Nawab Haider v Urban Cooperative Bank Limited, Lucknow Through Branch Manager and others

Allahabad High Court

19 July 2013

Misc. Bench No. – 7558 of 2011

The Judgment was delivered by : Sibghat Ullah Khan, J.

1. Heard Sri Vivek Srivastava, learned counsel for the petitioner, Sri Deepak Srivastava, learned counsel for opposite party no.1 and learned Additional Chief Standing Counsel for other opposite parties. The petitioner’s son Zeeshan Haidar respondent no.3 took some loan from respondent no.1. Petitioner was guarantor of the loan in terms of Section 40 ofU.P. Co-operative Societies Act, 1965. Section 40 is quoted below:-

“40. Deduction from salary to meet society’s claim in certain cases.

(1) Notwithstanding anything contained in any law for the time being in force, a member of a co-operative society may execute an agreement in favour of the co-operative society providing that his employer shall be competent to deduct from the salary or wages payable to him by the employer, such amount as may be specified in the agreement and to pay the amount so deducted to the co-operative society in satisfaction of any debt or other demand owing by the member of the society.

(2) Notwithstanding anything in any law for the time being in force, the employer shall, if so required by the co-operative society by requisition in writing and so long as such debt or demand or any part of it remains unpaid, make the deduction in accordance with the agreement executed under sub- section (1) any pay the amounts so deducted to the society within fourteen days from the date of the deduction.

(3) An employer who without sufficient cause fails to make the deduction in terms of sub-section(2), or having made, any such deduction fails to pay the amount so deducted to the society within fourteen days from the date of deduction, shall be liable to the society to the extent of the amount which the employer has failed to deduct or to pay, as the case may be.”

2. Petitioner is an employee of U.P. State Government working under respondent no.2 Executive Engineer Yantrik Khand Lok Nirman Vibhag, Lucknow. Respondent no.3 petitioner’s son and petitioner both were members of Co-operative Society respondent no.1. Respondent no.3 took loan of Rs.234118/- from the society in 2002 for purchasing a car. In term of Section 40 of the Act, petitioner stood surety for the loan of his son respondent no.3. Petitioner’s son defaulted in payment. Hence by virtue of the agreement executed by the petitioner in favour of respondent no.1 and in terms of Section 40 (1) of the Act, communication was sent by respondent no.1 to respondent no.2 dated 23.6.2011 and thereafter the loan was started to be deducted from the salary of the petitioner. The said office order dated 23.6.2011 has been challenged through this writ petition.

3. It has been stated that up till 2007 installments were paid but thereafter respondent no.3 stopped payment. Thereafter it is stated in para 5 of the writ petition that respondent no.3 son of the petitioner started behaving cruelly with the petitioner and thereupon petitioner disowned his son through advertisement in newspaper. In this writ petition, interim order was passed on 12.9.2011 directing that recovery shall not be made from the petitioner, however, it could be made by selling the car as well as immovable property owned by respondent no.3. Respondent no.1 has filed supplementary affidavit stating therein that its employee contacted the opposite party no.3 but he misbehaved with him and refused to give information regarding the house and the car, hence car has not been recovered.

4. The anchor-sheet of the argument of learned counsel for petitioner is that in view of Supreme Court authority reported in Pawan Kumar Jain vs. The P.I.I. Corporation of U.P. 2004 (3) UPLPEC 2366ย 2004 Indlaw SC 586, the recovery should have first been made from the principal borrower i.e. respondent no.3. Firstly, documents have not been filed to show that petitioner was simply a guarantor. Secondly, by virtue of Section 40 ofย U.P. Co-operative Societies Act, petitioner is squarely liable. Thirdly, the Supreme Court Authority reported in Pawan Kumar Jain deals only with recoveries under U.P. Public Money (Recovery of Dues) Act, 1972 Section 4 (2)(a) which requires that first recovery shall be made by selling pledged goods. If the instant case the pledged car is not traceable.

5. The Supreme Court in the authority reported in Bank of Bihar vs. Dr. Damodar Prasad AIR 1969 Supreme Court 2971968 Indlaw SC 80, (three judges) categorically held that liability of surety cannot be deferred until remedies against principal debtor are exhausted. Subsequently also in the following authorities placing reliance upon Section 128 ofContract Act, it has been held by the Supreme Court that even without proceeding against principal debtor the proceedings for recovery can be taken against guarantor/surety.

(I) Industrial Investment Bank of India Ltd. vs. Biswanath Jhunjhunwala 2009 (9) SCC 478ย 2009 Indlaw SC 978.

(II) Ram Kishun and others vs State of U.P. and others 2012 (11) SCC 511ย 2012 Indlaw SC 409.

Accordingly we do not find anything wrong in the action of respondent no.1 seeking to recover the amount of loan advanced to respondent no.3 from the salary of the petitioner.

6. Writ petition is, therefore, dismissed. Stay order stands automatically discharged.

Petition dismissed