Skip to content


Raghavendra Gururao Naik Vs. Mahipat Krishna - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case Number Second Appeal No. 178 of 1922
Judge
Reported inAIR1925Bom244; (1925)27BOMLR178
AppellantRaghavendra Gururao Naik
RespondentMahipat Krishna
DispositionAppeal dismissed
Excerpt:
.....act (ix of 1872), section 145 - acknowledgment of debt by surety- decree against surety-payment by surety-surety can recover the amount from principal debtor-money rightfully paid under the guarantee.;the sureties to a money-bond acknowledged their liability before the claim against the principal debtors time-barred. the creditor sued the sureties on the bond and obtained a decree against them. in execution the amount was recovered from one of the sureties. the surety having sued the principal debtor for the amount : -;that the principal debtor was bound to make good the amount to be the surety under section 145 of the indian contract act 1872, for the amount must treated as a sum rightfully paid under the guarantee. ;suja v. pahlwan (1877) p.r. no. 30 of 1878, dissented from. - section..........he had filed suite against defendant no. 1 the surety, and defendant no. 2 as representing the principal debtor. we are not concerned with those suits. in fact it appears from the judgment of the trial court that one of the suits was pending at the time of the judgment. a sum of rs. 800 was paid to shidhraj on september 1, 1915, during the pendency of the application for execution of the decree obtained by shidhraj against the sureties. the present suit was filed on september 2, 1918, to recover the said sum of rs. 800 just within three years against defendant no. 1, his co-surety, and defendant no. 2, the son of the principal debtor. defendant no. 1 did not appear to contest the suit. defendant no. 2 raised various defences and several issues were raised. the learned trial judge.....
Judgment:

Lallubhai Shah, Kt., Acting C.J.

1. The facts which have given rise to this second appeal are these: On October 8, 1895, the father of defendant No. 2 executed a money bond for Us. 2,000 payable after five years in favour of one Shidhraj Desai. The present plaintiff and defendant No. 1 were sureties in respect of this debt. The principal debtor did not pay the debt nor did he acknowledge his liability to the creditor, and the claim against him became time-barred on October 9, 1903. The sureties, how- ever, paid one rupee as interest first on October 5, 1903, and then on October 1, .1906, Shidhraj sued the present plaintiff an(l defendant No. 1 on the bond in 1909, and obtained a decree against them, as the claim was kept alive by the payment of interest on two occasions before the expiration of the period of limitation. Thereafter ho recovered from the present plaintiff different sums on different occasions. It appears that in respect of certain sums realised from the plaintiff, he had filed suite against defendant No. 1 the surety, and defendant No. 2 as representing the principal debtor. We are not concerned with those suits. In fact it appears from the judgment of the trial Court that one of the suits was pending at the time of the judgment. A sum of Rs. 800 was paid to Shidhraj on September 1, 1915, during the pendency of the application for execution of the decree obtained by Shidhraj against the sureties. The present suit was filed on September 2, 1918, to recover the said sum of Rs. 800 just within three years against defendant No. 1, his co-surety, and defendant No. 2, the son of the principal debtor. Defendant No. 1 did not appear to contest the suit. Defendant No. 2 raised various defences and several issues were raised. The learned trial Judge held that defendant No. 2 was liable for the payment made by the plaintiff in satisfaction of the decree obtained by the original creditor against him in the suit of 1909. It is not necessary for the purposes of this appeal to refer to the various issues in detail. Accordingly a decree was passed for the amount claimed against defendant No. 2, and for a moiety of that amount against defendant No. 1.

2. Defendant No. 2 appealed to the District Court, and the learned Assistant Judge, who heard the appeal, came to the same conclusion as the trial Court in respect of the liability of the defendant No. 2 as the principal debtor in respect of the sum paid by the surety in satisfaction of the decree obtained against him by the original creditor, and confirmed the decree of the trial Court. Both the lower Courts have dealt with this cane very carefully.

3. In the appeal before us, on behalf of defendant No. 2 it is urged that he is not liable in respect of this sum paid by the surety, that at the date when the suit was filed against the surety in 1909, the claim against the principal debtor had become time-barred long since, that as regards the present plaintiff and the Co-surety, the claim was kept alive by their own acts consisting of the payments of interest on two occasions; that under Section 145 of the Indian Contract Act, the surety is entitled to recover from the principal debtor whatever sum lie has rightfully paid under the guarantee, but no sums which he has paid wrongfully, and that the sum paid under the circumstances of this case must be treated as a sum paid wrongfully within the meaning of the section. There is no reported decision of any High Court directly bearing on this point; but there is a decision of the Punjab Chief Court in Suja v. Pahlwan (1877) P.R. 30 upon which the appellant has relied.

4. On the other hand, on behalf of the plaintiff it is contended that though the claim of the creditor against the principal debtor might be time-barred, it was open to him to keep the debt alive with a view to get more time for payment of the debt, which he was undoubtedly liable to pay at the time when he paid interest to keep the debt alive, that in any case when he paid the sum in satisfaction of the decree passed against him in respect of his liability as a surety, he made the payment rightfully under the guarantee, within the meaning of Section 145 of the Indian Contract Act, and that he is entitled to recover it from the principal debtor, quite independently of the consideration whether the claim of the original creditor was barred against the principal debtor or not.

