Rajam Naidu and Another vs Meenakshi Ammal and Others

This is an appeal under clause 15 of the Letters Patent against the judgment of Chandraseldiara Aiyar, J., confirming with slight modification rite

decision of the Subordinate Judge of Cuddalore holding that the application for execution was in time.

On the 25th September, 1926, one Muthukornaraswami Chettiar obtained a preliminary mortgage decree in O.S. No. 68 of 1925 in the Sub-

Court, Cuddalore, against three persons, Thayammal, Govindarajulu Naidu and Rajam Naidu. Against that decision the defendants preferred an

appeal to the High Court in App. No. 132 of 1927. When the decree-holder applied for the passing of a final decree, the defendants filed C.M.P.

No. 1393 of 1927 in the High Court for stay of the proceedings. Stay was granted by this Court on condition of the judgment-debtors furnishing

security. In pursuance of the order of the High Court defendants 1 to 3 executed a security bond on 5th January, 1928. The relevant clause in that

security bond is in these terms :

We further agree that if on the execution application of the decree-holder immediately after the disposal of the appeal by the High Court an amount

in excess of Us. 11,748-13-10 should be found due to the decree-holder and if the hypothecated properties do not on sale feteh Rs. 11,748-13-

10, the amount for which, they have been accepted as security we and our legal representatives will be personally liable for the difference between

the said execution, amount (exclusive of costs) and Rs. 11,748-13-10, the value of the security accepted by this Court.

The High Court confirmed the decree of the Sub-Court on 2nd August, 1929. The final decree was passed on 19th March, 1931. The decree-

holder realised a sum of about Rs. 6,000 by sale of the property by the year 1941, the last of the execution orders being dated 21st February,

1941. On 20th February, 1944, the legal representatives of the decree-holder, the decree-holder having died in the meanwhile applied to the Sub-

Court, Cuddalore, in M.P. No. 149 of 1944 for transmission of the decree and the security bond to the City Civil Court, Madras, for execution

against the sureties, defendants 1 to 3, by enforcing the security bond. This application was resisted by defendants 1 to 3 on two grounds, one of

which alone is relevant for purposes of this appeal. Their contention was that as the decree was more than 12 years old by the date of the petition,

the execution was barred tinder Section 48 of the Civil Procedure Code. The learned Subordinate Judge overruled this objection and directed

transmission of the decree to the City Civil Court. This order was confirmed by Chandrasekhara Aiyar, J., and this Letters Patent Appeal is against

his decision.

The only question that arises for consideration in this appeal therefore is whether the execution application is barred by limitation u/s 48 of the

Civil Procedure Code, as contended by defendants 1 to 3.

The present application is admittedly within three years from the date of the last order, 21st February, 1941, by which the property was sold

and the deficiency for when the defendants 1 to 3 made themselves liable personally as sureties was ascertained. The only bar therefore to be

considered is the bar of limitation u/s 48 of the Civil Procedure Code.

Section 145 of the CPC gives a summary remedy to the decree-holder to enforce the personal liability of a surety who made himself answerable

for the decree amount either in whole or in part. The section so far as is relevant to this appeal is as follows:

Where any person has become liable as surety

(a) for the performance of any decree or any part thereof, or

* * * * * *

(c) far the payment of any money, or for the fulfilment of any condition imposed on. any person under an order of the Court in any suit or in any

proceeding consequent, thereon, the decree or order may be executed against him, to the extent to which he has rendered himself personally liable,

in the manner herein provided for the execution of decrees, and such person shall, for the purposes of appeal, be deemed a party within the

meaning of Section 47.

The liability of the surety arises under the bond executed by him.. u/s 128 of the Contract Act the liability of the surety is co-extensive with that

of the principal debtor unless it is otherwise provided by the contract. It is now settled law that even if the enforcement of the liability against the

principal debtor is barred by limitation, the liability of the surety is not extinguished. Vide the decision in Mahant Singh v. U Bi Yi (1939) 2 M.L.J.

