First Appeal No.631 of 1997

9th April, 2014

Petitioner Counsel: Mr. S.V. ADWANT
Respondent Counsel: Mr. P.V. MANDLIK

Cases Cited:
Pranjivandas Jagjivandas Mehta Vs. Chan Ma Phee, AIR 1916 Privy Council [Para 27,28]
Sundarachariar & Ors. Vs. Narayana Ayyar & Ors., AIR 1931 Privy Council [Para 27,29]
Rachpal Mahraj Vs. Bhagwandas Daruka & Ors., AIR (37) 1950 SC 272 [Para 27,30]
State of Haryana & Ors. Vs. Narvir Singh & Anr., (2014) 1 SCC 105 [Para 27,31]
Mrs. Margaret Lalita Samuel Vs. Indo Commercial Bank Ltd., AIR 1979 SC 102 [Para 39]
Syndicate Bank Vs. Swaransingh Bachansingh Lal & Ors., 1996(2) ALL MR 310 [Para 39]
The Miraj State Bank Ltd. Vs. M/s. Poonawalla Promoters Pvt. Ltd. & Ors., 1996(3) ALL MR 179 [Para 39]
SICOM Ltd. Vs. Harjindersingh & Ors., 2004(3) ALL MR 603=AIR 2004 BOMBAY 337 [Para 39]

JUDGMENT

JUDGMENT :- This first appeal is admitted on 12th March, 1998. Heard learned counsel appearing for the respective parties.

2. Appellant - Bank's suit for recovery of an amount of Rs. 27,76,137/- and for preliminary decree for sale of the mortgaged property for recovery of the said amount was decreed against the borrower - original defendant No.1, but was dismissed against the guarantors i.e. defendants No. 2 to 6. Hence, this first appeal against the guarantors.

3. The case of the appellant/plaintiff, in short, is as under :-

That, the original defendant No. 1 has availed a loan of Rs. 10 (ten) lacs on 12.02.1988 and 10.03.1988 for the purposes of purchase of a truck with bore-well Rig, Machine, Screw Compressor, Drilling Rig, etc. The original defendant No. 1 - the borrower hypothecated the said machinery and its accessories with the plaintiff Bank. At the same time, the defendants No. 2 to 6 i.e. present respondents No. 2 to 6 agreed to stand as continuing guarantors for the original defendant No. 1 in repayment of the loan amount as agreed between the appellant Bank and the defendant No.1. They agreed to mortgage their respective immovable property, situated in Nizamabad in Andhra Pradesh State. They agreed to accept all the terms and conditions of the sanction of the loan amount. Thereafter, the amount was sanctioned and disbursed to the defendant No. 1. They accordingly delivered their title-deeds at Himayatnagar Branch of the plaintiff/appellant Bank on 29.04.1988. Thus, equitable mortgage by depositing the title-deed is created by these respondents. The defendant No. 3 i.e. the respondent No. 3 has further executed agreement to mortgage his plots, situated at Shivajinagar, Nizamabad, as detailed in the plaint and accordingly, those title-deeds were deposited on 29.04.1988 at Himayatnagar branch of appellant Bank. All the defendants on 28.04.1988 attended the Himayatnagar branch of appellant Bank and on 29.04.1988, deposited the title-deeds of their respective immovable properties, as detailed in the plaint. They had agreed by executing affidavits regarding the confirmation of the mortgage by deposit of title-deeds and had further agreed that the revival of the loan, if any by the borrower i.e. defendant No. 1 shall bind the mortgagor. However, as the defendant No. 1 failed to repay the loan amount as agreed from time to time, he has executed balance confirmation letters between 1989 and 1992, as detailed in the plaint and thus extended the time for payment of the borrowed amount together with interest accrued. However, due to the persistent default, the amount staggered to Rs. 27,76,137/-. In the circumstances, the suit, as detailed supra, came to be filed on 22.07.1994.

