1. By a common judgment we propose to dispose of the two Civil Rules as they stem from the common orders and involve common questions of law and facts.
2. A few material facts may be narrated to bring up the legal issue in the proper setting:--
One Anangadhar Rajkhowa was appointed as the Mouzadar of Joypur Mouza and under the provisions of the Assam Land and Revenue Regulations he was required to furnish sureties guaranteeing due performance of his duties and answer for his default to deposit land revenue as provided under the said Regulations, Rules and Executive Instructions framed thereunder. The petitioners stood sureties for the Mouzadar in question for the revenue years 1952-53, 1953-54 and 1954-55 and had jointly executed 'security bonds' for the said revenue years, which (revenue year) com-
mences from the 1st day of April and terminates with the last day of March every year. Ananga was reappointed as the Mouzadar for the year 1955-56; was called upon to furnish sureties; the petitioners executed one 'security bond' undertaking to stand as sureties for the Mouzadar, which has been marked as An-nexure T. It is alleged that the Mouzadar had misappropriated a sum of Rs. 34,246.19 paise collected by him as land revenue during the years 1952-53, 1953-54 and 1954-55, however, the misappropriation could only be detected in the year 1956 and the Mouzadar was dismissed. As sum of Rs. 3,700 had already been realised form the Mouzadar, the Deputy Commissioner, who was the appointing authority of the Mouzadar proceeded to realise the balance of the defalcated amount due from the Mouzadar by putting to sale the properties pledged by the petitioners under the security bond. The Deputy Commissioner forwarded a copy of 'the security bond' dated 6-6-56 executed by the petitioners as sureties for the dismissed Mouzadar and asked his subordinate officers, namely, the Extra Assistant Commissioner-in-charge of Land Sale Cases to put to sale the properties pledged by the petitioners for recovery of the amount liable to be recovered from the Mouzadar. On receipt of the order of the Deputy Commissioner, the Extra Assistant Commissioner started separate land sale cases against the petitioners being Land Sale Case No. 16/60-61 and No. 15/60-61 against Surendra and Chittaranjan respectively. The petitioners preferred appeals to the Deputy Commissioner questioning the validity of the proceeding and inter alia contended that the security bond in question was invalid and unenforceable in law. The petitioners also took up the plea that they had served notices terminating their suretyships. The appeals were posted for hearing on 14-6-65, but as the records were not available the hearing could not be concluded. But, however, on 23-11-65 the petitioners received copies of the order passed by the Deputy Commissioner rejecting the appeals preferred by them, It may be stated here that the Deputy Commissioner disposed of the appeals by a common order. As the order was passed behind the back of the petitioners they preferred further appeals before the same Deputy Commissioner, which were entertained and finally disposed of on 4-7-66. The Deputy Commissioner has
inter alia held that the petitioners were jointly and severally responsible; the properties secured under the bond executed by them were liable to be sold for realisation of the amount due from the Mouzadar. The Deputy Commissioner turned down the plea of the appellants that the bond was unexecutable and invalid. The petitioners preferred appeals under Section 147 of the Assam Land and Revenue Regulations (referred to as 'the Regulation' for brevity and convenience) to the Assam Board of Revenue and they were registered as Revenue Appeals Nos. 181 RA of 1966 and 182 RA of 1966. Delay in preferring the appeals was condoned by the Board of Revenue and the appeals were heard on merits and disposed of by a common judgment. The Board has held that the bond in question was executable; the petitioners being sureties were liable for the amount defalcated by the Mouzadar; the landed properties pledged by the petitioners were liable to be sold for the recovery of the amount; notwithstanding the fact that the bond was executed in favour of the Secretary of State for India-in-Council it was not executed in favour of a non-existent person, the bond was validated by Clause 16 of the Adaptation of Laws Order, 1950; that 'the Government of Assam' should be read in place and instead of 'the Secretary of State for India-in-Council'; and, that the Deputy Commissioner being the representative of the Government of Assam was fully empowered to enforce the terms and conditions of the bond and dismissed the appeals. Hence these applications under Article 226 of the Constitution projected against the proceedings in the Land Sale Cases, acts of the Revenue Officer in putting the properties covered by Annex-ure T to sale making the petitioners liable for the amount defalcated by the Mouzadar and against the appellate order passed by the Deputy Commissioner and the Board of Revenue.
