Page No.# 1/15 GAHC010280812025 2026:GAU-AS:7771 THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C)/243/2026 NUR ALI PARAMANIK SON OF LATE AJIJ PARAMANIK R/O VILL- MOKRAPARA, P.O.- VOTGAON DISTRICT- KOKRAJHAR, B.T.C ASSAM PIN-783370 VERSUS STATE BANK OF INDIA REPRESENTED BY THE CHIEF GENERAL MANAGER, NORTH REGION, BHANGAGARH, GUWAHATI-5 2:GENERAL MANAGER STATE BANK OF INDIA BONGAIGAON ZONE P.O. DISTRICT- BONGAIGAON ASSAM PIN-783380 3:BRANCH MANAGER STATE BANK OF INDIA GOALPARA BRANCH P.O. DISTRICT- GOALPARA ASSAM PIN-783101 4:BRANCH MANAGER STATE BANK OF INDIA KOKRAJHAR S/O BENGLENG PHANGCHO P.O. DISTRICT- KOKRAJHAR PIN-78337 Advocate for the Petitioner : MR. M A MONDAL, MR. A ISLAM Advocate for the Respondent : MR. J BARUAH(R1,2,3,4), MS. N CHOUDHURY(R1,2,3,4),MISS. R. DAS(R1,2,3,4) Page No.# 2/15 B E F O R E HON'BLE MR. JUSTICE KAUSHIK GOSWAMI Advocate for the petitioner : Mr. M. A. Mondol. Advocates for the respondents : Mr. J. Baruah Date on which judgment is reserved : Date of pronouncement of judgment : 04.06.2026 Whether the pronouncement is of the operative part of the judgment? : NA Whether the full judgment has been pronounced? : Yes JUDGMENT & ORDER (ORAL) Heard Mr. M. A. Mondal, learned counsel appearing for the petitioner. Also heard Mr. J. Baruah, learned counsel appearing for the respondent-Bank. 2. By filing the present petition under Article 226 of the Constitution of India, the petitioner has called in question the action of the respondent-Bank in placing a hold/freezing the petitioner’s salary account and has prayed for issuance of appropriate directions for removal of such hold and restoration of normal operation of the said account. 3. The facts giving rise to the present proceeding are not substantially in dispute. The borrower, namely, late Azahar Ali, had availed a personal loan from Page No.# 3/15 the respondent-Bank. The petitioner admittedly stood as a guarantor in respect of the said loan transaction. Pursuant thereto, the borrower and the petitioner executed the requisite loan and guarantee documents in favour of the respondent-Bank. 4. It is the case of the petitioner that the borrower expired on 05.05.2023. Following the death of the borrower, the loan account allegedly became irregular and an outstanding liability accrued against the loan account. Thereafter, the respondent-Bank issued a demand notice dated 05.05.2025 calling upon the petitioner, in his capacity as guarantor, to liquidate the outstanding dues. 5. According to the petitioner, subsequently a communication was received from the respondent-Bank intimating that a sum of Rs.2,00,000/- had been kept under hold in the petitioner’s account. The petitioner claims to have approached the Bank for removal of such hold and also caused a legal notice to be issued through his learned counsel. Since the account continued to remain under hold, the present writ petition came to be instituted. 6. Mr. Mondal, learned counsel for the petitioner, submits that the action of the respondent-Bank is arbitrary and unsustainable in law. According to him, the borrower having expired, the respondent-Bank ought to have proceeded against the estate and legal representatives of the deceased borrower before taking coercive action against the petitioner. 7. It is further contended that the petitioner is merely a guarantor and the respondent-Bank could not have directly frozen or placed a hold over the petitioner’s salary account without first exhausting remedies available against the principal borrower or his estate. Page No.# 4/15 8. Learned counsel submits that the action of the respondent-Bank has caused severe prejudice to the petitioner inasmuch as the account in question is a salary account from which the petitioner meets his day-to-day expenses and family obligations. 9. It is further submitted that the petitioner is willing to settle the outstanding liability and, therefore, the respondent-Bank ought to have considered such request instead of continuing with the impugned action. 10. Per contra, Mr. Baruah, learned counsel appearing for the respondent- Bank, submits that there is no dispute regarding the fact that the petitioner stood as a guarantor in respect of the loan availed by the borrower. 11. Learned counsel submits that after the loan account became irregular and was eventually classified as a Non-Performing Asset (NPA), repeated notices and demands were issued both to the borrower and to the petitioner. Despite such notices, the outstanding liability remained unpaid. 12. It is submitted that the respondent-Bank had exhausted all reasonable measures available for recovery of its dues. The affidavit-in-opposition filed by the Bank discloses that several demand notices were issued and recovery efforts were undertaken before the impugned hold was placed upon the petitioner’s account. 13. Learned counsel further submits that under Sections 126 and 128 of the Indian Contract Act, 1872, (hereinafter referred to as the Act) the liability of a guarantor is co-extensive with that of the principal debtor and, therefore, the respondent-Bank was fully justified in proceeding against the petitioner upon default committed by the borrower. 14. In support of the aforesaid contention, reliance has been placed upon the Page No.