253 : 1939 L.R. 66 IndAp 198 : (1939) Rang. L.R. 358. That by virtue of Section 145, a surety does not become a joint debtor along with the

judgment-debtor is also fairly well established by decisions of the Courts in India. All the decisions have been reviewed by Beasley, C.J., and

King, J., in Cangaraju v. Subbayya (1934) 68 M.L.J. 119 : ILR 58 Mad. 276.

u/s 48 of the Civil Procedure Code,

Where an application to execute a decree not being a decree granting an injunction has been made, no order for the execution of the same decree

shall be made upon any fresh application presented after the expiration of twelve years from

(a) the date of the decree sought to be executed.

(The other clauses are omitted as they are not material). This section applies as between the decree-holder and the judgment-debtor who are

parties to the suit. Where there is a combined decree passed under the old Code in a mortgage suit providing for the sale of the property in the first

instance and also for the personal liability of the mortgagor for the balance found due after such sale, it was held by a Full Bench of this Court in

Aiyasamier (dead) and Others Vs. Venkatachela Mudali and Another, that the decree-holder had twelve years u/s 48 of the CPC for the recovery

of such balance reckoned from the time when it was ascertained to be due. Under the present Code however a fresh decree has to be passed

under Order 34, Rule 6, on the personal covenant for the balance due after the hypotheea was sold. The decision in Aiyasamier (dead) and Others

Vs. Venkatachela Mudali and Another, is however no longer good law in view of the decision of the Privy Council in Kkulna Loan Co. v.

Jnanendranath Bose (1917) 22 C.W.N. 145: AIR 1917 P.C. 85. This decision of the Privy Council was considered by this Court in two

subsequent decisions in Nawab Shuja-ul-Mulk Bahadur Vs. Umir-ul-Umra Bahadur and Others, and Swami-natha Odayar v. Thiagarajaswami

Odayar (1925) 52 M.L.J. 256: ILR 50 Mad. 5 and it was held that if twelve years had elapsed from the date of the decree, execution is barred

tinder Section 48 of the Civil Procedure Code, notwithstanding the fact that the personal liability under the decree could not be ascertained till a

later date. As the liability of the surety in this case arises only under the bond and not under the decree, the principle of these decisions is

inapplicable to it. The liability however is enforced u/s 145 of the Code by executing the decree obtained against the judgment-debtor against the

surety to the extent of his personal liability. The expression ""in the manner herein provided for the execution of decrees"" in Section 145 of the CPC

seems to attract the provisions of Section 48 of the Code as Section 48 occurs in the part of the Code relating to execution. It is possible to

contend that this language makes only the remedies such as arrest of the surety and sale of his property after the attachment applicable and does

not attract the period of limitation u/s 48 of the Code. But it is difficult to accept such a contention as the restriction, or limitation on the right to

execute the decree imposed by Section 48 may also be treated as a ""manner"" of execution. The decision of the Privy Council in 37 CWN 548

(Privy Council) which, was an appeal against the decision of the High Court reported in Kirtyanand v. Pirthichand A.I.E. 1929 Pat. 597 places the

matter beyond doubt, though in that case the contention was not specifically raised. In that case there was a decree for rent on the 1st April, 1914.

During the pendency of the suit there was an application for attachment before judgment and the respondent before the Privy Council executed a

security bond on 19th September, 1912. By that bond the surety undertook to pay to the decree-holder, the amount that may be awarded by the

decree to the plaintiffs in the suit including the principal, interest and costs. After the decree there were as many as six execution applications

against the judgment-debtors and some amount was realised. On the 13th July, 1927, a seventh application was made against the surety for

realising the balance that remained unpaid. The objection raised by the surety was that as the decree was more than twelve years old execution

was barred against him u/s 48 of the Code. To meet this contention the decree-holders relied upon a ""subsequent order"" made in another suit for

the administration of the estate in which a Receiver was appointed with directions to make half-yearly payments to the decree-holders. This order,

it was contended on behalf of the decree-holders, was a ''''subsequent order"" within the meaning of Section 48(1)(6) of the Civil Procedure Code.