3. Shri J. P. Bhattacharjee, the learned counsel appearing on behalf of the petitioners has urged the following points:--
(1) That the bond in question was executed in favour of the Secretary of State for India-in-Council and the agreement was entered with a non-existent party and as such, the bond in question is unexecutable; the State of Assam and the Deputy Commissioner had no jurisdiction to enforce the terms and conditions of the bond; the provisions contained in paragraph 16 of the Adaptation of Laws Order have no application and, as such, the impugned acts and the orders of the authorities are liable to be set aside;
(2) That the petitioners not having undertaken or bound themselves as sureties for any past acts or omissions of 'the Mouzadar' did not render themselves liable for such acts or omissions and the properties were not liable to be sold; the respondents had acted beyond the jurisdiction vested in them by law in making the petitioners liable for the alleged defalcation of the Mouzadar prior to the date of the execution of the bond in the absence of any stipulation to that effect; and
(3) that the petitioners' liabilities were limited and specified in the bond itself and the petitioner Surendra had undertaken to reimburse or made himself liable to the tune of Rs. 2,900 and the petitioner Chittaranjan bound himself to the extent of Rs. 15,315 and the respondents acted illegally and without jurisdiction in making the petitioners liable for the entire defalcated amount, which was violative of the terms of the bond. According to the counsel, the errors committed by the respondents are apparent on the face of the records.
4. Dr. J. C. Medhi, the learned Advocate General, Assam, has strenuously argued that on a true and correct interpretation of the terms of the bond, it is evident that the agreement was entered by the petitioners with the Deputy Commissioner. To all intents and purposes the bond was executed by the petitioners in favour of the State of Assam. The learned Advocate General did not seriously contest that the provisions of Clause 16 of the Adaptation of Laws Order, 1950, are not applicable in the present case. However, the learned Advocate General has submitted that reading as a whole, the expressed intention of the parties points to the only conclusion that the petitioners had executed the bond in favour of the State of Assam authorising the Deputy Commssioner to realise the amounts secured by the petitioners under 'the Regulation'. In regard to the other contentions raised by the petitioners, the learned Advocate General submits that they are misconceived inasmuch as the Land Sale cases were not initiated by the Deputy Commissioner to realise the defalcated
amount by putting the properties secured by the bond in question to sale. The Deputy Commissioner, according to the learned Advocate General commenced the Land Sale cases to put the properties pledged by the petitioners under the bond executed by them for the years 1952-53, 1953-54 and 1954-55 to sale.
5. The following factors emerge on the face of the record:--
(1) 'The Mouzadar' had misappropriated the amount sought to be realised during the revenue years 1952-53, 1953-54 and 1954-55 and separate bonds were executed by the petitoners as sureties for those years. However, the said bonds are not produced before us and, as such, we are not in a position to know either the terms and conditions of the bonds or the nature and the amount of liabilities undertaken by the petitioners. The present bond, Annexure I, was executed by the petitioners in favour of the Secretary of Stats for India-in-Council; the petitioner Surendra pledged a parcel of land measuring 23 Bighas and odd and the valuation of the property was put at Rs. 2,900, whereas the petitioner Chittaranjan pledged the land measuring 134 Bighas and odd and specified the value thereof at Rs. 15,315 (vide Schedule I of the bond). The Mouzadar had defalcated the amount sought to be realised long before the execution of the bond in question; (2) The Deputy Commissioner had initiated the Land Sale cases and directed that the properties pledged under the security bond (Annexure I) should be put to sale on account of misappropriation committed by the Mouzadar. The Dy. Commissioner and the Board of Revenue, on appeals, upheld the said order and the petitioners were made liable for the amount of Rs. 30,548.19 paise.
