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Pannaji Devichand Vs. Basappa Virappa Bellary - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberFirst Appeal No. 309 of 1941
Judge
Reported inAIR1943Bom243; (1943)45BOMLR510
AppellantPannaji Devichand
RespondentBasappa Virappa Bellary
Excerpt:
.....(act v of 1908), 0. xli, rule 6; form no. 3, app. g-order for execution of decree appealed from-surety bond restricting liability of sureties to decision in appeal to high court-whether liability extends to decision by privy council an appeal-words 'by the appellate court' in form no. 3 whether connote 'by all further appellate courts'-rules for construction of surety bond.;the plaintiff, who had obtained a decree against the defendants, filed a darkhast to execute it, when an appeal by the defendants to the high court was pending. the plaintiff was allowed to execute the decree, under order xli, rule 6 of the civil procedure code, 1908, on his furnishing two sureties. the surety bond mentioned the serial number of the appeal in the high court and provided that in the event of the..........opponents nos. 2 and 3. they also filed a separate application against the sureties to enforce the surety bond. the contention of the sureties was that they were not liable on the terms of the bond because their liability was restricted only to their fulfilling the obligations arising under any decree passed by the appellate court, viz. the high court, and that the liability which the appellants were seeking to impose upon them arose not under the decree of the high court but under the decision of the privy council for which they had not bound themselves in the surety bond. the material terms of the surety bond are as follows :-defendants nos. 1, 2 and 3 have filed in the high court appeal (stamp) no. 1168 of 1929 to have the decree in suit no. 16 of 1927 set aside, and if in the said.....
Judgment:

Divatia, J.

1. This is an appeal arising in execution of a money decree. The original suit, No. 16 of 1927, was brought by the shop of Kapurji Magniram against the present appellants to recover a certain amount. The suit was decreed in the plaintiff's favour and the present appellants filed an appeal to the High Court which was First Appeal No. 136 of 1929. this Court confirmed the decree of the trial Court, and the appellants then applied for leave to appeal to the Privy Council. The leave was granted and the appellants succeeded in their appeal. The decree of the High Court was reversed and the suit was dismissed with costs throughout. During the pendency of the First Appeal in this Court, the plaintiff had filed Darkhast No. 30 of 1929 for executing the decree of the trial Court and had also recovered the decretal amount from the appellants. The appellants had applied to this Court for stay of execution, but the plaintiff was willing to furnish security, and it was therefore directed under Order XLI, Rule 6, of the Civil Procedure Code, 1908, that the plaintiff might be allowed to execute the decree on furnishing security to the satisfaction of the) trial Court. He accordingly furnished two sureties who are opponents Nos. 2 and 3 and the respondents in the present appeal. By virtue of the decision of the Privy Council the appellants became entitled in restitution to recover the amount which they had paid to the respondent-plaintiff, and they, therefore, applied to this Court under Order XLV, Rule 15, for transmission of the Privy Council decree for execution to the trial Court. That application being granted, the appellants filed the present darkhast No. 23 of 1937 to recover the amount with interest and costs from the original plaintiff as well as from the two sureties, opponents Nos. 2 and 3. They also filed a separate application against the sureties to enforce the surety bond. The contention of the sureties was that they were not liable on the terms of the bond because their liability was restricted only to their fulfilling the obligations arising under any decree passed by the appellate Court, viz. the High Court, and that the liability which the appellants were seeking to impose upon them arose not under the decree of the High Court but under the decision of the Privy Council for which they had not bound themselves in the surety bond. The material terms of the surety bond are as follows :-

Defendants Nos. 1, 2 and 3 have filed in the High Court Appeal (Stamp) No. 1168 of 1929 to have the decree in suit No. 16 of 1927 set aside, and if in the said appeal the decision goes against the plaintiff, then he will pay into Court the entire amount that may be payable to defendants Nos. 1, 2 and 3 and take a receipt, but if he fails to act according to the terms of the; said decree, the entire amount should be recovered by the sale of the properties mentioned below which are hereby mortgaged and if the proceeds of the sale of the said properties are insufficient to pay the amount due, we severally and our legal representatives will be personally liable to pay the balance up to Rs. 40,000. To this effect, we execute this security bond.

