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Ahmad Ali and anr. Vs. Raihan Raza - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1934All525
AppellantAhmad Ali and anr.
RespondentRaihan Raza
Excerpt:
- - on the same date the defendant, who was the husband of the vendee, executed a security bond under which he agreed to pay to the plaintiffs in part the amount left in the hands of the vendee which remained unpaid, together with interest which might accrue under the decree on account of delay in payment as well as costs and damages if any, suffered by the plaintiffs on account of any contingency. it cannot be disputed that there was consideration for this document and that the defendant promised to pay a specified amount the plaintiffs are therefore entitled to enforce the security bond against the vendee because the vendee failed to pay the amount which was left in her hands for payment to the previous creditor. 3. but under the terms of this security bond the defendant undertook..........of the vendors. on the same date the defendant, who was the husband of the vendee, executed a security bond under which he agreed to pay to the plaintiffs in part the amount left in the hands of the vendee which remained unpaid, together with interest which might accrue under the decree on account of delay in payment as well as costs and damages if any, suffered by the plaintiffs on account of any contingency. the vendee did not make the payment to the decree holder of the vendors and the plaintiffs ultimately had to raise rs. 130 under a hypothecation bond carrying interest at 2 per cent per mensem compounded every six months in order to pay off this part of the decretal amount. the amount was paid by them on 20th april 1918. having waited for many years they brought the suit.....
Judgment:

Sulaiman, C.J.

1. This case has been referred to a Division Bench because of the question of law which arose in it. On 19th February 1917, a sale-deed was executed by the two plaintiffs and their predecessor in favour of the defendant's wife conveying several items of properties. Out of the sale consideration a sum of Rs. 119-1-0, was left in the hands of the vendee for payment to a decree-holder who was a creditor of the vendors. On the same date the defendant, who was the husband of the vendee, executed a security bond under which he agreed to pay to the plaintiffs in part the amount left in the hands of the vendee which remained unpaid, together with interest which might accrue under the decree on account of delay in payment as well as costs and damages if any, suffered by the plaintiffs on account of any contingency. The vendee did not make the payment to the decree holder of the vendors and the plaintiffs ultimately had to raise Rs. 130 under a hypothecation bond carrying interest at 2 per cent per mensem compounded every six months in order to pay off this part of the decretal amount. The amount was paid by them on 20th April 1918. Having waited for many years they brought the suit against the defendant on 28th May 1928.

2. Various pleas were taken in defence among which was the plea that the plaintiffs having allowed their remedy against the principal debtor, the vendees, to become barred by time, were disentitled from suing the surety. The Courts below have accepted this plea and held that the principal debtor having been discharged the surety is no longer liable. The plaintiffs have accordingly come up in appeal to this Court and on their behalf the findings of the Court below are challenged. It seems to us that the first assumption made that the remedy against the vendee had become time-barred on the date of the present suit is not correct. The amount left in the hands of the vendee for payment to the previous creditor was undoubtedly a part of the purchase money due under the sale deed of 1917. It was left in the hands of the vendee for payment to the vendees' nominee. The vendors had a statutory charge upon the property in the hands of the buyer under Section 55(4)(b). The vendors could therefore have enforced this charge against the property in the hands of the vendee within 12 years of the date of the sale deed under Article 132, Limitation Act. This period had not expired when the present suit was instituted. There is therefore no question of the original vendee having been discharged. But we do not wish it to be understood that we are necessarily accepting the view that even where a mortgage-deed is-executed by a surety under which there are different terms entered into by him the mortgage-deed cannot be sued upon if the remedy against the principal debtor becomes barred by time. In this connexion we may point out that under Section 128, Contract Act, the liability of a surety is co-extensive with that of the principal debtor only when it is not otherwise provided for in the contract. In any case, it is not necessary for us to consider whether the same period of limitation must be held to be applicable to a suit against the debtor and the surety where the latter has given a separate security bond. In the present case the defendant agreed under a registered security bond to pay the amount of the decree with interest if it remained unpaid by the vendee and he hypothecated his property as security for the promise to pay. The present suit is one for the enforcement of the security bond against the property hypothecated. It cannot be disputed that there was consideration for this document and that the defendant promised to pay a specified amount the plaintiffs are therefore entitled to enforce the security bond against the vendee because the vendee failed to pay the amount which was left in her hands for payment to the previous creditor.

3. But under the terms of this security bond the defendant undertook the liability for any part of the amount left in the hands of the vendee which remained unpaid as well as for interest that might have accrued under the decree on account of the delay in payment and also for any damage that the vendors might suffer on account of any contingency. There can be no doubt that the defendant is liable to pay the sum of Rs. 119-1-0 as well as interest at 6 per cent, per annum simple on this amount which was the interest payable under the decree. It is however contended on behalf of the plaintiffs that inasmuch as they borrowed money at the rate of 2 per cent per mensem compound-able every six months in order to pay off the amount to the previous decree-holder they are entitled to be indemnified for loss suffered. But on the ambiguous language used in the document we are unable to hold that such a contingency was provided for. No untoward event has happened. The plaintiffs have merely borrowed money at an unusually high rate of interest which the defendant could not have anticipated. The plaintiffs have also not proved that they incurred any particular costs on account of this appeal. In these circumstances we would allow this appeal and setting aside the decrees of the Courts below decree the plaintiffs', claim for the payment of Rs. 119-1-0, with interest at 6 per cent per annum simple from 19th February 1917, till the date fixed for payment which we fix as being the date six months hence, thereafter the interest will run at 6 per cent per annum on the consolidated amount. The parties will receive and pay costs in proportion to success and failure. The usual decree under Order 34, Rule 4, will be prepared.


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