6. In order to appreciate the points urged by the parties it is worthwhile to ascertain as to how the Land Sale cases were initiated. After the Mouzadar had defalcated the amount and (was) dismissed, the Dy. Commissioner in exercise of his power under Section 146 of the Regulation proceeded against the sureties of the Mouzadar. The Mouzadar is a Revenue Officer as defined under the Regulation. The petitioners stood as sureties for the Mouzadar. It has not been disputed that the Deputy Commissioner has power to proceed against the sureties of such Mouzadars under Section 146 of the Regulation. The petitioners have
not questioned that position but, the crux of their contention is that a surety could be proceeded against only when he 'has become liable for any amount as surety for a defaulter or a Revenue Officer'. According to the petitioners, the Deputy Commissioner had no jurisdiction to proceed against the petitioners under Section 146 of 'the Regulation' and put the properties pledged by the security bond, Annexure I to sale, for the recovery of the amount defalcated by the Mouzadar long before the date of execution of the bond. The bond was executed on, 6-6-55 for the revenue year 1955-56. The Deputy Commissioner, the initiator of the proceeding passed the following orders:--
'OFFICE OF THE DEPUTY COMMISSIONER, LAKHIMPUR, DIBRUGARH.
No. 4606-R, Dated 25-3-61.
The R. A. C., i/c Land Sale.
In forwarding herewith a true copy of security bond No. SL.2578-IV/1284, dated 6-6-55 executed by Shri Chitta-ranjan Bondopadhya and Shri Surendra-nath Dutta both the securities of Shri Anangadhar Rajkhowa , the dismissed Mouzadar of Jaipur Mouza, you are requested to put the security properties into sale for recovery of the amount defalcated by the Mouzadar above.
Vigorous step in this matter may please be taken.
Sd/- K. Saigal,
Deputy Commissioner, Lakhimpur, Dibrugarh.'
As such, it appears clear that the Deputy Commissioner had asked his subordinate Revenue Officer to put the properties secured or pledged by the bond in question (Annexure 'I' executed on 6-6-55 for the Revenue year 1955-56) to sale- On receipt of the Memo 'the Extra Assistant Commissioner-in-Charge of Land Sale' set in motion Land Sale Cases Nos. 15 and 16 against the petitioners Chittaranjan and Surendra respectively for realisation of Rs. 30,546.19 paise and issued processes and notices to put the properties pledged or secured under the bond to sale. As such, there is no escape but to conclude that the Deputy Commissioner and the Land Sale Officer proceeded against the properties secured under the bond in question. It does not appear on the face of the records that the Land Sale cases were initiated and continued against the properties secured by the petitioners as sureties of the Mouzadar for the years 1952-53,
1953-54 and 1354-55. We find that the properties secured under the security bond dated 6-6-55 were proceeded against by the Revenue Officer.
7. Now, the crucial question is as to whether the Deputy Commissioner had the jurisdiction to proceed against the present bond? The condition precedent for exercise of the jurisdiction under Section 146 of the Regulation is the accrual of liability. Section 146 of the Regulation reads as under:--
'146. Any person who has become liable for any amount as surety for a defaulter or Revenue Officer may be proceeded against in the manner prescribed in Chapter V, as if he were a defaulter in such amount.'
Were the petitioners liable for any amount as sureties for the Mouzadar in respect of the bond executed on 6-6-55? The petitioners have questioned the said jurisdiction and have submitted before us that on a plain reading of the bond it would be clear that the security bond was executed by the petitioners on 6-6-55 and they did not undertake any past liability of the Mouzadar and, as such, the Deputy Commissioner could not have proceeded against the properties secured by the bond.