2. The learned Judge below has accepted the contention of the sureties and held that the liability of the sureties was limited to the obligation of acting according to the decree passed by the High Court in the First Appeal, and that it could not be extended to an obligation arising from a further appellate decree setting aside the decree of the High Court. After referring to several decisions, the learned Judge held on the construction of the bond that the sureties did not agree to be bound by the decision of the final appellate Court but only by the decree in the appeal which was pending in the High Court. As a result it was directed that the darkhast should proceed against opponent No. 1, i.e. the original plaintiff, alone, and it was dismissed against opponents Nos. 2 and 3.

3. The darkhastdars, i.e. the original defendants, have now preferred this appeal, and the main contention urged by Mr. Thakor on their behalf is that the surety bond was given under Order XLI, Rule 6, of the Civil Procedure Code, and that that rule provides for due performance of the decree or order of the Appellate Court which includes any higher Court varying or reversing the decree of that Court. We do not think, however, that on the terms of the surety bond, which refer only to a particular appeal pending in the High Court, the sureties' liability could be extended to a decision given by a Court reversing or varying the decree in that appeal.

4. In support of his argument Mr. Thakor has relied on the decision of the Privy Council in, Raghubar Singh v. Jai India Bahadur Singh (1919) L.R. 46 IndAp 228 and on the decision in Irangauda Shidramagauda v. Irbasappa. I.L.R. (1926) 51 Bom. 31 In the Privy Council case the bond was passed by the sureties to the Court of the Judicial Commissioner of Oudh sitting in appeal, and it expressly provided that the sureties would be liable to the extent of rupees one lac for the observance of any order which might be passed by that Court. The decision of the Judicial Commissioner was reversed by the Privy Council and the matter was remanded to that Court which thereafter decided that the defendant for whom sureties had given the bond was liable to pay rupees one lac to the plaintiff. Thus the order of payment was ultimately passed by the Court of the Judicial Commissioner to which the bond was passed and not by the Privy Council, Their Lordships expressly observed that there was no difficulty in the language of the surety bond, and that 'the obligors make themselves liable for the amount of one lac as security for any order that might be passed by; the Court of the Judicial Commissioner, not the first order but any order; and the ultimate orders of the Judicial Commissioner were that of March 4, 1907, decreeing that the claim of the widow be dismissed as to all but a few villages, and that of November 20, 1916, by which, inter alia, the assessment of the Subordinate Judge finding that the mesne profits amounted to more than three lacs of rupees was affirmed.' It was accordingly held that the sureties were liable on the terms of the bond, and there is no doubt that they were so liable for any order that was finally made by the Judicial Commissioner. In the present case, however, there is no subsequent order passed by the High Court. The Privy Council reversed the decision and dismissed the suit. All that the High Court had to do was to transmit the order of the Privy Council to the trial Court. Mr. Thakor, however, relies upon a passage in their Lordships;' judgment where they observed that the construction that the sureties would be only liable in the event of the Judicial Commissioner deciding against them and not liable if that Court decided in their favour though the decree was finally reversed in the Privy Council would give strange results. It was observed by their Lordships that according to that construction the sureties would have to pay the amount if the Court decided against the Rani for whom they gave surety even though that decision was reversed by the Privy Council and that it would be strange if the language of the bond had been such as to create a kind of wagering contract of that nature. The decision of their Lordships was, however, based on the language of the bond, and that language was clear enough to include the liability of the sureties on the ultimate order of the Judicial Commissioner after remand. In each case, therefore, it would be a question of the construction of the particular bond. In the present case, the surety bond clearly restricts the liability of the sureties to the decision of the. High Court in a particular matter, viz., Appeal (Stamp) No. 1168 of 1929. It may be observed here that form No. 3 given in Appendix G to the Civil Procedure Code relating to the surety bond to be given under Order XLI, Rule 6, simply mentions that the property was to be restored if the decree of the Court was reversed or varied by the Appellate Court. However, the liability of the surety would be governed by the terms of the bond which may not be according to the form. The words in the surety bond which we have to consider are more restricted than those in the form, because the number of the appeal in the High Court is mentioned and the liability is expressly restricted to the decision in that appeal. It has been laid down in several cases, one of which is the decision of our own High Court in Jayappa Lokappa v. Shivangouda Dyamangouda I.L.R. (1927) 52 Bom. 72 that a surety bond is to be strictly construed in favour of the surety. If, therefore, there is any ambiguity in the bond, it is to be construed in favour of the surety. If the words of the present bond are regarded as ambiguous, though we do not think they are, the benefit should be given to the sureties. We do not think also that the observations of their Lordships in Raghubar Singh's case relied upon on behalf of the appellants amount to an opinion that whatever may be the language of the bond given to a particular Court, the liability created thereunder continues till the decision of the final Court of appeal or revision.

