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N. Sulochana Vs. State of Andhra Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petn. No. 2523 of 1982
Judge
Reported inAIR1984AP173
ActsIndian Contract Act, 1872 - Sections 128
AppellantN. Sulochana
RespondentState of Andhra Pradesh and ors.
Appellant AdvocateP.L.N. Sarma and ;Krishnamohan Rao, Advs.
Respondent AdvocateGovt. Pleader for Excise
Excerpt:
contract - surety bond - section 128 of indian contract act, 1872 - petitioner sought refund of certain amount paid in pursuance of surety bond executed by her - petitioner undertook to pay arrears under surety bond - it cannot be said that surety bond not enforceable because amount of arrears yet to be determined - no merits found in petition and accordingly dismissed. - - failure to which the government may have the right to collect due amount from my personal property, as revenue arrears for the satisfaction of payment of this amount i pledge my property as entered in the list which is enclosed herewith in favour of the governor, government of andhra pradesh through the collector, hyderabad district and i promise that the government may collect the surety amount by sale of the..........may be issued for that year. it is in pursuance of those orders that the petitioner executed the surety bond on 26-9-1962. it would be appropriate to set out the surety bond in its entirety, since the argument of mr. p. l. n. sarma, the learned counsel for the petitioners, turns upon the language of this document. it reads:-'i. n. sulochana w/o. sathajah, r/0. lothkunda, taluq east, district hyderabad, do hereby acknowledge that sri. n. sathaiah son of sayanna r/o. lothukunta, in partnership with k. ramloo s/o. sayanna, r/o. saecunderabad and v. rajaiah resident of secunderabad has obtained the sendhi shops of group musheerabad for the year 1962-63 (i. e. 1372-f) on a monthly rental of rupees 60,000/- annually rs. 7,20,000/- after taking the licence to start the contract. the board of.....
Judgment:
ORDER

1. The petitioner is asking for a writ of mandamus, or any other appropriate writ or direction, directing the respondents to refund the sum of Rs. 75,934/- paid by her in pursuance of a surety bond executed by her. It is necessary to state a few facts, to appreciate the points raised herein.

2. For the excise year 1958-59, the petitioner's husband, along with some other Nallagutta Sendhi Group of shops. The Sendhi Group comprised, among other a village called Sikh village. This village is said to have been withdrawn later from the group. Be that as it may, at the end of the excise year, a demand in a sum of Rupees 75,928/- was made by the Government upon the licensees.

3. In September, 1962, auctions were held for the excise year 1962-63. The petitioner's husband, along with some other persons, happened to be the highest bidder in respect of musheerabad Sendhi Group of shops; but, the issue of licence was stopped by the Board of Revenue on the ground that the petitioner's husband was a defaulter for the amount referred to in the preceding paragraph. However, after further correspondence, it was directed by the Government that, in case a surely bond is furnished for the said arrears relating to Nallagutta Sendhi group of shops, licence for the Musheerabad group may be issued for that year. It is in pursuance of those orders that the petitioner executed the surety bond on 26-9-1962. It would be appropriate to set out the surety bond in its entirety, since the argument of Mr. P. L. N. Sarma, the learned counsel for the petitioners, turns upon the language of this document. It reads:-

'I. N. Sulochana W/o. Sathajah, R/0. Lothkunda, Taluq East, District Hyderabad, do hereby acknowledge that Sri. N. Sathaiah son of Sayanna R/o. Lothukunta, in partnership with K. Ramloo S/o. Sayanna, R/o. Saecunderabad and V. Rajaiah resident of Secunderabad has obtained the Sendhi shops of group musheerabad for the year 1962-63 (i. e. 1372-F) on a monthly rental of Rupees 60,000/- annually Rs. 7,20,000/- after taking the licence to start the contract. The Board of Revenue vide his letter No. 27847/62-EX/F4, dated 22-9-1962 has laid down conditions to get the security completed by Sri N. Sathaiah for the joint arrears of Rupees 75,928/- for the 1368-F. Therefore, I stand as a surety, I abide myself responsible for the said arrears and promise that if Sri N. Nathaiah fails to deposit the arrears on demand, myself shall be held responsible for the payment to the extent of Rs. 75,928/- from my own property, H. No. 1.7.387, situated at Musheerabad. Failure to which the Government may have the right to collect due amount from my personal property, as revenue arrears for the satisfaction of payment of this amount I pledge my property as entered in the list which is enclosed herewith in favour of the Governor, Government of Andhra Pradesh through the Collector, Hyderabad District and I promise that the Government may collect the surety amount by sale of the pledged property as land revenue arrears. I also promise that this property is my own and also possessed by me and there is no share or right of any others in it, and free from all demands whatsoever. Till the due amount of arrears of which I stood surety is cleared off, I will not sell, mortgage or transfer, or encumber this property in any way .. .... .... ....'