It was held that as the order in the Administration suit was made in the absence of the judgment-debtors and in the absence of the surety it was not

a ""subsequent order"" within the meaning of Section 48(1)(6), and that, therefore, execution against the surety was barred. The relation between

Section 48 of the Code and Article 182 of the Limitation Act was not considered by their Lordships of the Judicial Committee. Nor was any

contention raised before their Lordships that Section 48 would not apply to the liability of the surety u/s 145. Though there is no discussion of the

question this decision has to be treated as authority for applying Section 48 for the enforcement of the liability of the surety u/s 145 of the Civil

Procedure Code. But in that case it must be noted that the liability of the surety was absolute and arose on the date of the decree. It Avas not a

contingent liability.

As Section 48 applies to the liability of the surety u/s 145 in view of the decision of the Privy Council in 37 CWN 548 (Privy Council) the next

question that arises for consideration is what is the date from which the period of twelve�s years should be computed in such a ease. u/s 48 in a

case between the decree-holder and the judgment-debtor, it is the date of the decree sought to be executed from which the period of twelve years

has to be counted. As the liability of the surety is not under the decree and arises only under the bond, in our opinion, the period of twelve years

should be calculated from the time when such liability accrued. The liability under a bond may be an absolute liability or a contingent or conditional

liability. If it is an absolute liability the date from which the liability accrues coincides with the date of the decree. But if it is merely a contingent

liability, a liability that arises after the ascertainment of the deficiency, in such a case, in our opinion, the period should be counted only from the

date of the accrual of such liability. In this view we are supported by two decisions of the Privy Council in Baja Raghunandan Prasad Singh v. Raja

Kirtyanand Singh Bahadur (1932) 63 M.L.J. 85 which was an appeal against the decision of the Patna High Court in Raja Raghunandan Prasad

Singh v. Baja Kirtyanand Singh Bahadur ILR (1928) Pat. 310. There was a mortgage decree on the 22nd December, 1917. The decree did not

contain a personal liability against the mortgagor in view of Order 34, Rule 6 of the Civil Procedure Code. There was an appeal against the decree

to the High Court. On 31st August, 1918, the decree was made absolute while the appeal in the High Court was pending. The mortgagee decree-

holder made an application to execute the decree and bring the properties to sale. At that stage the mortgagor applied for stay of execution in the

High Court. Stay was granted on condition of the mortgagor furnishing solvent security in the lower Court to the satisfaction of the Subordinate

Judge. The respondent before the Privy Council who was also a party to the suit as a puisne encumbrancer gave a security bond. If was construed

by the Privy Council to have the same effect as the bond in the present case. After exhausting the remedy against the property, the mortgagee

decree-holder applied to enforce the bond against the surety in 1927. The surety raised among other contentions that his liability under the bond

was absolute and that the right to enforce the bond accrued to the decree-holder on the 1st April, 1920, according to the terms of the bond and

that the application for execution against him filed more than three years thereafter u/s 145 was barred by limitation. In construing the bond their

Lordships observed at page 91 as follows :

It is not a clause which puts upon the giver of the bond an obligation to make an immediate payment in cash; it is a clause which puts the decree-

holders in the position of having a realisable security of Rs. 77,000. The question is whether that is an absolute security which the decree-holders

are to be free to realise immediately on 1st April, 1920 or whether it is security to the extent of Rs. 77,000 for the balance of the sum, if any,

remaining unpaid after the mortgaged property has been realised.

In their Lordships'' judgment upon the true construction of this document having regard to the circumstances in which it was executed, this bond is

a bond for securing the balance unprovided for by the proceeds of sale of the mortgage property, upto a sum not exceeding Rs. 77,000.

Upon that view of the case it is plain that until the property was sold the liability of the giver of the bond, the respondent here, could not be

enforced. The application which was made in January, 1927, was necessarily within time inasmuch as under the Indian Limitation Act it must either

be within three years if the application is properly an application, in the suit, or within six years, if the application should have been made by

independent suit.