4. The defendant No. 1 i.e. the borrower, though served with the summons, failed to appear before the trial Court and thereafter to file written statement. The case, therefore, proceeded without his written statement. Defendants No. 2 to 4 i.e. present respondents No. 2 to 4 filed their common written statement at Exhibit-33. They denied all the pleadings of the appellant Bank. Further, the plea of territorial jurisdiction to entertain the suit was taken as the mortgaged property are situated at Nizamabad in Andhra Pradesh. The original contract between the appellant Bank and the defendant No.1/ defendant No. 1 was denied. They denied that these defendants had approached the plaintiff in connection with any such loan transaction. The execution of any document by them or deposit of title-deeds towards creation of mortgage was denied. Further, any balance confirmation letter from the defendant No. 1 was denied. Alternatively, it was submitted that from time to time, these respondents/defendants had brought to the notice of the Manager of the plaintiff Bank about the activities of the defendant No. 1. However, the Branch Manager of the plaintiff Bank failed to take any proper steps or attach the hypothecated property and therefore, it was claimed that these defendants/respondents No. 2 to 4 are not required to pay any amount.

5. On the basis of these pleadings, the learned trial Court framed the issues at Exhibit-35. It held that the appellant failed to prove execution of guarantee-deed by the respondents No. 2 to 6. It further came to the conclusion that the plaintiff was able to prove that the respondents No. 2 to 4/defendants No. 2 to 4 had executed agreement of mortgage while defendant No. 6 i.e. present respondent No. 6 had executed actual mortgage-deed. However, it was found that the respondents No. 2 to 6 i.e. original defendants No. 2 to 6 have never executed the mortgage and therefore, their property is not liable to be sold for recovery of the money. As regards the extension of limitation by executing a balance confirmation letter by the defendant No.1/ respondent No.1, it was held that the said extension would not bind the present respondents No. 2 to 6. In the circumstances, the suit as against the respondents No. 2 to 6 came to be dismissed.

6. Mr. S.V. Adwant, learned counsel for the appellant/Bank submitted before me that the learned Civil Judge, Senior Division failed to distinguish between the "transfer of interest by executing a mortgage-deed" and "a mortgage by deposit of title-deeds only". Further, the documents executed by the defendants would show that they had agreed that the balance confirmation by the principal borrower shall bind them. Thus, the liability of the defendants No. 2 to 6 is co-extensive to that of the borrower and hence, it was submitted that the suit was within limitation.

7. On the other hand, Mr. P.V. Mandlik, learned Senior Counsel appearing for the respondents No. 2 to 6, submitted that there is no document on record to show that it was a continuing guarantee. The documents were only regarding agreement by mortgage by respondents No. 2 to 4. There is no registration of the mortgage, nor any stamp fees as per the provisions of Bombay Stamp Act was paid. He further took a plea of territorial jurisdiction. He further submitted that since there is no mortgage, the guarantors' liability would not be extended by personal acknowledgement, if any by the borrower during the subsistence of the contract of repayment of loan. He submits that the period of recovery of the loan amount was only of three years. The loan transaction was entered into on 12.02.1988 and 10.03.1988 while the suit was filed on 22.07.1994. In the circumstances, he submitted that the suit was barred by limitation. He further submitted that the learned trial Court has taken into consideration the contradiction regarding the fact as to the execution of guarantee-deed at Exh-103. In the circumstances, Mr. Mandlik wanted that the appeal be dismissed.

8. Mr. Mandlik, learned Senior Counsel further submitted that the admission of the appellant Bank's Branch Manager during cross-examination would show that once the hypothecated property i.e. the truck was seized by the Bank, which was lateron released, it was detrimental to the guarantors' guarantee and therefore, on this count also, he submitted that the appeal be dismissed.

9. Both the sides rely on various authorities to buttress their respective arguments.

10. On the basis of above material, the following points arise for my determination:-

(i) Whether the respondents No. 2 to 6 executed guarantee-deed ?

(ii) Whether the respondents No. 2 to 6 i.e. the original defendants No. 2 to 6 have mortgaged their respective immovable properties by deposit of title-deeds with the appellant Bank ?

(iii) Whether the suit against the respondents No. 2 to 6 i.e. original defendants No. 2 to 6 was within limitation ?

(iv) Whether the respondents No. 2 to 6 i.e. defendants No. 2 to 6 stood discharged due to any act of commission of omission by the officials of the appellant Bank? and whether the plea can be taken during the hearing of the appeal ?

My findings to points No. (i) to (iii) are in the affirmative and to point No. (iv) in the negative. Hence, the appeal is hereby allowed against the respondents No. 2 to 6, for the reasons to follow.