8. It is the common case of the parties that the security bond in question was executed on 6-6-55. The bond is nothing but a contract of guarantee. The petitioners had given the guarantee and stood as sureties; the Mouzadar, Shri Anangadhar, was the person in respect of whose default the guarantee was given. As such, the Mouzadar was the 'Principal Debtor'. The petitioners were the sureties. According to the petitioners guarantee was given to the Secretary of State for India-in-Council, whereas on behalf of the State it is submitted that it was so given to the State of Assam with an authority to the Deputy Commissioner to execute the bond. As such, there is a dispute between the parties as to who was the 'Creditor'. The nature of the liability undertaken by the sureties was prospective. The time terms of the bond are eloquent and indicative of the fact that the petitioners, as sureties, ensured the 'Creditor' that in default of due performance of the duties of the Mouzadar in accordance with the Rules and Instructions contained in the Regulation and also in default of payment of Government revenue punctually on the fixed
dates or in the event of the Mouzadar acting in contravention of the Regulation, Rules or Executive Instructions, the sureties, their heirs, representatives and permitted assigns would remain responsible and bound themselves, their heirs and assigns to the conditions of the bond in respect of the amount specified in the Schedule appended hereto'. The expression 'the amount as specified in the Schedule appended hereto' has been quoted by us from the bond itself. There is nothing in the bond to indicate that the petitioners had undertaken or guaranteed for any past default, debts or miscarriage of the Mouzadar. The petitioners stood as sureties in respect of the prospective default and prospective miscarriage of the Mouzadar. We have used the word 'miscarriage' to mean that species of wrongful act for the consequence of which the law would make a party civilly responsible. On a perusal of the bond we come to the conclusion that the contract of guarantee or the security bond ensured the contractual as also the tortious liabilities of the Mouzadar.
9. A surety in the eye of law is a 'favoured debtor' and the surety bonds are to be construed strictly; a surety can only be held to be bound if the condition of liability has been fulfilled. Being a 'favoured debtor', a surety is entitled to insist upon rigid adherance to the term of his obligation by the 'Creditor' and cannot be made liable for more than he has undertaken. The nature of the contract cannot be equated with that of an insurer or uberrima fides, it is one 'strictissimi juris'. We quote a passage from Halsbury's Laws of England, 2nd Edition, Vol. XVI, Article 52, p. 59:--
'The surety is regarded as a favoured debtor. He is entitled, as such, to insist upon a rigid adherence to the terms of his (the surety's) obligation by the creditor, and cannot be 'made liable for more than he has undertaken; for, though his contract is not, like that of an insurer, uberrima fides, it is one strictissimi juris,' The principle as to the liability of a surety has been enunciated by the Privy Council is Pratapsingh Moholalbhai v. Keshavlal Harilal, AIR 1935 PC 21. To put the principle in a microform the law laid down in that a guarantor cannot be made liable for more than what he has undertaken. The law laid down by the Supreme Court as to the nature of the liability of a guarantor or surety may
be gathered from the decisions reported in AIR 1955 SC 478 (State of Bihar v. M. Homi), AIR 1957 SC 587 (State of U. P. v. Mohammed Sayeed), and AIR 1964 SC 859 (Kamala Devi v. Takhatmal). The Supreme Court has ruled that the provisions in a surety bond which are penal in nature must be very strictly construed. The above decisions were cited at the bar, but we are not oblivious of the decisions of the Supreme Court reported in AIR 1963 SC 746 (Anirudhan v. Thomco's Bank Ltd.). AIR 1967 SC 1634 (State of Maharashtra v. Dr. M. N. Kaul) and AIR 1971 SC 1722 (State of Maharashtra v. Dadamiya Babumiya Sheikh). On a perusal of the aforesaid decisions we are of the view that when a question crops up as to whether the guarantee is enforceable or not, it entirely depends upon the terms under which the guarantor or the surety bound himself. Under the law a guarantor or a surety cannot be made liable for more than he has undertaken. However, there are some exceptions to the aforesaid Rules, which have been expressed by the Supreme Court in the State of Maharashtra v. Dr. M. N. Kaul (supra) in the following terms:--
'To this there are some exceptions. In case of ambiguity when all other rules of construction fail, the Courts interpret the guarantee contra profer-entem that is, against the guarantor or use the recitals to control the meaning of the operative part where that is possible. But whatever the mode employed, the cardinal rule is that the guarantor must not be made liable beyond the terms of his engagement'.
