2014 INSC 0813
04/11/2015     SOBRAN SINGH Vs. STATE OF U.P.

SOBRAN SINGH Vs. STATE OF U.P.
(http://www.thelaws.com)

SOBRAN SINGH         LAWS(SC)20149133                                    Appellant
STATE OF U.P.      Supreme Court Of India                            Respondents
               Decided on September 23,2014

                                VERSUS

JUDGEMENT

T.S. Thakur, J.  ( 1. ) LEAVE granted.
( 2. ) IN Pawan Kumar Jain v. Pradeshiya Industrial and Investment Corporation of U.P. Ltd.
and Ors. : (2004) 6 SCC 758, a two Judge Bench of this Court declared that no
proceedings for recovery of the outstanding loan amount can be taken against a guarantor
so long as the property of the borrower which is mortgaged, charged or otherwise
encumbered is not first sold. Section 4(2)(b) of the Uttar Pradesh Public Moneys (Recovery
of Dues) Act, 1972 was in the process interpreted to be giving protection against recovery
proceedings not only to the borrower of the loan but to his guarantor as well. The conclusion
drawn by this Court is summed up in the following passage: 8. In our view, the above set 
out provisions of the U.P. Act are very clear. Action against the guarantor cannot be taken
until the property of the principal debtor is first sold off. As the Appellant has not sold the
property of the principal debtor, the action against the Appellant cannot be sustained. We,
therefore, set aside the recovery notice. Proceedings for the recovery of outstanding loan
amount having been initiated against the Appellant Sobran Singh who stood guarantor for
the repayment of the loan amount, Writ Petition No. 37172 of 2006 filed by him before the
High Court of Judicature at Allahabad challenged the same primarily on the ground that so
long as the properties of the principal borrower remained to be sold, the guarantor could
not be proceeded against. That contention did not find favour with the High Court who
summarily dismissed the writ petition holding that the liability of the guarantor was co 
extensive with that of the borrower and that recovery proceeding could be initiated against
both of them simultaneously. The present appeal by special leave assails the correctness of
the view taken by the High Court.
( 3. ) WHEN the matter came up for hearing on 12 November, 2007 before a bench
comprising S.B. Sinha and H.S. Bedi, J.J., the Appellant placed reliance upon the decision of
this Court in Pawan Kumar Jain's case (supra) to argue that the guarantor was as much
protected against proceedings for recovery of the outstanding amount as the borrower in
view of the provisions of Section 3(1)(d) read with Section 4(2)(b) of the Act afore 

http://www.thelaws.com/Encyclopedia/Browse/Case?CaseId=004102530100                              1/2
04/11/2015  SOBRAN SINGH Vs. STATE OF U.P.

mentioned. The Court, however, entertained doubts about the correctness of the view taken
in Pawan Kumar Jain's case (supra) and accordingly referred the matter to a larger bench.
That is precisely how this appeal and the accompanying two matters have come up before
us for hearing. 

Click here to view full judgement. (/)
                                       Copyright © Regent Computronics Pvt.Ltd.

http://www.thelaws.com/Encyclopedia/Browse/Case?CaseId=004102530100                        2/2