REASONS

11. The respondents No. 2 to 6 have denied all the averments of the appellant Bank made in the suit. They denied that they had any knowledge about the loan transaction between the appellant and respondent/defendant No. 1. They further denied that they had, at any point of time, approached the appellant Bank and agreed to stand as guarantors for the loan to be advanced to the respondent No. 1. The learned trial Court has framed issue No. 2 on these contentions. It was held by the learned trial Court that defendants No. 2 to 4 i.e. respondents No. 2 to 4 had executed the agreement of mortgage while only respondent No. 6 had executed actual mortgage. Further certain contradictions between the statements of the plaintiff's witness as to who was present at the time of execution of the guarantee-deed were highlighted by the learned trial Court.

Out of all these respondents, only respondent No. 3 G. Ram Reddy entered the witness box. The learned trial Court, however, held that though this defendant No. 3 witness has admitted the signatures of himself in the cross-examination and also of defendants No. 2 to 5, their admissions would not be binding on the other defendants. The learned Civil Judge, Senior Division, however, did not draw any adverse inference when this defendant/respondent did not enter the witness box to deny the execution of those documents. The findings of the trial Court in this regard unfortunately are perverse.

12. PW1 Massa Singh Ubhi - the Manager of the appellant Bank deposed that he served with the Branch for a period between 08.08.1988 to 14.01.1992. He proved the original loan transaction by proving these documents at Exh-38 and Exh-39. Regarding hypothecation, he submitted that letter of hypothecation was signed by defendant No. 1 in his presence at Exhibit-40. The acknowledgement to repay the loan amount from the defendant No. 1 were proved by him at Exhibit-42 to Exhibit-48.

13. PW2 Sukhdeoswami, the Manager of the Hoshiyarpur Branch of the appellant Bank during the period from 12.04.1987 to 08.08.1988, deposed about transaction regarding the present respondents No. 2 to 6. He deposed that while the principal borrower - defendant No. 1 applied for loan, present respondents No. 2 to 6 made an application that they were prepared to stand as guarantors for the principal borrower and accordingly mortgaged their respective properties. They had given separate application which were signed in his presence. He accordingly proved those documents at Exh-58 to Exh-62. By these applications, the respondents No. 2 to 6 i.e. defendants No. 2 to 6 also gave the details of their properties and valuation thereof. He further deposed that as there is no branch of the appellant Bank at Nizamabad (Andhra Pradesh), the respondents No. 2, 3 and 4 had agreed to deposit the title-deeds of their property for creating the mortgage by deposit of title-deeds at Nizamabad branch. Accordingly, they gave the letters to the Branch Manager of Himayatnagar Branch. The said application, according to him, bears the signatures of these respondents No. 2, 3 and 4. He also signed the same in attestation. This common letter is proved by him at Exhibit-69. He deposed that Exh-69 was signed by these respective respondents in his presence. Besides this, the respondent No. 2 executed an agreement - Exhibit-70 in his presence. He further deposed about the deposit of title-deeds by each of these respondents. The title verification report of their Advocate regarding the property were also pointed by him. The affidavit of respondent No. 2 was pointed by him at Exhibit-74. Non-encumbrance certificate from the Sub-Registrar of Nizamabad was pointed out at Exh-75.

Regarding defendant No. 3 also, he deposed on the similar lines and proved the documents at Exhibit-76 to Exhibit-88 in this regard. As regards defendant No. 4 i.e. respondent No. 4, he proved the similar documents at Exh-89 to Exh-94. The deponent thereafter deposed about the course of action taken by him at Himayatnagar branch of the appellant Bank about said transaction and proved the correspondence from Exh-93 to Exh-98. Exh-99 is the letter from Himayatnagar branch to the Nanded branch stating that the equitable mortgage of the property was created by these respondents. Thereafter, the respondents No. 2 to 4 gave a separate letter regarding the fact of deposit of title-deeds towards the mortgage. The same was proved by him at Exh-100.

14. the witness i.e. PW2 thereafter deposed about the respondent No. 6. He deposed that the respondent No. 6 has executed a registered mortgage-deed of her house at Nizamabad, as detailed in the mortgage-deed. The registered mortgage-deed was proved at Exh-101.

15. The witness further deposed that after deposit of title-deeds, these respondents No. 2 to 6 came to the Nanded branch and executed a guarantee-deed in his presence. The same was marked as Exh-103. Thereafter, he deposed about the documents exhibited by the principal borrower.

