Liability of guarantor is co-extensive with that of principal debtor and borrower has a right to recover the dues from guarantor

High Court of Himachal Pradesh: A Single Judge Bench of Tarlok Singh Chauhan, J. dismissed a petition holding that the respondent-Bank was well within its right to recover the dues from the amount payable to the petitioner who stood guarantor for a loan.

The petitioner filed the instant petition praying to quash the letter whereby the respondent–Bank appropriated the leave encashment of the petitioner towards his liability to the bank as a guarantor for a loan. The petitioner contented that without initiating proceedings against the principal debtor, the respondent-Bank could not proceed against the petitioner who was simply the guarantor for the loan amount.

The High Court relying on the judgment of the Supreme Court in (1992) 3 SCC 159, was of the opinion that it is a settled law that the liability of the guarantor is co-extensive with that of the principal debtor and no fetter can be put on the rights of the borrower to first recover the amount due from the guarantor. As per the High Court, this position was unexceptional.

The High Court found no merit in the petition and accordingly the petition was dismissed. [Om Parkash Laceria v. Punjab National Bank,  2017 SCC OnLine HP 1523, order dated 20.09.2017]

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