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Judgment
Varadachariar, J.—This second appeal arises out of an action instituted against a principal debtor and his surety. The debt was due by the
first defendant under a mortgage bond executed by him; and the second defendant had made himself liable for the sum as surety under Ex. K. The
defences raised in the case were over-ruled by the first Court which gave a decree to the plaintiff against both the defendants. The second
defendant appealed to the lower Court on the ground that he should be held to have been exonerated from all liability by reason of the plaintiff
having given up his rights under the mortgage bond executed by the first defendant. The lower appellate Court accepted this contention and
dismissed the suit. The decree of the lower appellate Court is very loosely worded and even suggests that it might be construed as a total dismissal
of the suit. But it is obvious that the District Judge could not have meant to dismiss the suit even as against the first defendant; if necessary I should
be prepared to set right that mistake. Against the lower appellate Court the plaintiff has preferred this appeal, contending that the circumstances of
the case are not sufficient to warrant the exoneration of the second defendant u/s 141 of the Contract Act and that a decree should have been
given against the second defendant as well.
The question of the discharge of the second defendant by reason of the relinquishment of the mortgage right by the plaintiff was raised by the
fifth issue in the case. So far as I am able to gather from the available records, the argument as to relinquishment is based upon a statement in the
plaint to the following effect: ""The plaintiffs have given up only the mortgage right and filed the suit as on a simple bond."" Mr. Sitarama Rao, the
earned Counsel for the appellant, has translated the vernacular in a slightly different form, but I am content to accept the translation in the above
terms given by Mr. V.S. Narasimhachari as this is also the translation adopted by the learned District Judge. Neither of the earned Counsel
appearing in the case is able to enlighten me as to the circumstances which led to this allegation in the plaint. No attempt has been made either by
cross-examination of the plaintiff''s witnesses, or by any independent evidence adduced^ on the other side, to suggest that there was any
relinquishment of the mortgage right by the plaintiff except by reason of the above statement contained in the plaint. The only reasonable
construction of this statement in the plaint is that the plaintiff is content to enforce the bond as a money claim and does not want a mortgage decree.
I am free to admit that it passes my comprehension why or under what advice the plaintiff came to make this statement in the plaint. It could not
have saved him even a pie by way of diminution of the court-fee; not even the most idiotic client would have taken such a step if he had been
advised as to the danger that he ran by making such a gratuitous statement for no purpose. I can only express my regret that such is the kind of
help and advice still available to litigants. However, if the case clearly falls u/s 141 of the Contract Act it is my duty to apply the law independent of
any personal regret of mine. But I am glad to be able to hold that this foolish conduct of the plaintiff has not really deprived him of his rights against
the surety.
Section 141 of the Contract Act provides that if the creditor loses or without the consent of the surety, parts with any security held by him
against the principal debtor at the time when the contract of suretyship was entered into, the surety is discharged to the extent of the value of the
security. With reference to the concluding words of the section, Mr. Sitarama Rao contended that even on the view taken by the lower appellate
Court, it ought not to have wholly dismissed the suit as against the second defendant but directed an enquiry as to the extent of the value of the
security which the second defendant must be held to have lost by reason of the creditor''s conduct. That would no doubt have been the correct
course, but in the view I take on the main question in the case, it is unnecessary to pursue that point.
The question for determination is whether the creditor has lost or parted with the security which had been given by the first defendant. I find no
specific reference either in the judgment of the first Court or in the judgment of the lower appellate Court to the provision in Order 34, Rule 14 of
the CPC to the effect that a mortgagee who has obtained decree for payment of money in satisfaction of a claim arising under the mortgage may
institute a suit for sale on foot of the mortgage, notwithstanding anything contained in Order 2, Rule 2, Civil Procedure Code. The utmost that
could be said against the plaintiff in the present case is that he has omitted without the leave of the Court to sue for all the reliefs that he was entitled
to. The penalty therefor is indicated in Sub-clause (3) of Order 2, Rule 2, Civil Procedure Code. But the provision that I have already extracted
from Order 34, Rule 14 makes this penalty inapplicable to a mortgagee who chooses to enforce the money claim without claiming relief by way of
sale. The result therefore is that notwithstanding this statement in the plaint, the plaintiff can sue for sale and there is accordingly nothing that
precludes him from assigning the mortgage right to the surety as per the terms of Ex. K or precludes the surety from enforcing the mortgage right
by reason of the provisions of Section 141 of the Contract Act which entitle him by way of subrogation to the benefit of the securities held by the
principal creditor. Mr. Narasimhachari, however, went further and contended that the conduct of the plaintiff is not merely of the kind provided for
in Order 2, Rule 2 but amounts to a giving up of the mortgage right in the sense of releasing it or extinguishing it. I see no warrant for that
contention. As I have already observed, it has nowhere been suggested that there was any other act of relinquishment oral or documentary, except
such as might arise from the statement contained in the plaint. That statement can, as I have already held, be reasonably construed only as a
statement of an intention not to claim the relief by way of sale. But if it should be held to amount to anything more, it will be inoperative in law
because u/s 17(1)(b) of the Registration Act no document which is unregistered can extinguish the mortgage, because the mortgage here was
admittedly far more than Rs. 100. I am unable to agree in the view taken by the learned District Judge that what was given up was not only the
remedy but the mortgage right itself. In any event, as I have said, the mortgage right cannot in the circumstances be held to have been extinguished
because there is no registered document.
My attention was drawn to a decision of the Bombay High Court in Narayan Govind Ok v. Ganesh Atmaram Fadke (1870) 7 B.H.C.R.A.J.
That decision no doubt is in favour of the respondents'' contention but it was pronounced at a time when there was no statutory provision
corresponding to Order 34, Rule 14, Civil Procedure Code. The learned Judges accordingly held that as the course adopted by the creditor had
deprived the creditor as well as the surety of the benefit of the security according to the law as it then stood, the surety must be held to be
discharged to the extent of the security. Holding the view that by reason of the provisions of Order 34, Rule 14, Civil Procedure Code, it is still
open to the plaintiff as well as to the second defendant to sue to enforce the mortgage, I must set aside the decree of the District Judge, which is
based on the ground that that right is no longer available to either of them.
The result is that the second appeal must be allowed and the decree of the District Munsif restored. But as the plaintiff has brought this trouble
on himself, I am not prepared to make any order as to the costs either in this Court or in the lower appellate Court.