Decided on May 24,2010

VIVEK GARG Respondents


- (1.) THIS appeal is directed against the judgment and decree dated 25 -11 -2008 passed by the District Judge, East and North Sikkim, at Gangtok, in Money Suit No.3 of 2005, by which the suit filed by the appellant -bank against the respondents for recovery of Rs. 5,05,336.73 was dismissed.
(2.) THE case of the appellant in the suit is that the respondents had jointly applied to the appellant -bank for a term loan amounting Rs. 3,54,000/ - under the "SBI Education Loan Scheme" as financial assistance to the respondent No. 1 Shri Vivek Garg for undergoing B. Tech. (Degree Course) in Sikkim Manipal Institute of Technology, Mazitar, East Sikkim, which was sanctioned under agreed terms and conditions more specifically provided in the Agreement for Term Loan Exhibit -5 executed by and between the appellant bank and the respondents No.1 and 2 and other related documents. THE respondent No.l and his father respondent No.2 were the principal borrowers with the respondent No.3 as their guarantor and, therefore, they were jointly and severally liable for the repayment of the loan with interest accruing thereon. As per the appellant, the respondent No.3 by a Guarantee Agreement marked Exhibit 3 executed by him, had agreed to repay the dues and payable by the borrowers, the respondents No.1 and 2, to the bank with accrued interest, cost, charges, expenses, etc., in the event they defaulted in doing so and also would indemnify and keep the bank indemnified against all loss of the principal, interest and other moneys, etc. and that he would be treated as the principal debtor to the bank for all payments against the principal borrowers and further that the guarantee would be a continuing one. According to the appellant, the respondents had applied for the loan in the prescribed form (Exhibit 1) which along with the proposal form (Exhibit 2) and the arrangement letter (Exhibit 4) were duly signed by all of them. Letter dated 17 -2 -2004 of the appellant -bank sent to the respondents No.l and 2 through speed post demanding repayment of the loan with interest was returned with the postal remark "addressee left without information". It was later learnt by the appellant - bank that the respondents No. 1 and 2 had left the place and address shown in the prescribed application form and in other related documents without any trace, whereupon they lodged a FIR in the Sadar Police Station, Gangtok on 12 -9 -2004. Later coming to learn of their being at Naya Bazar, Kurseong, Darjeeling, W. B., the appellant issued to them in that address a legal notice on 17 -11 -2004 demanding repayment of the loan with accrued interest but was also returned by the postal authorities as unserved. Similar notice issued to the respondent No.3 at his address at Gangtok, was not responded to in spite of it being received by him. Thereafter, notices were published in "Janapath Samachar" (Hindi Newspaper) on 26 -6 -2005 with photographs of the respondents Nos. 1 and 2 calling upon them to repay the dues of the appellant -bank, but that too failed to evoke any response. The total dues against the loan as on 10 -8 -2005 with interest computed @ 11.5% per annum was Rs.5,05,336.73, without prejudice to the future interest @11.5% until recovery of the entire dues. Ultimately, the appellant -bank filed Money Suit No. 23 of 2005 against all the respondents in the Court of the District Judge, East and North Sikkim at Gangtok on 23 -8 -2005 for recovery of the aforesaid sum and other consequential reliefs. During the course of the proceedings before the trial Court, it appears that the notice of summons could not be served upon the respondents Nos.1 and 2, requiring the appellant taking resort to substituted service by publication in a local newspaper. The substituted service not having been responded to by the respondents Nos. 1 and 2, they were proceeded ex parte vide the order of the trial Court dated 21 -6 -2006. From the proceedings of the trial Court available on record, it is seen that it was only the respondent No. 3 who appeared diligently in each date fixed by the Court and contested the suit by filing written statement. It would not be necessary to deal with each and every averments contained in the written statement but suffice it to state that the respondent No.3 did not deny the factum of the respondents Nos. 1 and 2 having taken the loan and he having stood as guarantor by executing the deed of guarantee marked as Exhibit 3. The suit was contested by him on the ground that since the appellant and the respondents Nos. 1 and 2 had made material variation in the manner of disbursement of the loan without his consent, inasmuch as, it was deposited directly in the personal account of the borrowers, i.e., the respondents Nos.l and 2, instead of the institution which was the agreed mode of disbursement, he stood discharged as a guarantor. It was further stated that vide the application for loan Exhibit 1, the respondents Nos.1 and 2 had pledged an immovable asset, namely, "Krishna Restaurant" having the declared value of Rs. 2,50,000/ - which the appellant -bank allowed the respondents -borrowers to part with. The appellant having varied the terms of the contract and having allowed the borrowers to part with the pledged security which as per the respondent No.3, was in connivance with the borrowers, he stood discharged from the guarantee. In fact, on coming to learn of the manner of disbursement in violation of and contrary to the agreed terms, the respondent No.3 vide his letter dated 5 -7 -2003 addressed to the Assistant Bank Manager, SBI (HQ), Gangtok, conveyed his withdrawal from the guarantee, but as per the respondent No.3, the bank chose not to respond.
(3.) BASED upon the pleadings for the purpose, the trial Court framed the following issues : - "1. Whether the suit is maintainable against the defendant No. 3? 2. Whether the defendant No.3 is liable to repay the educational loan taken by defendant Nos. 1 and 2? 3. Whether the plaintiff altered the terms of the contract without the consent of defendant No.3? 4. Whether the plaintiff has violated the terms of guarantee agreement entered between the plaintiff, defendant Nos. 1 and 2 and the defendant No.3? 5. Reliefs." The learned trial Court after considering the pleadings and the evidence on record decided all the issues against the appellants and vide the impugned judgment came to a finding that the appellant -bank had altered the terms of the contract and, therefore, neither the suit was maintainable against respondent No.3 nor was he liable to repay the loan taken by the respondents Nos. 1 and 2 thereby leading to the dismissal of the suit.;

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