16. PW3 Sudhir Vishnupurikar deposed that he was serving as Clerk-cum-Cashier in the Nanded branch of the appellant Bank since the year 1987. He deposed that during the relevant period, he was working in loan section. He deposed that on 08.06.1988, the respondents No. 2 to 6 came to the branch and executed the letter of mortgage at Exh-103 in his presence. He deposed that respondent No. 6 Laxmibai put thumb mark over the said letter. He also deposed that he had read over the contents of the said document to respondent No. 6 as she was illiterate and accordingly communicated the Branch Manager that he had explained the contents to respondents No. 2 to 6. Thereafter, the witness deposed about the course of action regarding the principal borrower.

17. PW4 M.G. Shrikanta deposed that he was serving as Manager in the plaintiff Bank at the time of filing of suit. He has filed the suit for the outstanding amount of loan on the basis of the documents, as detailed supra.

18. As against this evidence, all the respondents examined respondent No. 3 Ram Reddy at Exh-117. He deposed that the principal borrower told him that as the loan amount was huge, certain identification is required. The principal borrower as well as himself were acquainted with each other. Therefore, only for the purpose of identification, he went alongwith the principal borrower as well respondents No. 2 and 4 to Hyderabad branch of the appellant Bank. There, they told the bank officers that the principal borrower was known to them. For the purpose of identification, he submitted certain documents of title of the property to the officers. He thereafter signed over certain document. He deposed that he did not state that he stood as guarantor for the loan transaction of the respondent No. 1.

19. He (respondent No. 3 Ram Reddy) in cross-examination admitted that he was serving as teacher during the relevant period in a public school at Nizamabad. He admitted his signatures over the concerned documents - Exh-58, Exh-59, Exh-60 and Exh-69. He also agreed that the signatures of defendants No. 2 to 4 i.e. present respondents No. 2 to 4 are there on the said documents. The document styled as agreement was accepted by him as bearing his signature at exh-76. The title-deeds of his properties which were in the custody of the bank and produced in the suit, were accepted by him at Exh-77 to Exh-79. Even he admitted that he has submitted valuation report of his property as per Exh-88. He further admitted that he had submitted an affidavit at Exh-82 and Exh-87. He also admitted that the defendants No. 2 and 4 had deposited title-deeds of their properties. He further admitted that the defendants No. 2 to 4 had also deposited their title-deeds regarding their property with the plaintiff Bank. He admitted the signatures of rest of the defendants over Exh-70 and Exh-89 and the affidavits. He also further admitted that on the next day, he himself alongwith the defendants No.2 and 4 went to the Bank and thereat, he signed the reports at Exh-96, Exh-97 and Exh-98. Further, he admitted that on 30.04.1988, he himself gave a letter at Exh-110 to the plaintiff Bank. The signatures over Exh-100 of himself and of the defendants No. 2 to 4 were admitted by him.

The guarantee-deed dated 08.06.1988 at Exh-103 was shown to him. He admitted his signature as well as the signatures of defendants No. 2, 4, 5 and 6 over the same. Further he has admitted that he has received the notice prior to filing of the suit. The postal acknowledgement at Exh-50 was shown to him. He admitted that it bears his signature. He, however, did not send any reply to the notice. The postal acknowledgement regarding some other defendants were shown to him and he admitted that the service of the notice and the acknowledgement thereof at Exh-118. He also admitted that he has not replied the said notice.

20. In the teeth of this evidence, as we have already found that the learned trial Court not only failed to draw adverse inference against the defendants/respondents No. 2 to 6 but also went further by stating that admissions of D.W. 1 would not be binding on others. The reading of the judgement of the trial Court shows that it has highlighted over certain contradiction in the oral evidence insignificance of PW1 to PW4 and concluded that the documents were concocted by the officers of the Bank.

21. The evidence on record would show that against the responsible bank officers, sweeping remark is made by the learned Civil Judge, Senior Division, Nanded that they got concocted all these documents. In the circumstances, it is proved that guarantee-deed at Exh-103 is proved.

22. The learned Judge has made distinction between "transaction of mortgage" and "agreement to mortgage property". Whatever distinction is made by the learned Judge when atleast a finding was arrived at by the learned Judge that defendant No. 6 has executed a registered mortgage-deed, what prompted the learned Judge in absolving the said defendant No. 6 from making her jointly and severally liable to pay the decretal amount, is an enigma.

