ESS AAR Universal (P) Ltd. and Others vs Shri Girish Mehra

Pradeep Nandrajog, J.—Suit filed by the appellant against the respondent, Girish Mehra, has been held to be barred by limitation as also under Order II Rule 2 CPC as well as on constructive res judicata. Undisputed facts are that the appellants had a commercial transaction with a company M/s. Mehra Air Products Pvt. Ltd. and in respect of which, Prem Mehra, Satish Mehra, Harish Mehra and the respondent Girish Mehra had executed a joint guarantee undertaking to re-pay the amount outstanding and payable by M/s. Mehra Air Products Pvt. Ltd. to the appellant.

There being defaults, undisputably, the appellant invoked the guarantee in question; but for unexplainable reasons filed a suit only against M/s. Mehra Air Products Pvt. Ltd., Prem Mehra, Harish Mehra and Satish Mehra. The said suit registered as CS (OS) No. 1319/1997 was decreed on September 03, 2002. Thereafter CS (OS) No. 1240/2007 was filed by the appellant against the fourth guarantor i.e. Girish Mehra, who raised the question, while seeking leave to defend, of the suit being barred by limitation as also Order II Rule 2 CPC and on the doctrine of constructive res judicata; all pleas which have found favour with the learned Single Judge.

It is settled law that the liability of a guarantor would cease if the principal debt payable by the principal debtor is barred by limitation i.e. cannot be recovered. This position of law is conceded to by learned counsel for the appellants.

But, it is urged that the guarantee being a continuing guarantee and that the appellant has already obtained a decree against a principal debtor, would require it to be treated that the liability of the principal debtor continues and thus the liability of the guarantor also continues.

The argument is rejected by us for the reason, with respect to the facts of the instant case what needs to be considered is: Whether the appellants could sue the principal debtor when the instant suit was filed, if the previous suit had not been filed? The reason to draw this distinction is that, if what the appellant alleges to be the correct legal position is accepted, then it would mean that a suit can be filed within the limitation prescribed against a principal debtor and decree obtained and as long as the decree remained unexecuted, over an indefinite period of time, another suit can be filed against the guarantor by relying upon the guarantee.

Suffice would it be to state that the debt in favour of the appellant was enforced by the appellant against the principal debtor and three guarantors in the year 1997. After 10 years, the instant suit was filed against the fourth guarantor.

We concur with the view taken by the learned Single Judge that the suit was barred by limitation.

We need not deal with the two other issues pertaining to the application of Order II Rule 2 CPC and the doctrine of constructive res judicata. The appeal is dismissed but without any order as to costs, since none appears for the respondent.