# 5/15 decisions of the Apex Court in Bank of Bihar Ltd. vs. Damodar Prasad, reported in AIR 1969 SC 297; Punjab National Bank vs. Surendra Prasad Sinha, 1993 reported in Supp (1) SCC 499; and Canara Bank Overseas Branch vs. Archean Industries Private Limited & Anr., reported in 2026 INSC 247. 15. I have heard the learned counsels for the parties and have perused the materials available on record. I have also duly considered the case laws cited at the bar. 16. The affidavit-in-opposition filed by the respondent-Bank discloses that the loan was sanctioned to the borrower under an arrangement letter dated 12.11.2021 and that the petitioner executed the relevant guarantee documents. The Bank has further disclosed that repeated demand notices dated 04.02.2025, 05.05.2025 and 04.08.2025 were issued calling upon the borrower and the petitioner to regularise the loan account. 17. The affidavit further reveals that despite repeated demands and despite recovery efforts undertaken by the respondent-Bank, no satisfactory response was forthcoming and the outstanding liability remained unpaid. Consequently, the respondent-Bank placed a hold upon the petitioner’s account to secure recovery of its dues. 18. In the backdrop of the aforesaid facts and rival submissions, the following questions arise for determination: (i) Whether the respondent-Bank was legally entitled to proceed against the petitioner in his capacity as guarantor upon default committed in the loan account? (ii) Whether the respondent-Bank was under a legal obligation to first Page No.# 6/15 proceed against the legal heirs or estate of the deceased borrower before invoking its remedies against the petitioner-guarantor? (iii) Whether the action of the respondent-Bank in placing a hold upon the petitioner’s account suffers from any illegality, arbitrariness or procedural infirmity warranting interference in exercise of jurisdiction under Article 226 of the Constitution of India? 19. The aforesaid issues are taken up together for consideration. 20. Before examining the rival contentions, it would be apposite to notice the statutory provisions governing contracts of guarantee. 21. Section 126 of the Act, 1872 defines a contract of guarantee in the following terms: “Section 126- "Contract of guarantee", "surety", "principal debtor" and "creditor"- A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the ‘surety’; the person in respect of whose default the guarantee is given is called the ‘principal debtor’; and the person to whom the guarantee is given is called the ‘creditor’. A guarantee may be either oral or written.” The provision thus recognises that a contract of guarantee creates a legally enforceable obligation whereby the surety undertakes to discharge the liability of the principal debtor upon occurrence of default. The person who gives the guarantee is called the surety; the person in respect of whose default the guarantee is given is called the principal debtor and the person to whom the guarantee is given is called the creditor. In the present case, the petitioner is Page No.# 7/15 the surety, whereas the respondent bank is the creditor. 22. Section 128 of the Act provides: “Section 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.” 23. The expression “co-extensive” occurring in Section 128 has consistently been interpreted by Courts to mean that the surety/guarantor is liable to the same extent as the principal debtor and that the creditor is entitled to recover the entire outstanding liability from the surety/guarantor unless the contract itself restricts such liability. It is imperative upon the surety/guarantor to discharge the liability of the principal debtor in case of default. Liability of such surety/guarantor is coextensive with that of the debtor. In other words, surety/guarantor cannot avoid discharge of the liability of the principal debtor merely on the ground that the creditor has not exhausted his remedy against the principal debtor. On the contrary, it is the business of the surety/guarantor to see whether the principal debtor has paid or not. 24. The statutory scheme further provides protection to a surety/guarantor after he discharges the debt. Section 140 confers upon the surety/guarantor a right of subrogation and provides that upon payment of the guaranteed debt, the surety/guarantor is invested with all rights which the creditor possessed against the principal debtor. Similarly, Section 145 creates an implied promise by the principal debtor to indemnify the surety in respect of all sums rightfully paid under the guarantee. 25. These provisions demonstrate that while the law places a substantial Page No.# 8/15 obligation upon the surety/guarantor towards the creditor, it simultaneously preserves the surety/guarantor’s remedies against the principal debtor. Therefore, the statutory framework itself proceeds on the basis that the creditor may directly proceed against the surety/guarantor, leaving the surety to work out his remedies against the principal debtor or his estate thereafter. 26. The scope and effect of Section 128 of the Act came to be considered by the Apex Court in Bank of Bihar Ltd. (Supra). The Apex Court held that the liability of the surety/guarantor is immediate and is not deferred until the creditor exhausts his remedies against the principal debtor. 