Abdul Ali vs Rupchand and Another

Qamar Hasan, J.—This application in vision challenges the order of the learned Judge, Small Causes Court, Hyderabad, dated (SIC)-10-1951, overruling certain objections raised by the petitions in respect of the execution of decree,

The Petitioner executed a surety bond on (SIC) February 1951 in pursuance of an order the High Court granting stay of execution ending a revision application preferred by the Judgment-debtor on his furnishing security. The security bond recited :

Whereas the decree-holder has applied to execute the decree and the execution has been ordered to be stayed on the furnishing of a reliable security, therefore, I of my own free will stand security to the extent of Rs. 1,728-15-0 and covenant that if the judgment-debtor is ordered to pay the above amount he shall deposit it with costs. If he should fail therein, then any amount so pay able shall be realized from moveable or immovable property belonging to me......

The High Court disallowed the revision on 24-(SIC)-I951, and-on the same date the judgment -debtor applied to the executing court under (SIC) Hyderabad Money Lenders Act, for an order fixing instalment for payment of the (SIC)ecretal debt. On another application of the same date, the learned Judge ordered stay of execution during the pendency of the application. Rupchand, the assignee of the original decree, who is opposite party No. 1 before us, on 26-7-1951 applied to have his name substituted for the decree-holder in the execution petition, and for issuing notice to the surely and the judgment-debtor. No order was passed on this application, but on 27-8-1951, the court recognized the assignment of the decree and ordered the assignee-decree-holder to file (SIC) to the judgment-debtor''s application for installment. On 4-9-1951, the decree-holder app lied for attachment of the surety''s property which was resisted, and it was urged on his behalf that execution does not lie against him because of the stay of execution and absence of notice to the judgment-debtor to pay the amount and exoneration of the surety by reason of stay order.

The learned Judge held that the stay order did neither exonerate the surety from his liability nor did it operate to suspend the execution proceedings against the surety because it was granted for the limited purpose of seeing whether the judgment-debtor was entitled to the benefit of Section 12, Money Lenders'' Act: In regard to the objection that unless the judgment-debtor was called upon to pay the amount awarded by the decree, the decree holder cannot proceed against the surety, he held that the mere presentation of the application on the part of the judgment-debtor for being allowed to pay the amount by easy installments was tantamount to a denial giving rise to the validity of the process against the surety.

It was in the first place argued by the learned Advocate for-the Petitioner that a stay order absolute and unqualified in terms cannot be regarded to be partial in its operation. There-fore, as long as the stay order continued, no execution can be levied against the surety. No law or authority has been quoted in support of this contention. I, no doubt, agree with the contention to this extent that a stay order absolute in terms operates as stay against all per sons who are parties to the decree. But it is clear from the terms of the decree itself that there was no decree against the surety. The surety becomes liable under the terms of his bond, and on that account execution is taken out against him under the provisions of Section 145 CPC and not because he is or has become a party to the decree. No doubt, the decree is executed against the surety u/s 145 of the Code as though he were a party to the suit, and the principal debtor but that does not make him a virtual party to the decree itself. The language used in Section 145 of the Code points to the same conclusion because it says that surety shall be deemed to be a party with in the meaning of Section 47 only for a limited purpose, namely for the purpose of appeal. This view is fortified by the observations of their Lordships of the Madras High Court in the case of - Ramanathan Pillai v. M. Doraiswami Ayyangar 55 Ind Cas 363 (Mad), to the effect that the surety is not a party to the suit or to the decree made therein nor does he become party to the execution proceedings until application is made for an order against him. He is not a party to the suit within Section 47 and Section 145 only makes him a party for the limited purpose of appeal. In the case of - ''Raj Raghubar Singh v. Jai Indra Bahadur Singh 46 Ind App 228 their Lordships of the Privy Council remarked that Section s 47 and 144 apply only to the parties or the legal representative of the original parties and do not apply to sureties. For these reasons, I am of the opinion that if an order staying the execution of the decree is granted by a court, it would be restricted in its operation to the actual parties to the decree, and it will not deter the decree-holder from seeking execution against the surety.

The question whether the surety has incurred liability under the bond depends upon the terms of the bond. Where the words in a surety bond are capable of different meanings they must be strictly construed. In the light of these principles, it is to be seen whether the decree-holder was entitled to proceed against the surety as soon as there was failure on the part of the judgment-debtor to pay the decretal amount or whether an order of the court, and consequent failure of the judgment-debtor to comply with that order was necessary to give rise to the obligation of the surety In my opinion, that is not a case in which mere non-payment by the judgment-debtor would give a cause of action to the decree-holder. The bond expressly provides that in case the judgment-debtor fails to comply with the order of the court to pay the decretal amount, the surety would incur his liability to pay the stipulated sum.

It is contended on behalf of the decree holder, opposite party, that the presentation by the judgment-debtor of an application for securing instalmentary payment of a decretal amount was tantamount to failure on his part therefore, the surety had become liable to be proceeded against in execution. That may be 30, but that fact will not amount to an order of the court as contemplated by the bond. From the record it appears that no orders have as yet been passed by the court below on the execution petition dated 25-1-1951.