4. The licensees of Nallagatta Sendhi Group of shops filed a suit, O. S. No. 2/1966, on the file of the Iind. Additional Judge, City Civil Court, Hyderabad, for a declaration that the demand for arrears made against them in a sum of Rs. 75,928/- was illegal and bad. The suit was dismissed on 27-2-1971, against which the plaintiffs therein filed CCC. A. No. 180/1973. Initially, no stay was obtained; but, when the property given by the petitioner by way of security was brought to sale, the plaintiffs, (appellants in that appeal) filed CMP No. 8739/1973, whereupon stay was granted on condition that they deposit a sum of Rs. 35,000/- within three weeks. This condition was not complied with, with the result that the petitioner's house was brought to sale and sold. An appeal was preferred by the petitioner to the District Collector, alleging several inrregularities in the conduct of the auction, which appeal was allowed by the District Collector. Thereafter the property was again brought to sale. At that stage, the petitioner filed an application dated 8-11-1974, requesting that she may be allowed to pay the amount in instalments subject to the condition that, if the appeal is allowed, the amount deposited by her should be refunded to her. No orders appear to have been passed upon this application. Be that as it may, the petitioner deposited the entire amount of arrears with the result that the surety bond got discharged.

5. CCC. A. No. 180/73 came to be allowed by a Bench of this Court by its judgment and decree dated 28-10-1976. It would be appropriate to set out Clauses 1 to 4 of the said decree :-

'(1) That, the decree of the Court of the II nd Additional Judge, City Civil Court, in O. S. No. 2/66, be and hereby is set aside;

(2) that, the demand made by the respondents defendants for Rs. 75,928/- towards the arrears of excise contract for Nallagutta group of Sendhi shops for the year 1958-59 including the arrears of excise contract in respect of a Sendhi shop at Sikh village be and hereby is declared as illegal and void and could not be enforced;

(3) that, the respondents-defendants are consequently, restrained from recovering the said amount from the appellants-plaintiffs,

(4) that, it shall however be open to the respondents-defendants to institute fresh proceedings in that behalf and after giving the appellants-plaintiffs reasonable opportunity, determine what amount is payable by the plaintiffs, towards the arrears of excise contracts in respect of Nallagutta group of sendhi shops for the year 1958-59 after excluding what they would have been otherwise liable to pay in respect of a Sendhi shop at the Sikh village ... ... ... ... ... ....'After this decree was passed by this Court, the petitioner field an application before the Commissioner for refund of the amount deposited by her, contending that she had deposited that amount subject to the condition that it should be refunded to her in case the appeal was allowed. This application was, however, rejected by the Commissioner and also by the Government subsequently. It is then that the present writ petition is filed.

6. Meanwhile, it appears in pursuance of clause (4) of this Court's decree, that Excise authorities redetermined the amount of arrears at Rs. 62,057.39 ps. On appeal, however, the Government is said to have set aside the said determination on the ground that it was made without notice to the affected parties. Accordingly a fresh determination was ordered. The fresh determination is still in progress.

7. The contention of Mr. P. L. N. Sarma, the learned counsel for the petitioner, is firstly that the surety bond furnished by the petitioner was in respect of the demand in a sum of Rs. 75,928/- and once that demand in a sum of Rs. 75,928/- and once that demand has been set aside by the High Court, the surety bond automatically gets discharged. His contention is that the surety bond was not in respect of the arrears, nor was it in respect of the liability of the licences of Nallagutta group of shops but that, it was in respect of the demand in a sum of Rs. 75,928/-. Counsel contends that, since that demand has been set aside and a fresh demand is being raised, the respondents are not entitled to invoke the surety bond in respect of fresh demand. Secondly, the learned counsel contended, the deposit of the said amount of Rupees 75,928/- by the petitioner was subject to the condition stated by her in her application dated 8-11-1974 and, in terms of that condition, the amount is liable to be refunded to her, once the appeal is allowed.

8. I will dispose of the second contention first, for the sake of convenience. It is true that the petitioner made an application dated 8-11-74 offering to deposit the entire arrears of Rs. 75,928/- on condition that the said amount shall be refundable to her in case the appeal n the High Court is allowed; but, there is no material before me to show that the said condition was accepted by the respondents. On the contrary it is stated in the counter-affidavit that the said condition was not agreed to, and the house was put to sale on 23-12-1974 and further that as and when the house was brought to sale, the petitioner was paying some amount; that is how the entire arrears were collected. It, therefore, cannot be said that just because the appeal is allowed - assuming that the judgment of this Court can be construed as allowing the appeal absolutely - the petitioner is entitled to refund.