27. The Apex Court categorically observed that: “The surety became thus liable to pay the entire amount. His liability was immediate. It was not deferred until the creditor exhausted his remedies against the principal debtor.” The Court further held that a surety has no right to restrain a creditor from proceeding against him merely because the creditor may have remedies available against the principal debtor. 28. The ratio laid down in Bank of Bihar Ltd. (Supra) leaves no room for doubt that a creditor is under no legal obligation to first proceed against the principal debtor before invoking the liability of the guarantor. 29. In Punjab National Bank (Supra), the Apex Court considered the rights of a bank in relation to a security furnished by a guarantor. The Court held that where the creditor is in possession of a valid security and the debt remains unpaid, the creditor is entitled to realise and appropriate such security towards discharge of the outstanding liability. 30. The Apex Court further reiterated the settled principle that a debt does not Page No.# 9/15 cease to exist merely because a remedy may become barred by limitation and that a creditor may realise the debt through lawful means recognised by contract and law. 31. More recently, in Canara Bank Overseas Branch (Supra), the Apex Court reiterated the fundamental characteristics of a contract of guarantee and recognised that the liability of the surety/guarantor arises upon default of the principal debtor. The Court identified the essential elements of a guarantee as: (i) existence of a principal debt; (ii) default by the principal debtor; and (iii) a promise by the surety to discharge such liability in the event of default. 32. Once these elements are established, the creditor becomes entitled to invoke the guarantee in accordance with law and enforce the contractual obligation undertaken by the surety/guarantor. 33. This brings the Court to the principal submission advanced on behalf of the petitioner that after the death of the borrower, the respondent-Bank ought first to have initiated recovery proceedings against the legal heirs and estate of the deceased borrower. 34. The submission, though attractive at first glance, cannot be accepted in view of the settled position of law. 35. The death of a borrower does not extinguish the debt. Equally, it does not extinguish the contract of guarantee executed by a surety/guarantor. The liability undertaken by a surety/guarantor continues to subsist notwithstanding the death of the principal debtor. Page No.# 10/15 36. Neither Section 126 nor Section 128 of the Act creates any legal obligation requiring a creditor to first proceed against the legal representatives of a deceased borrower before enforcing the liability of the surety/guarantor. 37. The principle that the creditor is not required to first exhaust remedies against the principal debtor before proceeding against the surety/guarantor is no longer res integra. In Bank of Bihar Ltd. (Supra), as stated above, the Apex Court held that the liability of the surety/guarantor is immediate and the surety/guarantor cannot insist that the creditor should first proceed against the principal debtor. 38. The same principle was reiterated in State Bank of India v. Indexport Registered, reported in (1992) 3 SCC 159, wherein the Apex Court held that the decree-holder is entitled to proceed against the surety/guarantor without first proceeding against the principal debtor. Likewise, in Ram Kishun v. State of Uttar Pradesh, reported in (2012) 11 SCC 511), the Apex Court observed that the creditor is not bound to first recover the amount from the principal borrower and may directly proceed against the surety/guarantor whose liability is co-extensive with that of the borrower. 39. The legal position emerging from the aforesaid authorities is that the surety/guarantor cannot dictate the manner or sequence in which the creditor should enforce its remedies. Once default occurs, the creditor acquires a legally enforceable right to proceed either against the principal debtor, the surety/guarantor, or both simultaneously, unless the contract provides otherwise. 40. Consequently, the contention that the respondent-Bank was obliged to first proceed against the legal heirs of the deceased borrower before invoking Page No.# 11/15 the petitioner’s liability as surety/guarantor is contrary to the settled principles governing contracts of guarantee and is liable to be rejected. 41. In the present case, the following facts stand admitted from the materials on record: (a) the borrower availed a loan from the respondent-Bank; (b) the petitioner stood as guarantor in respect thereof; (c) the petitioner executed the relevant guarantee documents; (d) the borrower committed default; (e) the account became NPA; (f) repeated notices and demands were issued by the respondent-Bank; and (g) the outstanding liability remains unpaid. 42. The petitioner has not disputed execution of the guarantee documents. Nor has he disputed the subsistence of the outstanding liability. In fact, the petitioner has expressed willingness to settle the dues. 43. Once default occurred, the liability of the petitioner as surety/guarantor became enforceable by operation of Sections 126 and 128 of the Contract Act. The respondent-Bank therefore became entitled to invoke its remedies against the petitioner. 