Narsingh Sahay vs Sheoparasan Singh and Others

James, J.—This is an appeal from the order of the Subordinate Judge of Shahabad dismissing an application for the enforcement of a security bond. The appellant obtained a mortgage decree in this Court from which the respondent preferred an appeal to His Majesty in Council. The respondent applied for stay of execution pending the hearing of the appeal, to which the appellant took the objection that the property ought to be brought to sale at once, because if it was not thus brought to sale, he would lose interest which he otherwise might have obtained by lending out the money realized by the sale.

The direction of this Court was that sale should be stayed on the judgment-debtor''s furnishing security for Rs. 7,000 and that a receiver should be appointed to manage the mortgaged property, the whole income of which would be available to the mortgagee if the Privy Council appeal (sic) be dismissed. The appeal to the (sic) Council was in due course dismissed, and the decree-holder applied to the Subordinate Judge for execution of his decree. By his execution petition he claimed the amount which had been decreed by the High Court with interest at the rate specified in the bond up to the date of the preparation of the execution petition, praying that the mortgaged property might be brought to sale.

He further prayed that the property given in security at the time when the sale was stayed by this High Court should also be brought to sale for the realization of Rs. 7,000. The judgment-debtor objected first, that the security bond for Rs. 7,000 could not be enforced in these proceedings, because the sureties had undertaken no personal liability; and secondly that the decree-holder was entitled to no interest from the date when sale was stayed, because a receiver had then been appointed, and the income of the mortgaged property had been available to the decree-holder. The Subordinate Judge held that the sureties had undertaken no personal liability by the security bond which they had executed when the sale was stayed, and that therefore their hypothecation of the Immovable property could be enforced only by means of a regular suit and not otherwise.

He considered the second objection to be untenable, though he did not clearly state on what ground he came to that conclusion; but he allowed the objection in part by directing that the execution should proceed only with respect to the sale of the mortgaged property for realization of the mortgage decree, and not with respect to the security bond for Rs. 7,000; and it is against the latter part of his order that the decree holder now appeals.

The learned Subordinate Judge in coming to the conclusion that the security bond could be enforced only by a regular suit, relied upon the decision in Raja Brij Narain Rai and Another Vs. Ram Dhari Rai, . Mr. Khurshed Husnain on behalf of the appellant points out that the security bond in the present case is similar in its form to the bound which was discussed by the Privy Council in Raghubar Singh v. Jai Indra Bahadur Singh AIR 1919 PC 55.

This bond is not addressed to any person in particular. If there is any person to whom the security is given it is the Court under whose orders the bond was executed. In the case which I have mentioned, dealing with a bond of this nature Lord Phillimore, on the suggestion that the sureties in that case were bound to the Court, remarked:

The Court is not a juridical person. It can not be sued. It cannot take property, and as it cannot take property, it cannot assign it. It remains therefore that here is an unquestioned liability, and there must be some mode of enforcing it and that the only mode of enforcing it must be by the Court making an order in the suit upon an application to which the sureties are parties that the property charged be sold unless before a day named the sureties find the money.

This would be the procedure to be followed if this bond were to be enforced, although as Mr. S.M. Mullick points out on behalf of the respondents, the form of the prayer for the sale of the property given in security is open to criticism. If the decree holder desired to realize the security, it was necessary for him to specify on what ground the sureties were to be held liable to make good the sum of Rs. 7,000 and the prayer should have been for an order that they should make good the sum for which they were held liable, and that if they failed to do so, the property charged would be brought to sale. Mr. S.M. Mullick, supporting the decision of the Subordinate Judge on grounds decided against him in the Court below, argues that no case has been made out by the decree-holder for enforcing any liability of the sureties of 20th July 1931.

When the judgment-debtor applied for stay of sale, the decree-holder objected that he was not likely to realise more than Rs. 12,000 by the sale of the property and that if the sale was to be deferred he would suffer by the loss of the interest which he would otherwise make by investing the proceeds of the sale. It was then decided that the judgment-debtor should furnish security for Rs. 7,000; that the property was to be placed in the hands of a receiver and that the decree-holder should be entitled if he was ultimately successful to the whole of the income of the property which might accrue while it was in the receiver''s hands. Mr. S.M. Mullick argues that the intention of this Court in requiring security was that the decree-holder should be secured against any act of waste which might possibly be committed by the mortgagor while the appeal in the Privy Council is pending; against any obstruction which may be placed in the way of receiver in entering into possession of the property or realizing the income from it and against any other risks of a like nature. He argues that it was never intended that the decree-holder should claim the income of the property from the receiver together with interest at the usurious rate specified in the bond, and also that he should receive the sum of Rs. 7,000 to make good any difference between the nominal amount of the swollen mortgage debt and the value of the mortgaged property.

Mr. Khurshed Husnain suggests that the security for Rs. 7,000 must have been demanded and given as additional security for the mortgage debt as security to the decree holder for the realization of interest at the full bond rate from the date of the execution of the security bond until the date of the Privy Council decree: and in any event as additional security for the whole of the amount of the mortgage debt.

There is nothing in the bond itself which indicates what the sureties guarantee, nor is there anything specific in the order of the High Court to show for what purpose this security of Rs. 7,000 was required. The security must have been taken, as Mr. Khurshed Husnain points out for the due performance of the decree-appealed from or of any order which His Majesty in Council might make under order 45 Rule 13.

But that fact carries us little further. The personal liability of the judgment debtor for the mortgaged debt had been barred by limitation long before the institution of the suit, and the effect of the decrees of the High Court and of the Privy Council amounted to no more than this: that the mortgaged property would be brought to sale unless a certain amount should be paid by the judgment-debtor within a certain time for its redemption. The debt, regarded as a personal debt, is barred by limitation; the decree cannot be regarded as an order to redeem; and it cannot be said that the sureties executing the security bond undertook any responsibility for the mortgage debt.

The judgment-debtor objected to the stay of execution on the ground that the mortgaged property which was worth Rs. 12,000 ought to be brought to sale at once in order that he might enjoy the proceeds. The High Court secured the proceeds to the decree-holder by directing that a receiver should be appointed; and the security for Rs. 7,000 must be regarded as security for no (sic) than this: that the judgment-debtor(sic) should at once do all in their power to place the property in the hands of the receiver, and that when it was in the hands of the receiver, they should do nothing to obstruct the management and should commit no act of waste, so that the decree-holder should find the property when it was brought to sale in the same condition as at the date of the order for stay of sale. Mr. Khurshed Husnain says that the amount which has been realized from the receiver as income of the property has been very small.

That is a matter which may possibly require investigation; and if the smallness of the income should be due to the fact that any part of it has been appropriated by the judgment-debtors, or to any obstruction by the judgment-debtors to the management by the receiver, the sureties will undoubtedly be liable. This is the extent to which the sureties are liable; and it will of course be necessary to establish that the sureties have incurred liability before any attempt can be made to enforce that liability by realization of the security or by any other means. On the execution petition in the form in which it was presented to the Subordinate Judge, the decree-holder certainly cannot claim to realize this security. The order of the Subordinate Judge allowing the objection of the judgment-debtor must be affirmed, and this appeal must be dismissed with costs.

Agarwala. J.

I agree.