In State of Maharashtra v. Dadamia Babumia Sheikh (supra), the Supreme Court held that the surety bond in Criminal cases must be held to be designed to an extent to serve public purpose; the terms of the surety bond must be strictly construed but, the construction must not be so unduly strained as to result in defeating its essential purpose. Therefore the cardinal rule remains unaffected that a guarantor or a surety must not be made liable beyond the terms of his engagement. The exceptions are, (1) that when there is an ambiguity and all other rules of construction fail the courts should interpret the guarantee contra proferentem (against the guarantor) or use the recital to control the meaning of the operative part where it is so possible; (2) that while construing a surety bond, the court must consider the object
and purpose of its execution and the construction should not be unduly strained as to result in defeating the essential purpose of the bond.
10. Therefore, relying on the principles of law enunciated by the Privy Council and the Supreme Court we hold that a guarantor or a surety cannot be made liable for more than what he has undertaken. We recollect an observation of Lord Westbury L. C. in Bleat v. Brown, (1862) 4 De GF & J 367 at p. 376 quoted and recalled by the Privy Council and the Supreme Court in connection with cases of guarantee and suretyship:--
'you bind him to the letter of his engagement. Beyond the proper interpretation of that engagement you have no hold upon him.'
Therefore, judging by the terms and conditions of the bond, we find it impossible to bind the petitioners for the past acts, actions or miscarriage of the Mouzadar, The petitioners had undertaken to guarantee and/or stood as sureties for the further act and conduct of the Mouzadar. We have very carefully scanned the terms of the bond and do not find anything whatsoever to make the petitioners liable under the terms of the bond for the past acts or liabilities of the Mouzadar. Under these circumstances, we are constrained to hold that the petitioners as sureties or guarantors were not liable under the terms and conditions of the present bond for any past debt or miscarriage of the Mouzadar and, as such, the contention of the petitioners must be upheld that the bond is not enforceable against the petitioners. We hold that the petitioners were not liable for any amount as surety under the bond in question and, as such, the Deputy Commissioner had no jurisdiction to commence the proceeding under Section 146 of the Regulation against the petitioner.
11. We hold that the submission made by the learned Advocate General that the Revenue Officer had proceeded against the petitioners against the bond executed by them for the years 1952-53, 1953-54 and 1954-55 is not borne out from any material on records. The learned Advocate General has failed to substantiate his submission.
12. Under these circumstances, we hold that the Deputy Commissioner had no jurisdiction to proceed against the the petitioners under Section 146 of the Regulation as the petitioners were not
liable under the bond in question for the past liabilities of the Mouzadar arising out of misappropriation of the money collected by him towards land revenue during the years 1952-53, 1953-54 and 1954-55. We also hold that the acts and actions of the Deputy Commissioner under Section 146 of the Regulation were without jurisdiction and the impugned orders of the Deputy Commissioner and the Board of Revenue are liable to be set aside on the score that the said orders are vitiated by errors apparent on the face of the records and no person properly instructed in law could have reached at the conclusions arrived at by the tribunals aforesaid.
13. In view of the decision arrived at by us we feel that we are not called upon to determine the other interesting points raised by the parties, namely, as to, (1) whether considering the object, purpose and surrounding circumstances of the execution of the contract it can be held that the petitioners had the intention to execute the bond in favour of the State of Assam authorising the Deputy Commissioner to realise the amounts secured by them (petitioners); (2) whether there was a misdescription of the party which did not per se nullify the contract or as ko whether it was an unilateral mistake committed by the petitioners which did not affect their liabilities; (3) whether in view of the facts and circumstances of the case we should interpret the guarantee contra proferentem (against the guarantor). Accordingly, we leave out of consideration the determination of the questions in a suitable case for the reasons set forth above. However, we fail to see as to how the provisions contained in Clause 16 of the Adaptation of Laws Order, 1950, are applicable in the present case,
14. In the result, the petitions are allowed, the impugned orders are set aside. Under the facts and circumstances of the case, we do not make any order as to costs.
D. Pathak, J.
N. Ibotombi Singh, J.