 of 148 (B Schedule) situated in Okkiam, Thoraipakkam Village, after cancelling the simple mortgage deed executed by D-5, on payment into the account of the defendants a sum of Rs. 30 lakhs.
6. In para-3 of the reply affidavit the 5th defendant has sworn that one promoter is ready and willing to transfer the sum of Rs. 30 lakhs lying in his current account to the account of the applicant Bank provided the title deeds in respect of the properties in question belonging to D-5 are returned immediately.
7. The applicant Bank has filed objections, opposing IA-205/97. The learned Presiding Officer of DRT passed the impugned order on IA-205/97, directing the Bank to receive the amount of Rs. 30 lakhs and release the title deed of D-5 in respect of B-Schedule property. I have already stated that the 5th defendant is a guarantor. Section 123 of the Indian Contract Act which speaks of surety's liability comes into play.
8. Section 128 of the Contract Act says:
“The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.”
9. It is nobody's case that surety's liability is otherwise provided for.
10. What remains is that the liability of the surety is co-extensive with that of the principal debtor. It should be mentioned here that the principal debtors are due a huge sum of about Rs. 1,13,00,000/- odd (Rupees one crore thirteen lakhs odd) on the date of filing the petition under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions (RDDB & FI) Act (the Act).
11. The learned P.O has nowhere referred to Section 128 of the Contract Act and its intendment. I am clearly of opinion that the impugned order passed by the learned P.O, DRT, Chennai is thoroughly illegal. The Presiding Officer has not seen the wood for the trees.
12. Accordingly the impugned order is set aside.
Appeal allowed.