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Chunni Lal Vs. Hazari and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad High Court
Decided On
Judge
Reported in(1886)ILR8All259
AppellantChunni Lal
RespondentHazari and ors.
Excerpt:
.....covenanted to pay this sum in eleven years by engaging, on the occurrence of a single default, to execute his decree for the whole sum remaining due under it, on the expiry of one month from the date of the default, and the sureties bound themselves to guarantee satisfaction of the decree debt, in the event of failure of payment, by the mode indicated above. in other words, the debtors were to have time, and to make punctual periodical payments, failure in punctuality to be necessarily followed within one month by execution of the decree on the decree-holder's part, the sureties becoming then and thereafter responsible for any eventual failure in full satisfaction of the decree. he sues the sureties for the unpaid balance due on the decree, with interest to the date of his suit,..........20th april 1879; then payments ceased, and the decree-holder took no steps against his judgment-debtors to execute his decree which is now defunct by lapse of time. he sues the sureties for the unpaid balance due on the decree, with interest to the date of his suit, instituted in november 1884. having failed in the court of first instance, he obtained a judgment from the district judge in appeal; and the sureties seek in second appeal to get that decree set aside. on our reading of the peculiar terms of the agreement set out above, we are satisfied that the appeal should prevail. it must be conceded that the legal consequence of the respondent's omission to execute the decree has been the discharge of his principal debtors. the decree is dead, and they are released from all.....
Judgment:

Oldfield and Tyreell, JJ.

1. Having carefully examined the terms of the surety-bond, the basis of this action, we are of opinion that they amount to this, that the creditor having given his debtor time to pay Rs. 816-3-6, costs, and interest at 8 annas per cent., the amount of his judgment-debt, the debtor covenanted to pay this sum in eleven years by engaging, on the occurrence of a single default, to execute his decree for the whole sum remaining due under it, on the expiry of one month from the date of the default, and the sureties bound themselves to guarantee satisfaction of the decree debt, in the event of failure of payment, by the mode indicated above. In other words, the debtors were to have time, and to make punctual periodical payments, failure in punctuality to be necessarily followed within one month by execution of the decree on the decree-holder's part, the sureties becoming then and thereafter responsible for any eventual failure in full satisfaction of the decree. The words of the deed were: 'In case of default of paying the instalments, the whole decretal money, with costs, and interest at 8 annas per cent., shall be executed after one month; and for the satisfaction of the decree-holder, we, the executants, stand as surety of the judgment-debtors to Rs. 816-3-6, with all the costs of the Court and interest.' The first and necessary step to be taken on, occurrence of a default was, within a month from its date, execution of his decree on the part of the creditor. The language of this part of the covenant is peremptory, and imports much more than the usual agreement under such circumstances, that the decree-holder may or is at liberty to execute his decree, if he pleases, on a default. Instalments were regularly paid for five years, down to the 20th April 1879; then payments ceased, and the decree-holder took no steps against his judgment-debtors to execute his decree which is now defunct by lapse of time. He sues the sureties for the unpaid balance due on the decree, with interest to the date of his suit, instituted in November 1884. Having failed in the Court of First Instance, he obtained a judgment from the District Judge in appeal; and the sureties seek in second appeal to get that decree set aside. On our reading of the peculiar terms of the agreement set out above, we are satisfied that the appeal should prevail. It must be conceded that the legal consequence of the respondent's omission to execute the decree has been the discharge of his principal debtors. The decree is dead, and they are released from all responsibility under it. The sureties, then, would, under the rule of Section 134 of the Indian Contract Act, stand discharged likewise by virtue of this omission of the creditor. But it was argued that (Section 137, id.) 'mere forbearance on the part of the creditor to enforce his remedy against the principal debtor does not, in the absence of any provision in the guarantee to the contrary, discharge the surety.' This is doubtless true; but the action of the respondent, who omitted in this case to resort to the execution of his decree, and allowed it to become a dead letter by limitation, is, in our opinion, much more serious than 'mere forbearance' in favour of his debtors. And we hold that by his failure to carry out this express part of his agreement, he did an act (Section 139, id.) inconsistent with the equities of the sureties, and omitted to do an act which his duty to the sureties (under the agreement) required him to do, whereby the eventual remedy of the sureties themselves against the principal debtors must necessarily have been impaired. We are also of opinion that by allowing his decree to become incapable of enforcement, the respondent deprived the sureties of the benefit of the decree, which was a subsisting security in his hand at the time when the contract of suretyship was entered into, and the loss of this security, to the benefit of which the sureties were entitled through the act of the creditor, would operate to the discharge of the sureties to the extent of the value of that security (Section 141, id.). In this view of the facts of the agreement and of the law applicable to them, we must set aside the decree of the Lower Appellate Court, and, allowing this appeal, dismiss the respondent's suit with all costs.


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