9. Now I will take up the first and the main contention. I have already set out the surety bond in its entirety. A reading of the bond clearly discloses that security was furnished not in respect of any particular, demand, but it was furnished 'for the joint arrears of Rs. 75,928/- for the year 1363F'. This expression has to be understood in the light of the letter of the Board of Revenue dated 22-9-1962, referred to in the bond. The Board of Revenue's letter refers to the Govt. Memo. No. P/5883/61-1 dated 21-9-1962, and then requests the Deputy Commissioner of Excise to vacate the stay as per the Government's order and 'to issue licence to the Contractor in question securing sound security for the due amount pending with defaulters in question for the year 1958-59 to the tune of Rs. 75,928/- which have not been secured by any property'. Undoubtedly, the expression 'the joint arrears of Rs. 75,928/- for the year 1368F' refers to the arrears due in respect of Nallagutta group of Sendhi shops for the excise year 1958-59. Now, once it is held that the surety bond is in respect of arrears for the year 1958-59. Now, once it is held that the surety bond is in respect of arrears for the year 1968-Fasli (1958-59) relating to Nallagutta group of shops, it follows that the surety bond enures and subsists until and unless the said arrears are wiped out. It is not possible to agree with Mr. P. L. N. Sarma, the learned counsel for the petitioner, that once the demand in a sum of Rs. 75,928/- is set aside, the surety bond gets discharged. The judgment of the High Court does not declare that there are no arrears due from the licensees in respect of the Nallagutta group of Sendhi shops. All that it says is that, the demand in a sum of Rs. 75,928/- is bad, at the same time making it clear that it shall be open to the respondents to institute fresh proceedings, after giving due opportunity to the appellants-plaintiffs therein, to redetermine the amount payable by them towards the arrears of the said execise contract. In the light of language of the surety bond and the decree of the High Court, it is idle to contend that, because the demand in a sum of Rs. 75,928/- is set aside, the surety bond gets discharged, the surety bond is for the arrears, and not for any particular amount. Even otherwise, I am not satisfied that, merely because a particular amount of arrears is mentioned in the surety bond, any reduction in the arrears would amount to variation of the surety bond resulting in discharge of the surety. No decision has been brought to my notice saying so.

10. Learned counsel for the petitioner relied upon certain decisions to which a brief reference is necessary. The first decision is in Mahomed Ehiya v. Valliappa Chettiar, AIR 1936 Mad 576. This decision lays down the general principle that, if there is any variation in however small a particular in the original contract, the performance of which the surety is securing, then the surety is absolved. It has been held that the surety can be held responsible only for what he has contracted, and not for anything else. I am unable to see how the said principle is applicable in the facts of the present case. There is no variation of the original contract or agreement, if any, between the Government and the licensees in this case, so as to result in discharge of the petitioner's surety bond.

11. The other decision cited is in Raman Adiyoty v. Kannan Nambiar, AIR 1940 Mad 725. This decision was rendered with reference to Section 72 of the Contract Act. There, a certain deposit was made with a view to avert an execution sale. The sale was held but, subsequently set aside on an application made under O. XXI, R. 89, C. P. C. The depositor then sued for refund of the amount, which the Court held he was entitled to under the principle of Section 72 of the Contract Act. I am unable to see the relevance of the principle of this decision, because the deposit was made in this case, by the petitioner, not with a view to avert any sale, but in pursuance of a surety bond executed by her which, it is not here case, was executed under any coercion or duress, or for averting any sale.

12. The last decision cited is in Pratapsingh v. Keshavlal, AIR 1935 PC 21. This decision affirms the principle that a surety bond should be construed strictly; and if there is any variation in the original contract, the surety gets discharged. The following passage in the decision is particularly relied upon by Sri Sarma:-

'...................... It must always be recollected in what manner a surety is bound. You bind him to the letter of his engagement. Beyond the proper interpretation of that engagement you have no hold upon him. He receives no benefit and no consideration. He is bound therefore merely according to the proper meaning and effect of the written engagement that he has entered into. If that written engagement is altered in a single line, no matter whether it be altered for his benefits, no matter whether the alteration be innocently made, he has a right to say: 'The contract is no longer that for which I engaged to be surety; you have pu7t an end to the contract that I guaranteed, and my obligation, therefore, is at an end.' Now, I construe this engagement to be an engagement to be answerable for flour supplied in conformity with the requisitions of this contract. Then I ask de facto was any flour supplied to Millar in conformity with the requisition of the contract. The answer of the defendants themselves is an admission that none such was supplied. The conclusion is plain therefore that no legal obligation so far as the surety is concerned arises upon what has been done under this contract so construed, as I hold it ought to be construed, and as involving the representation that I have stated .......... .......... ............'

There can be no dispute about the principle; but, I am unable to see any variation or any alteration in the terms of the original agreement between the Government and the licensees. Merely because the maount of arrears is yet to be determined, it cannot be said that the surety bond which was executed by the petitioner undertaking to pay the arrears, is not enforceable. Whatever be the sum of arrears the liability of the petitioners subsists, so long as the arrears exist. Of course, she cannot be made liable for any amount over and above Rs. 75,928/- but she is certainly liable for that amount, or for any lesser amount.

13. For the above reasons, it must be held that there are no merits in this writ petition which is, accordingly, dismissed with costs. Advocate's fee : Rs. 200/-.

14. Petition dismissed.


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