Ramanathan Pillai vs Doraiswami Aiyangar and Others

Moore, J.—In execution of the decree in C.S. No. 34 of 1912 in the High Court, one Sayyed Muhammad Rowther was arrested. On 29th

September 1914, the judgment-debtor and the present appellant as surety on behalf of the judgment-debtor, executed a security bond for Rs.

4,443-20 in favour of the District Court of Ramnad, in which Court the execution proceedings were pending, and the judgment-debtor was

released.

The bond provides for the payment of the amount either jointly or severally by the executants. There is also a further provision, that in case of

default in payment, the money should be recovered from the surety personally, and from the properties hypothecated under the security bond and

from the other properties of the surety. The properties hypothecated are, it appears, situate in the Madura district. On 8th February 1915, the

appellant filed a suit (Original Suit No. 19 of 1915), in the Subordinate Judge''s Court of Madura, against the plaintiffs in C.S. No. 34 of 1912 and

their judgment-debtors for a declaration that the security bond had been fraudulently obtained by the defendants, and was void and not binding on

the appellant''s properties, and for cancellation of the security bond. It was alleged in the plaint, that the appellant was a person of weak intellect,

and that the bond had been executed owing to undue influence, fraud and coercion practised upon him by certain persons acting in collusion with

the defendants. A preliminary objection was taken by the defendants (respondents) that the suit was barred by Section 47, Code of Civil

Procedure. The Temporary Subordinate Judge hold that the appellant had alternative remedies, (1) in execution proceedings in the Ramnad

District Court and (2) by way of suit. He further decided that, as the appellant had a remedy in execution proceedings, the Court should not in the

exercise of its discretion grant the declaratory relief soughs for, and in the result dismissed the suit. In appeal the District Judge took the same view

and held,

that as the party had a remedy in execution and also an appeal.

the declaratory relief asked for was rightly refused.

Mr. Sitarama Rao for the appellant contended, (1) that the lower appellate Court ought to have held that no relief such as is claimed in the point

could be granted in execution, (2) that the suit being for the substantial relief of cancellation of the document on the ground of undue influence and

fraud, which the executing Court could not grant, She lower appellate Court erred in holding that it had a discretion in relief, and (3) that in any

view of the case the discretion had been improperly and illegally exercised.

The question raised in this appeal, viz., whether a third party who has given security on behalf of a judgment-debtor for the due performance of

a decree has an independent right of application u/s 47 of the CPC and can apply to the executing Court to cancel the security bond on the ground

that it was obtained by fraud, or whether his only remedy is by way of suit, is a novel one and not free from difficulty. No decision directly bearing

on the question has been cited before us. Section 145 of the Code of Civil Procedure, which corresponds to Section 253 of the Code of 1882, is

in these terms:

Where any person has become liable as surety (a) for the performance of any decree or any part thereof, or (b) for the restitution of any property

taken in execution of a decree, or (c) for the payment of any money, or for the fulfillment of any condition imposed on any person, under an order

of the Court in any suit or 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. Provided that such notice as the Court in each case thinks sufficient has been given to the

surety.

The section provides a summary remedy in execution and dispenses with the necessity for a separate suit to the extent to which the surety has

rendered himself personally liable. Motilal Virchand v. Thakore Chandra Sangji ILR (1912) 36 Bom. 42, and Amir v. Mahadeo Prasad ILR

(1917) All. 225, which were relied on by the learned vakil for the appellant, have no direct bearing on the question which we have to decide. In

the Bombay case it was held that, where a bond is passed by third parties as security for restitution in the event of the decree being reversed in

appeal, the obligee may file a suit upon the contract continued in the bond. In the Allahabad case the learned Judges held that, if the surety takes

upon himself more than the personal liability and hypothecates Immovable property, such hypothecation can only be enforced against the property

by means of a regular suit.

The learned vakil for the respondents has referred us to Subramanian Chettiar v. Raja of Ramnad ILR (1918) Mad. 327. In that case the

question was whether, when Immovable property has been given by the judgment-debtor as security for the due performance of a decree pursuant

to an order made under Order XLI, Rule 5(3), of the Code of Civil Procedure, that property can be realized by a decree-holder in execution, or

can only be realized by a separate suit. The learned Judges (Wallis, C.J., and Kumaraswami Sastri, J.) were of opinion that the matter being one

relating to execution u/s 47 of the CPC a separate suit did not lie, and that the fact that the bond was given to the Court did not make it a question

arising between the judgment-debtor and a third party, so as to take it out of the section. At page 333 of the report the learned Chief Justice

observed, that it was unnecessary to deal with cases of security given by third parties u/s 145 of the Code of Civil Procedure. The point for

decision in this appeal is whether the surety can be regarded as a party to the suit, so as to entitle him to present an application to the Court

executing the decree. In Linga Reddy v. Hussain Reddy ILR (1905) Mad. 117, it was held on the authority of Thirumalai v. Ramayyar ILR (1890)

Mad. 1, Shek Suleman v. Shivram Bhikaji ILR (1888) Bom. 71 and other cases with reference to Section 253 of the Code of 1882, that the

surety should be treated as a party to the suit and cannot bring a suit for a declaration that he is not liable under the surety bond. Section 145 of the

CPC differs in some respects from the old section. Section 145 says that the surety shall ""for the purposes of appeal be deemed to be a party

within the meaning of Section 47."" We think that the words ""shall for the purposes of appeal be deemed to be a party,"" which were apparently

introduced in order to give effect to certain rulings under the old Code--Shek Suleman v. Shivram Bhikaji ILR (1888) Bom. 71 and Akhoot

Ramanah v. Ahmed Eusoofjee (1871) 15 W.R. 538--only mean that if an order is made in execution against a surety, the surety may appeal

against the order as if he were a party to the suit in which the decree or order sought to be executed was passed, and that the reference to Section

47 does not in other respects import into Section 145 the provision contained in Section 47, which bars a separate suit. If it were not for the

provisions of Section 145 the liability of the surety would have to be enforced by a separate suit, because it does not arise under the decree but

subsequently and under a separate contract with the Court. The effect of the section is that the surety may be made a party to the execution

proceedings against the principal debtor, and an order against the surety is in effect a decree upon his separate contract against him for the

payment of money. The surety is not a party to the suit, or to the decree made therein, nor does he become a party to 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 a limited

purpose, namely, for appeal.

It is doubtful whether the question in this case related to the execution, discharge, or satisfaction of the decree, since it relates to the surety bond

and not the decree, and to the enforcement of the liability incurred thereunder, and not under the decree. We doubt whether the surety, if ha be not

made a party to execution proceedings, can intervene in a matter in which he has no interest.

We are unable, therefore, to agree with the conclusion arrived at by the lower Courts that the surety has a right to apply u/s 47 to have the

security bond cancelled.

The lower Courts have refused the declaratory relief sought for, on the ground that it was a discretionary relief and as the appellant had a

separate remedy by way of suit. We think that the lower Courts were wrong, and that the suit should have been tried on the merits. We

accordingly allow the appeal with costs in this Court, and reverse the decrees of the lower Courts. The Temporary Subordinate Judge is directed

to restore the suit to his file and dispose of it according to law. Costs in the lower Courts will abide the result. The appellant is entitled to a refund

of the Court fee of the Second Appeal.