No doubt, in that case the question for the applicability of Section 43 of the CPC did not and could not arise. But if the liability of the surety

arises only under the bond and not under the decree it is not unreasonable to hold that there should be a different starting point u/s 48 of the Code

and under the Limitation Act. Their Lordships did not, however, indicate the proper Article of the Limitation Act applicable to the case. It is as if

u/s 145 of the Code when the liability springs under the bond it is a decree against the surety. No doubt the mode of enforcement is by execution

of the decree obtained already. But that does not mean that the liability is a liability under the decree. In Rameshwar Singh v. Homeshwar Singh

(1920) 45 M.L.J. 1 : 1920 L.R. 48 IndAp 244 : ILR 44 Mad. 643 (P.C.) their Lordships of the Judicial Committee had to consider the question

whether the language of the first clause in the third column of Article 182, ""Date of the decree or order"" could properly be applied to a case where

the decree was not a combined decree but a decree which imposed upon the judgment-debtor a contingent liability. The decree in that case did

not provide for any personal liability of the judgment-debtor but declared that the decree amount should be realised by sale of the property

belonging to one Janeshwar and left in Ekradeshwar''s possession, Janeshwar being the judgment-debtor. Ekradeshwar how-over did not obtain

possession of the property of Janeshwar until after the (sic) of the litigation between him and the widow of Janeshwar which was on the 22nd July,

1914, under the judgment of the Privy Council. He then obtained possession of the property and the decree-holder made an application to execute

the decree in December, 1914, after the decision, of the Privy Council. The contention urged on behalf of the judgment-debtor was that under

Article 182 of the Limitation Act execution was barred as the application was made more than three years from date of the decree. In answer to

this contention their Lordships stated as follows:

They are of opinion that, in order to make the provision of the Limitation Act apply, the decree sought to be onforced must have been in such a

form as to render it capable in the (sic) of being enforeed A decree so limited in its scope as that of the 27th July, 1906, under reconsideration

cannot, in their opinion, be regarded as being thus capable of (sic). Under that decree Ekradeshwar was not made personally liable, nor did it

extend to any portion of the estate of Janeshwar which was not in his hands. None of the estate came to his hands until after the decision of the

Board in 1914... They are of opinion that when the Limitation Act of 1908 prescribes three years from the date of a decree or order as the period

which it must be enforced, the language, read with its context, refer only, as they have already indicated, to an order or decree made in such a form

as to render it capable in the circumstances of being enforced...This application could not have been made till Ekradeshwar had come into

possession of the property of Janeshwar, and by Article 181 in the Schedule to the Limitation Act, the period of limitation for making an

application is three is three years from the time when the right to apply accrues.

Until the obligation of the surety becomes enforceable by reason of the (sic) contemplated having occurred it cannot be said that the period of

limitation whether u/s 48 of the Code or under the appropriate Article of the Limitation Act commenced to run. It may be that the deficiency may

not be ascertained even till after the lapse of a period of twelve years from the date of the decree. It may be that the liability might accrue

immediately after the decree. In either case in our opinion the period starts from the moment of the obligation of the surety became enforceable. Of

course when there is no certain date Article 182 of the Limitation Act does not apply and it is only Article 181 that applies. This view was taken

also in Jamundas Ravuji Sait Vs. Puthan Marakar Kandiyil Krishnan (deceased) and Others, by Pakenham Walsh, J., and in Muthu K.A.R.

Annamalai Chettiar Vs. N.V. Sundaresa Iyer, by Kuppuswami Aiyar, J. In the present case, under the terms of the surety bond the liability of the

sureties was only a contingent liability arising after the mortgaged properties were sold and the deficiency was ascertained; and this occurred only

in February, 1941. The present application which was filed within three years from that date is in time both u/s 43 of the CPC and also under

Article 181 of the Limitation Act. We therefore agree with the judgment of Chandrasekhara Aiyar, J., though not for the reasons given by him and

confirm his decision and dismiss this appeal with costs.