23. This takes us to find out the difference between "the agreement to mortgage" and "mortgage by deposit of title-deeds". The mortgage by deposit of title-deeds is defined by section 58 (f) of the Transfer of Property Act, 1882. It runs as under :-

"(f) Mortgage by deposit of title-deeds.- Where a person in any of the following towns, namely, the towns of Calcutta, Madras and Bombay, and in any other town which the State Government concerned may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds." (Emphasis supplied)

It is undisputed that city of Hyderabad is notified city where the delivery of the title-deeds of immovable property can be made with intention to create a security thereon.

24. There is no need to refer any authority or case-law to show that the mortgage by deposit of title-deeds requires no registration. However, if any document is executed, which would show that the mortgagee has under the said document mortgaged the property by deposit of title-deeds, then only the registration of the said document is required. However, the contemporaneous document fortifying the "intention to create the security" executing the same is neither an agreement to mortgage or a mortgage. The deposit of title-deeds itself with intention in the mind of the person that the said title-deeds are being deposited with intention to create a security thereon is sufficient to culminate the transaction into a mortgage by deposit of title-deeds. This mortgage by deposit of title-deeds is sometimes called as equitable mortgage, as was prevalent in England. However, the ingredients of the equitable mortgage and the mortgage as defined under section 58 (f) of the Transfer of Property Act are not identical.

25. The documents on record, coupled with the affidavits as admitted by the defendant No.3/ respondent No. 3 and positively proved by the relevant witness of the plaintiff would show that the title-deeds were deposited with the plaintiff Bank, with an intention to create the security thereon. It is to be noted that admittedly, the loan transaction took place on 08.06.1988. The title-deeds of the respective respondents were admittedly put in the custody of the appellant Bank at that time. The suit was filed in the year 1994 in which those title-deeds were placed by the appellant-Bank. None of the relevant respondents at any time asked for return of those title-deeds, nor complained of keeping the same in the custody of the Bank.

26. At Exhibit-111, we have the letter from respondent No. 4 - T. Shantha Kumari, dated 21.04.1993, vide which she had communicated to the appellant Bank that she shall insist the principal borrower to pay the loan as soon as possible so as to save her from her guarantee.

27. Mr. S.V. Adwant, learned counsel for the appellant Bank, to buttress his submissions as to how the mortgage by deposit of title-deeds is created, relied on the ratio laid down in the following authorities :-

(i) Pranjivandas Jagjivandas Mehta V. Chan Ma Phee A.I.R. 1916 Privy Council

(ii) Sundarachariar and others V. Narayana Ayyar and others A.I.R. 1931 Privy Council

(iii) Rachpal Mahraj V. Bhagwandas Daruka & others A.I.R. (37) 1950 S.C. 272

(iv) State of Haryana and others V. Narvir Singh and another (2014) 1 S.C.C. 105

28. In the case of "Pranjivandas Jagjivandas Mehta" (cited supra), the mortgagor on the back of a promissory note, has written that he was depositing the title-deeds as a security. This was held to be sufficient to show the intention of creation of mortgage by deposit of title-deeds.

29. In the case of " Sundarachariar and others" (cited supra), it was highlighted that memorandum containing record of particulars of deeds deposited as security does not require registration.

30. In the case of " Rachpal Mahraj" (cited supra), it was held that when the debtor deposits with the creditor the title deeds of his property with intent to create a security, no registered instrument is required. However, if the parties choose to reduce the contract to writing, the document will be the sole evidence of its terms and it would require registration.

31. In the case of " State of Haryana and others" (cited supra), the same principle was underlined.

32. The documents on record would show that the respondents No. 2 to 6 had intention to create the security for the repayment of the loan availed by the principal borrower. Therefore, they showed their readiness to deposit the title-deeds by various agreements and affidavits and also by placing all the title verification certificate by the Advocates, etc. and ultimately, they deposited the title-deeds with the appellant Bank at Hyderabad branch. The learned Judge of the trial Court, however, differentiated between the "agreement to mortgage" and to actually "mortgage the immovable property".

33. Mr. P.V. Mandlik, learned Senior Counsel submitted that any transaction of mortgage requires the payment of stamp fees. He relied on the provisions of Article 6 of the Bombay Stamp Act. Lateron, he conceded that these provisions have come into Statute book by way of amendment w.e.f. 1st July, 2009.

34. The above discussion is sufficient to hold that the respondents No. 2 to 6 stood as guarantors and created mortgage of their property for repayment of the loan advanced to the principal borrower by depositing their title-deeds.