44. The next question which arises for consideration is whether the action of the respondent-Bank in placing a hold upon the petitioner’s account suffers from such illegality, arbitrariness or procedural impropriety as would warrant interference by this Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India. Page No.# 12/15 45. It is by now well settled that judicial review under Article 226 is directed against the decision-making process and not the decision itself. Unless the action of the authority is shown to be patently arbitrary, mala fide, contrary to statute or in violation of principles of natural justice, the writ Court would be slow to interfere in matters arising out of contractual and commercial transactions. 46. The records placed before this Court reveal that the respondent-Bank had issued repeated notices and demands both to the borrower and the petitioner prior to taking the impugned action. The affidavit-in-opposition discloses issuance of demand notices dated 04.02.2025, 05.05.2025 and 04.08.2025 and further reveals that the loan account had already slipped into NPA. The materials further indicate that despite repeated demands, the dues remained unpaid. 47. The petitioner has not placed any material before this Court to demonstrate that the respondent-Bank acted in breach of any statutory provision governing the loan transaction or that the action complained of was actuated by mala fides. Neither has any material been brought on record to establish that the petitioner stood discharged from his obligations as guarantor in accordance with law. 48. On the contrary, the materials available on record establish the existence of a valid loan transaction, the execution of guarantee documents by the petitioner, the occurrence of default and the subsistence of outstanding dues recoverable by the respondent-Bank. In such circumstances, the respondent- Bank cannot be faulted for taking recourse to measures available to it under law for securing recovery of its lawful dues. Page No.# 13/15 49. The relationship between the parties is founded upon a commercial transaction and the obligations arising therefrom are governed by the terms of the loan documents read with the provisions of the Indian Contract Act, 1872. 50. Once the petitioner voluntarily agreed to stand as surety/guarantor for repayment of the loan availed by the borrower, he assumed an obligation which became enforceable immediately upon default by the principal debtor. Such liability cannot be avoided merely because the borrower subsequently expired or because alternative remedies may have been available to the respondent-Bank. 51. The Court is conscious of the fact that the account in question is stated to be a salary account. However, the mere fact that the account receives salary credits would not by itself extinguish the contractual obligations voluntarily undertaken by the petitioner as surety/guarantor. The rights of the parties must necessarily be determined in accordance with the governing contract and the settled principles relating to guarantees. 52. The Court is also unable to accept the contention that the impugned action becomes illegal merely because the account inquestion is a salary account. The character of the account as a salary account does not confer immunity from contractual liability voluntarily undertaken by the account holder. The petitioner has not placed before this Court any statutory provision, regulatory direction, or contractual stipulation prohibiting the respondent bank from exercising its contractual rights in relation to the account. In the absence of any such material, and having regard to the admitted status of the petitioner as surety/guarantor, the mere fact that the salary is credited into the account cannot by itself render the impugned action arbitrary or unlawful. 53. This Court is therefore of the considered opinion that no case has been Page No.# 14/15 made out warranting exercise of extraordinary writ jurisdiction for interference with the action of the respondent-Bank. 54. Accordingly, the points formulated for determination are answered as follows: (i) The respondent-Bank was legally entitled to proceed against the petitioner in his capacity as surety/guarantor immediately upon default committed in the loan account. (ii) The respondent-Bank was under no legal obligation to first proceed against the legal heirs or estate of the deceased borrower before invoking the liability of the petitioner- surety/guarantor. (iii) The petitioner has failed to establish any illegality, arbitrariness, mala fides or procedural infirmity in the action of the respondent-Bank warranting interference under Article 226 of the Constitution of India. 55. For the reasons recorded hereinabove, this Court finds no merit in the writ petition. 56. The writ petition accordingly stands dismissed. 57. No order as to costs. 58. Before parting with the record, it is observed that if the petitioner approaches the respondent-Bank with a proposal for repayment, liquidation or settlement of the outstanding dues, the respondent-Bank shall consider the same in accordance with law, applicable banking guidelines and the governing terms of the loan transaction. 59. Pending applications, if any, shall also stand disposed of. Page No.# 15/15 JUDGE Comparing Assistant Pranab Kumar Deka Digitally signed by Pranab Kumar Deka Date: 2026.06.05 17:21:49 +05'30'