BHAGYALAXMI CO-OPERATIVE BANK LTD. Vs. BABALDAS AMTHARAM PATEL

JUDGEMENT

(1.) Briefly stated, the facts of the case are that on 30/10/1993, M/s Darshak Trading Company, respondent No.6 herein, obtained a cash-credit facility for withdrawal of Rs.4,00,000.00 (Rupees Four Lakhs Only) as a loan from Bhagyalakshmi Co-Operative Bank Ltd., the appellant herein. Mercantile goods belonging to respondent No.6 were hypothecated to the appellant. Respondent Nos.1 and 2 herein, stood as guarantors/sureties for the said loan obtained by respondent No.6 and executed contracts of guarantee in favour of the appellant. It is the case of the appellant that respondent No.6 in connivance with some officers employed by the appellant withdrew amounts far in excess of the Rs.4,00,000.00 (Rupees Four Lakhs Only) that had been sanctioned.

(2.) Learned senior counsel Sri Raghavendra S. Srivatsa appearing for the appellant submitted that the High Court was not right in holding that under Sec. 133 of the Act, the sureties are liable for the entire amount or none at all. He drew our attention to Sec. 133 of the Act, which states that any variance, made without the surety's consent, in the terms of the contract between the principal debtor and the creditor, discharges the surety as to transactions subsequent to the variance. In this regard, he placed reliance on the following judgments:

(3.) Having heard learned senior counsel and learned counsel for the respective parties, the point that arises for our consideration is, whether, respondents are entitled to the benefit under Sec. 139 of the Act or they are liable as sureties in terms of Sec. 133 of the Act? In our view, respondents are liable in accordance with Sec. 133 of the Act.