5. The decision in Irangouda Shidramgouda v. Irbasappa I.L.R. (1926) 51 Bom. 31 relied on by the appellants could also be distinguished on the same ground. The defendant there had to produce certain moveables and the surety had passed a bond guaranteeing the defendant's undertaking to produce them. After the decision of the appeal the moveables were to be produced before the very Court to which the bond was passed, even though the production of the moveables was in pursuance of the order made by the appellate Court. The decision in Raghubar Singh's case was rightly applied in that case, and it was held that the surety had to comply with the order of the same Court to which the bond was passed just as in the Privy Council case the sureties had to comply with the final order of the Judicial Commissioner's Court to which the bond was passed. The decision was based on the construction of the particular bond, and it was observed that the surety cannot escape liability in absence of any clear indication in the bond that only the Court to which the bond was passed was meant and not the Court of appeal.

6. In our conclusion that the sureties are not liable on the terms of the bond, we find ourselves in agreement with the decision of the Madras High Court in Paramasivam v. Ramasami [1939] Mad. 290 where the bond was similar to the one in the present case. It stated :-

If the C.M.A. 375 of 1931 preferred by me to the High Court against the order appointing receiver is decided in favour of the said first plaintiff, I shall pay into Court the one year's net income of Rs. 1,600-7-4 as aforesaid.

7. The appellant there had urged the same arguments which have been urged before us, and it was contended, among other things, relying upon the decision in Raghubar Singh's case that the Court to which the bond was passed would include the higher Court of appeal. The learned Judges were of the opinion that if the parties had drafted the bond more carefully and had thought of every possible eventuality, they would have made it clear that the surety shall be liable or not according to the final decision of the High Court in the matter, but that on the language of the bond, the defendant was not liable for carrying out the decree in appeal under the Letters Patent. The appeal was preferred from the decision of a single Judge to a Division Bench of the same High Court, so that the Court was the same and still it was held that the defendant was not responsible for carrying out the appellate decree because the bond was given for the decision of the particular appeal mentioned in it and not of any further appeal. The decision of their Lordships in Raghubar Singh's case was distinguished on the same grounds on which we have distinguished it. There is also a decision of the Nagpur High Court in Shri Madho Rao Narayan Rao Ghatate v. Harinath Bhikaji Baxi [1937] Nag. 276 which is based on the' same reasoning as in the Madras case.

8. Although the words of the surety bond before us are not according to the words used in form 3 of Appendix G of the Civil Procedure Code and are more restricted than those in the form, it is doubtful whether the sureties would have been liable even if they were according to the form. The words ' by the Appellate Court' in the form do not necessarily connote 'by all further Appellate Courts.' It is a question of intention in each case in what sense the words were understood by the parties to the bond. Ordinarily a surety understands that he would be bound to obey only the order of the Court to which he is passing the bond and not the order of any other Court. In our experience, sufficient attention is not paid to the words of the form while drafting a surety bond nor is the language used precise and unambiguous in most cases. It is, therefore, very desirable that the standard form of a surety bond should be so expressly worded that the surety, who is generally a layman, would clearly understand the extent of the liability he is incurring. To prevent the surety bond from being in the nature of a wagering contract as was stated by the Privy Council in Raghubar Singh's case one of the ways would be to amend the form as the Madras High Court has done by adding the words 'or in any other appeal or appeals from the decree of the said Court' after the words 'be reversed or varied by the Appellate Court.' A similar amendment might also be made in Rule 6 itself. Form No. 2 relating to the order of security under Order XLI, Rule 5, may also require a like amendment.

9. As a result, the order of the lower Court is confirmed and the appeal is dismissed with costs in one set.


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