35. Once it is concluded that the respondents No. 2 to 6 have created mortgage by deposit of title-deeds for the repayment of the loan amount, naturally the limitation in their case would be governed by the provisions of Article 62 of the Indian Limitation Act read with Section 96 of the Transfer of Property Act.

36. The provisions of section 96 of the Transfer of Property Act runs as under:-

" 96. Mortgage by deposit of title-deeds.- The provisions hereinbefore contained which apply to simple mortgage shall, so far as may be, apply to a mortgage by deposit of the deeds."

Thus, all the provisions which apply to simple mortgage are made applicable to a mortgage by depositing of title-deeds. Article 62 of the Indian Limitation Act in this reference runs as under :-

Article 62 Description of suit Period of limitation Time from which period begins to run To enforce payment of money secured by a mortgage or otherwise charged upon immovable property Twelve years When the money sued for becomes due

37. There cannot be two opinions that the suit for enforcement of money secured by mortgage can be filed in case of a simple mortgage. Since the same provision would apply to a mortgage by deposit of title-deeds, the period of limitation would be twelve years from the date when the money becomes due. Therefore, no issue of limitation as such would arise in the present case.

38. Even otherwise, the extension of the repayment of the loan promised by the principal borrower would bind the surety. In this regard, the provisions of section 128 of the Indian Contract Act would be material, which runs as under :-

"128. Surety's liability. - The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract."

39. Defendants No. 2 to 6 have executed the continuing guarantee with further declaration that any acknowledgement of debt made by the principal borrower within the meaning of sections 18 and 19 of the Indian Limitation Act, shall be deemed to have been made by themselves also. In that view of the matter, Mr. Adwant, learned counsel for the appellant Bank, relying on the following authorities, submits that acknowledgement of debt executed by the principal borrower, as detailed supra, would be binding on the respondents No. 2 to 6. The authorities, relied upon by Mr. Adwant are as follows :-

(i) Mrs. Margaret Lalita Samuel V. Indo Commercial Bank Ltd. AIR 1979 S.C. 102

(ii) Syndicate Bank V. Swaransingh Bachansingh Lal and others 1996(2) ALL MR 310

(iii) The Miraj State Bank Limited Vs. M/s Poonawalla Promoters Pvt. Limited & Ors. 1996(3) ALL MR 179

(iv) SICOM Ltd. V. Harjindersingh and others AIR 2004 BOMBAY 337 : [2004(3) ALL MR 603]

40. In view of above, it is clear that the respondents No. 2 to 6 had entered into a transaction of creating mortgage by deposit of title-deeds for the security of repayment of the loan of principal borrower - defendant No. 1 and have also continuously agreed to be binding for re-payment of the loan in case the principal borrower acknowledges the liability within the meaning of the relevant provisions of the Indian Limitation Act.

41. This leads us to find out as to whether due to any commission or omission on the part of the Bank officials, the liability of the mortgagors is extinguished.

42. Mr. Mandlik, learned Senior Counsel has placed reliance on section 139 of the Indian Contract Act in this regard. Section 139 of the Contract Act reads thus :-

"139. Discharge of surety by creditor's act or omission impairing surety's eventual remedy. - If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged."

43. Mr. Mandlik further points towards certain admissions given by the Bank officials which would show that once the hypothecated property was seized. However, upon part-payment towards the loan account, the same was released. It should, however, be noted that there were no pleadings at all in this regard on behalf of the respondents No. 2 to 6. Therefore, suddenly on the basis of certain 'admissions' given by the witness that once the property was seized but lateron released, we cannot come to the conclusion that the appellant-Bank has done any act which is inconsistent with the rights of the surety or omitted to do its duty to the surety.

44. In view of the facts and legal position, discussed hereinabove, I pass the following order.

(A) The first appeal is allowed with costs.

(B) The decree of the trial Court dismissing the suit as against the respondents No. 2 to 6 is hereby set aside. Instead, the respondents No. 1 to 6 (original defendants No. 1 to 6) are hereby directed to jointly and severally pay to the appellant/Bank an amount of Rs. 27,76,137/-, with interest at the rate of 6% per annum from the date of the decree passed by the trial Court till recovery of the suit amount. Besides this, the appellant/Bank would be entitled for sale of the mortgaged property for recovery of the decretal amount, as detailed supra.

(C) The decree be drawn accordingly.

Appeal allowed.