Ramanathan Pillai vs M. Doraiswami Ayyangar and Others

In execution of the decree in C.S. 34 of 1912 in the High Court, one Sayyed Mahomed 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. 4,443-2-0 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 the 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-

debtor for a declaration that the security bond, had been fraudulently obtained by the defendants and was void and not binding on the appellants''

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

has 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 defendants (respondents) that the suit was barred by Section 47, Code of Civil Procedure. The Temporary

Subordinate Judge held 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 sought 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 plaint

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, the lower Appellate Court erred in holding that it had a discretion in relief, and that in any view of

the case the discretion had been improperly and 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 fulfilment 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 Chandrasangji ILR (1911) Bom. 42 and Amir v. Mahadeo

Prasad ILR (1916) 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 36 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 contained in the bond. In Amir v. Mahadeo Prasad ILR (1916) All 225, 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 the decision in Subramaniam Chettiar v. Raja of Ramnad ILR (1917) Mad. 327 : 34

M.L.J. 84. In that case the question was that 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 CPC that property can be realised by a decree-holder in

execution or can only he realised by a separate suit. The learned judges (Wallis, C.J., and Kumarsawami 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 (1904) Mad. 117, it was held on the authority of Thirumalai v. Ramayar

ILR (1880) Mad. 1, Sheik Suleman v. Shivram Bhikaji ILR (1887) 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. Sheik Suleman v. Shivram Bhikaji ILR (1887) Bom 71 and

Akhoot Ramanab 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 respect 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 relates to the execution, discharge or satisfaction of the decree, since it relates to the surety bond

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