For this reason, I make the rule absolute and hold that the order under revision directing attachment of the Petitioner''s property is premature. In view of the circumstances of this case, I make no order as to costs.

Manohar Pershad, J.

This petition in revision had initially come up before me when I was sitting as a Single Judge. In view of the question of law involved, I had referred it to the Division Bench which is before us now.

I have read the judgment prepared by my learned brother and 1 agree with the result, but I wish to add a few lines.

It appears that a money decree was passed against the judgment-debtor who had filed a revision petition in this Court. On the miscellaneous petition for stay filed by the judgment-debtor, the revision Petitioner stood surety. The revision petition of the judgment debtor was dismissed by this Court. On the same day, the judgment-debtor put in a petition before the executing court praying for instalments. Notice of this petition was given to the decree-holder who objected to the same being granted. After hearing the arguments of the parties, the court directed that the execution of the decree be stayed till the final disposal of the petition. After this, the decree-holder started execution proceedings against the surety who in reply stated that when the court has stayed the execution of the decree, no execution can proceed against him. The court rejected the plea of the surety relying on the case of - Annadana Jadaya Goundar Vs. Konammal and Another, , against which is this petition in revision, on behalf of the surety.

In this petition in revision, it is argued that the liability of the surety and the judgment-debtor is co-extensive and when the whole decree has been stayed on the petition of the judgment-debtor, no execution can proceed against him.

In order to appreciate this point, it has to be seen how and under what circumstances liability of the surety arises. Admittedly, the surety is not a party to the decree. The liability appears to arise from the terms of the bond. The surety''s liability is co-extensive with that of the judgment-debtor and he is jointly and severally liable with the judgment-debtor for the decree amount. A decree against the principal can, in fact, be treated as a decree against him. Hence the party for whose benefit security has been given is not bound to execute the decree against the judgment-debtor before proceeding against the surety, except where the decree otherwise provides. Within the limits prescribed by the security bond, the surety''s liability extends to any amount recoverable from the judgment-debtor. The surety''s liability being co-extensive with that of the judgment-debtor the extinction or dimunition of the latter''s liability operates as a discharge of the surety to a corresponding extent. Conversely, a surety is bound as long as the judgment-debtor is bound. Thus, in other words, the surety become liable under the terms of the bond and execution can be taken out against him u/s 145, CPC Though execution is taken out against the surety u/s 145, Code of Civil Procedure, still the surety does not become a party until an application is made for execution against him.

Section 145, Civil P. C, provides that the decree or order may be executed against the surety "in the manner herein provided for the execution of decrees" and that the surety shall for the purposes of an appeal be deemed to be a party within the meaning of Section 47. Hence, the order enforcing or refusing to enforce security under this section is appealable as a decree.

Admittedly, when the judgment-debtor applied for installments to the executing court, the decree-holder had not started execution proceedings against the surety, as such the order for stay of the decree passed on his application would ordinarily operate against him alone, and would not in any way debar the decree-holder from seeking execution against the surety. Thus, I do not agree with the contention of the learned Advocate for the Petitioner that the stay of the execution of the decree against the judgment-debtor would operate as a stay against the surety also.

On behalf of the Petitioner it is contended ''that the liability of the surety arises out of the terms of the bond and relying on the terms of the bond, he urges that according to the terms of the bond, the judgment-debtor would be called first to pay the amount and on his failure, the surety would be liable to pay the amount, and as the judgment-debtor has not been called upon to pay the amount, the liability of the surety for the payment of the amount does not arise at all.

In order to appreciate this point, a reference to the terms of the Bond is necessary. The relevant English translation of the surety Bond is in the following words: "I agree through this that if the judgment-debtor is ordered to pay the amount, the judgment-debtor would deposit the amount with costs and if he does not do so, then the amount which is due under the decree would be recoverable from his moveable and Immovable property."

Thus, it is clear from this that the condition precedent is that the judgment-debtor would be first called upon to deposit the amount and on his failure the surety would be liable to pay. Great stress is laid on this, and urged that as in the case the judgment-debtor has not been called upon to deposit the amount, no question of the surety''s liability arises.

On behalf of the other side, it is con tended that when the judgment-debtor himself has put in a petition for instalments, it should be deemed that he is unable to pay, as such no question of the court calling upon him to deposit the amount arises, and the decree-holder is at liberty irrespective of this to execute the decree against the surety. I am afraid, I cannot accept this contention in toto.

As pointed above, the surety''s liability would be restricted to the terms of the agreement. The terms are clear that the judgment-debtor would be called first to pay the amount. according to the terms of the bond, the (SIC) of the surety would only arise when judgment-debtor has failed to deposit. Now it has to be seen whether the fact judgment-debtor having put in a Peti-(SIC) installments would amount to his failure (SIC) In my opinion failure to pay would be said when according to the terms of ad, the judgment-debtor has been called to deposit and he fails to do the same. mere filing of a petition for installments not amount to failure to deposit. From a perusal of the record I find that (SIC)ers have been passed by the court below (SIC)execution petition of 25-1-1951. In view (SIC) I think it is premature on the part of power court to order attachment of the (SIC) property. Petition in revision is, there allowed and judgment of the court below aside. Having regard to the facts of the (SIC)do not wish to pass any order regarding.