Surety cannot be absolved of liability based on financial hardship or efforts to persuade the principal debtor.

The Petitioner Society sanctioned a loan of Rs. 2,00,000/- to Respondent No. 2 (Principal Debtor), with Respondent Nos. 3 to 5 serving as sureties

Upon default, the Petitioner initiated recovery proceedings under Sections 70/71 of the Delhi Co-operative Societies Act, 2003.

An Arbitrator passed an Award on April 22, 2017, holding Respondent No. 2 liable but absolving Respondent No. 3 (Sh. Kanwar) from liability as a surety due to his financial condition and efforts to influence the debtor to pay

The Petitioner challenged this Award before the Delhi Cooperative Tribunal (DCT). The DCT dismissed the appeal on February 22, 2019, on the grounds of limitation (delay)

The Petitioner subsequently approached the High Court challenging the DCT’s dismissal

1. Whether the Delhi Cooperative Tribunal was justified in dismissing the appeal against the Arbitral Award on the grounds of delay

2. Whether a surety can be legally absolved of liability while the Principal Debtor remains liable under the provisions of the Delhi Co-operative Societies Act and the Indian Contract Act

The court considered the procedural requirements for filing appeals under the Delhi Co-operative Societies Act, 2003

The court touched upon the liability of sureties under the Indian Contract Act, 1872, noting the Petitioner’s argument that a surety’s liability is generally co-extensive with the principal debtor

The court applied principles of discretionary jurisdiction in writ petitions, specifically focusing on the impact of laches and the conduct of the Petitioner in failing to execute available remedies

The Court observed that while the Petitioner argued the surety was unlawfully discharged, they failed to demonstrate any "perversity" in the DCT’s decision to dismiss the appeal for being belated

The Court highlighted a significant lack of due diligence by the Petitioner, noting that despite the Award being passed in 2017 and the DCT's order in 2019, the Petitioner had taken no active steps to execute the recovery against the Principal Debtor or the remaining available sureties

The Court also noted that the situation had become further complicated by the death of one of the sureties (Respondent No. 5)

The Court found no grounds to interfere with the DCT's order because the Petitioner’s own inaction outweighed the legal merits of the challenge against the discharge of Respondent No. 3.

The Court held that there was no perversity in the impugned order given the Petitioner's failure to pursue execution for several years.

The Court granted the Petitioner Society the liberty to execute the original Award dated April 22, 2017, against the Principal Debtor (Respondent No. 2) and any other surviving or available sureties