5. We have considered the arguments urged on both sides, and though the point is not covered by any authority which is binding upon us, we have carefully considered the arguments put forth in the judgments of the learned Judges in the case of Suja v. Pahlwan (1877) P. R. 30. Section 137 provides that mere forbearance on the part of the creditor to sue the principal debtor does not discharge the surety in the absence of any provision in the guarantee to the contrary. It has been held by this Court in Hajariwial v. Krishnarav I. L. R. (1881) 5 Bom. 647 that though the claim against the principal debtor may be barred, the creditor can enforce his right against the surety. In this case the effect of the various sections of the Indian Contract Act has been considered with reference to a state of facts under which by operation of law, though the claim against the principal debtor was barred, it was enforceable against the surety. The same view was taken in Sankana Kalana v. Virupakashapa, Ganeshapa I. L. R. (1883) 7 Bom. 146 and that view is also accepted by the Calcutta and Madras High Courts in Krishto Kishori Chowdhrain v. Radha Romun Munshi I. L. R. (1885) Cal. 330 and Subramania Aiyar v. Gopala Aiyar I. L. R. (1909) Mad. 308. Though this view is not accepted by the Allahabad High Court, so far as we are concerned, we are bound by the decisions of this Court; and is not disputed before us that though the claim against the principal debtor may be barred, it is not necessarily barred against the surety. In other words, the liabilities of the principal or and the surety to the creditor are not absolutely interdependent, and though the remedy as against the one may be barred, it does not follow that it is necessarily barred as against the other.

6. Further, it has been held by this Court in Gopal Daji v. Gopalbin Sonu I. L. R. (1903) 28 Bom. 248 : 5 Bom. L.R. 1020 that the payment of interest by the debtor within limitation does not give a fresh starting point for limitation against the surety. Having regard to the ratio decidendi of this case, and that of Brajendra Kishore Roy Chowdhwry v. Hindustan Co-operative Insurance Society, Ld. I.L.R. (1917) Cal. 978, it is clear that the surety may effectively keep alive his liability by his own act without in any way affecting the plea of limitation in favour of the principal debtor. According to these two cases, the principal debtor and the surety can each keep his liability alive, though the remedy of the creditor may be barred as against the other on account of limitation. That being ho, it is clear that in 1909 the surety was liable in respect of the amount for which he had stood surety at the time the original bond was passed by the principal debtor. In keeping the debt alive against himself, he cannot be said to have acted improperly or wrongfully. If he was not in a position to pay, it was open to him to secure extension of time for payment by keeping his liability alive; and it is clear in this case that as a decree was passed against him in favour of Shidhraj in the suit of 1909, he was bound to pay the decretal debt. It is not reasonable, in my opinion, to hold that he paid the sum wrongfully within the meaning of Section 145 of the Indian Contract Act when he paid it in satisfaction of a decree passed against him. It must be treated as a sum rightfully paid under the guarantee. The liability of the principal debtor to indemnify the surety is provided for by Section 145 and is in no way dependent upon the existence of his original liability to the creditor. It maybe said that this view may lead to an indefinite extension of the period of the liability of the principal debtor, which cannot be enforced directly against him on account of the bar of limitation. It is possible that in some cases, as in the present case, it may so happen; but I am unable to think that there is any particular hardship or injustice to the principal debtor involved in his being called upon to indemnify the surety. The cause of action in respect of his liability to indemnify the surety arises when the surety in fact pays the amount under Section 145 of the Indian Contract Act. Even if it involves worns hardship, I do not think it can afford any reasonable basis for holding- that the payment made by the surety under circumstances, such an we have in thin case, is wrongful, I may point out that in the present case it has been definitely found by the lower Courts that there was no collusion whatever between the surety and the original creditor. The only ground upon which it is suggested that the payment made by the surety under the decree against him is wrongful within the meaning of Section 145, is that by his own act he has kept alive his liability which would otherwise have become unenforceable on account of limitation. That in not a sufficient ground for disallowing the right which is given to him under h. 145 of the Indian Contract Act.

7. I am unable to agree with the reasons given in Suja v. Pahlwan for the contrary view. It is not necessary to attempt to generalize as to when a payment can be said to have been wrongfully made by the surety within the meaning of Section 145. It is enough for the purposes of this case to observe that the act of the surety in keeping his liability alive by bona fide payments of interest within Mine is not such as could make the payment by him in pursuance of the decree obtained against him by the creditor wrongful within the meaning of the section.

8. No other point is urged in support of the appeal. It is not clear why there are different suits in respect of payments made by the plaintiff from time to time, An no point is made on that score before us, it is not necessary to consider it.

9. We, therefore, dismiss the appeal and confirm the decree of the lower appellate Court with costs to respondent No. 1.

Kincaid, J.

10. I concur.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //