1. This is a plaintiff's appeal under the Letters Patent from a decision of a learned Judge of this Court. On 20th April 1934 a hundi for Rs. 1115-10-0 was drawn by firm Kedar Nath Ganga Prasad. The drawee was firm Dipchand, Ganga Prasad and the payee was Ganesh Ram Dhanraj, defendant 1. On that same date defendant 1 sold this hundi to the plaintiff firm and on 23rd April 1934 the latter sold it to defendant 2, Suraj Mal Shankal Chand. The latter endorsed it to the Ahmedabad branch of the Central Bank, defendant 3, and the bank presented it for payment, but it was dishonoured. The plaintiff appellant thereafter paid defendant 2 and then he instituted this suit against the three defendants, praying for a decree against whichever of them might be found by the Court to be liable. The trial Court decreed the suit for Rupees 1094-4-0 against defendant 2 on the ground of negligence on the part of that firm. The lower appellate Court found as a fact that there had been no negligence either by defendant 2 or by defendant 3 and that none of the defendants had incurred any liability to the plaintiff appellant. The learned Judge refers to Section 37, Negotiable Instruments Act, and to Section 134, Contract Act, and he is of opinion that when the plaintiff appellant omitted to implead the drawer, that is to say the principal debtor, which he suspects was due to collusion, he must be deemed to have discharged the surety, namely defendant 2; but the learned Judge has overlooked the provisions of Section 38, Negotiable Instruments Act, which provides:
As between the parties so liable as sureties, each prior party is, in the absence of a contract to the contrary, also liable thereon as a principal debtor in respect of each subsequent party.
2. We have also been referred by learned Counsel for the appellant to Section 137, Contract Act, which enacts as follows:
Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety.
3. The learned Judge has not mentioned this section, probably. The conclusion at which the learned Judge arrived was that there was no liability against any of the defendants, and in the result he dismissed the suit. There was an appeal to this Court and it has been dismissed by a learned Judge. The learned Judge of this Court was apparently of opinion that the person upon whom liability rested was defendant 1, namely the payee, who sold the hundi to the plaintiff appellant on the date on which it was drawn, and he would probably have followed the decision of this Court in Kanji Mal v. Durga Prasad ('25) 12 A. I. R. 1925 All. 555; but having regard to a decision of the Privy Council in Mahomed Khaleef Shitazi and Sons v. Les Tanneries Lyonnaises ('26) 13 A. I. R. 1926 P. C. 34, the learned Judge felt himself constrained to hold that he had no power under Order 41, Rule 33, to pass a decree in favour of the plaintiff appellant against defendant 1. He says:
Upon the whole, had I not been of opinion that the appeal was not maintainable in view of the provisions of Order 41, Rule 33, I should probably have been inclined to hold that defendant 1, who had received cash from the plaintiffs and in respect of whom the plaintiffs could not be saddled with any negligence, were liable to repay the money to the plaintiffs.
4. We have examined the judgment of the Judicial Committee in the above-mentioned case and we are by no means satisfied that it supports the proposition that it was not open to the learned Judge to apply the provisions of Order 41, Rule 33, to this second appeal. In order to understand the case which was before the Judicial Committee it is necessary to state briefly certain facts. A certain person sued a tannery company and its agent for damages for breach of two contracts. The trial Court decreed the suit against the company in respect of both contracts and made an order for costs only against the agent. The plaintiff did not appeal against the dismissal of the suit as against the agent; but the agent and the company both appealed. The High Court modified the decree by making the company liable only in respect to one contract and it allowed the appeal of the agent. Thereupon the plaintiff appealed to the Privy Council, impleading both the company and the agent. He contended that the agent was liable upon the contract in respect to which the High Court had dismissed the suit as against the company. Their Lordships of the Privy Council held that the appeal against the agent was in effect a direct appeal from the trial Judge and that this was not allowable. They held that the provisions of Order 41, Rule 33, Civil P. C., were not intended to apply to such an appeal.
5. On behalf of the respondents before us it is contended that that decision is conclusive of the fact that the learned single Judge was not competent to apply the provisions of Order 41, Rule 33; but we find it difficult to accept this contention. There is no discussion of Order 41, Rule 33, in the judgment of the Judicial Committee and their Lordships have given no reasons for their view. Possibly they may have thought that the proposition was too obvious to require any reasoning--and indeed it would be obvious if, as seems highly probable, a joint and several liability on the part of the company and the agent was alleged in the plaint of that suit. The decision of the Judicial Committee was based on the facts of that particular case and we do not think it can be held to be authority for the proposition that the provisions of Order 41, Rule 33, Civil P. C., can in no circumstances be applied in a second appeal. The plaintiff could only have a decree against one of the defendants and he obtained a decree against defendant 2. There was, therefore, no occasion for him to prefer an appeal; but it was clearly open to the lower appellate Court, when holding that no liability rested on defendant 2, to decree the suit against defendant 1.
6. It is contended, however, on behalf of the respondents that the learned Judge of the lower appellate Court was never asked to apply the provision of Order 41, Rule 38, in favour of the plaintiff against defendant l ; and therefore, it is argued, this Court is precluded from applying those provisions. It is true that the question of applying Order 41, Rule 33, Civil P. C., finds no place in the list of 'points for determination' in the early part of the judgment of the lower appellate Court; but we have read that judgment with care and it appears to us that the learned Judge has in fact considered the question of the liability of each of the three defendants. Towards the end of the judgment defendant 1 is specifically mentioned and the learned Judge finds that none of the three defendants has incurred any liability. The learned Judge has not specifically mentioned Order 41, Rule 83, but we do not think it can be held that these provisions were not in his mind. It was open to him to apply them so as to give the plaintiff satisfaction as against defendant 1--who is incontestably liable -- but he failed to exercise his power ; and it is open to this Court in second appeal to do what the lower appellate Court ought to have done. The provisions of Order 41, Rule 33, Civil P. C., are applicable to a second appeal under the provisions of Order 42, and in our judgment the suit ought to have been decreed against defendant 1. We accordingly allow this appeal and set aside tie decree of the lower appellate Court and of the learned Judge of this Court and we decree the plaintiff's suit for Rs. 1094-4-0 against defendant 1, firm Ganesh Ram Dhanraj. The plaintiff appellant will have his costs throughout from defendant 1. We think that as against defendants 2 and 3 the suit should be dismissed with costs throughout against the plaintiff and we direct accordingly.