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Ram Prasad Vs. Gordhan - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Reported inAIR1934All616
AppellantRam Prasad
RespondentGordhan
Excerpt:
- .....circumstances out of which this application has arisen are as follows : the applicant, who is a decree-holder had obtained an ex parte decree against two judgment-debtors in the small cause court, and attached some of their property in execution of that decree. the judgment-debtors applied to set aside the ex parte decree and gordhan, the present opposite party became their surety, undertaking that if the application were dismissed or if it were allowed and the suit was subsequently decreed against the judgment-debtors and the judgment-debtors did not pay the amount he, the surety, would pay the amount of the decree. the original attachment appears to have been withdrawn on this surety bond being executed. it will be seen that there was no condition in the bond that the decree-holder.....
Judgment:
ORDER

Kendall, J.

1. The circumstances out of which this application has arisen are as follows : The applicant, who is a decree-holder had obtained an ex parte decree against two judgment-debtors in the Small Cause Court, and attached some of their property in execution of that decree. The judgment-debtors applied to set aside the ex parte decree and Gordhan, the present opposite party became their surety, undertaking that if the application were dismissed or if it were allowed and the suit was subsequently decreed against the judgment-debtors and the judgment-debtors did not pay the amount he, the surety, would pay the amount of the decree. The original attachment appears to have been withdrawn on this surety bond being executed. It will be seen that there was no condition in the bond that the decree-holder should be obliged to execute the decree. The ex parte decree was set aside but the suit was again decreed against the judgment-debtors, and the decree-holder attached some cattle and other property of theirs. The judgment-debtors filed an application for revision in the High Court and obtained an order of stay. In the meanwhile the decree-holder obtained another decree against the same judgment-debtors in the Court of the Munsif and attached the same property as had already been attached in the decree of the Small Cause Court in that decree and also some other property. He then withdrew the attachment in execution of the Small Cause-. Court decree, in spite of the objection of the judgment-debtors and the surety. He then made an application under Section 1450, Civil P.C. against the surety the surety who is the present opposite party objected and the trial Court has allowed this objection. It is represented that this-decision is wrong as there was no obligation on the decree-holder to proceed against the judgment debtors by executing his decree. It was only necessary for him to show that the judgment-debtors-had not paid up the decretal amount. The Court, however has evidently relied on the provisions of Section 139 and Section 141, Contract Act, 1872. Under Section 141,

A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and, if the creditor loses or, without the consent of the surety parts with such security, the surety is discharged to the extent of the value of the security.

2. When the surety bond was executed in this case the property of the judgment-debtors was under attachment and the surety was therefore entitled to the benefit of that security. It is true that the Court itself released the property and the decree-holder attached again after the execution of the bond, but later withdrew the attachment. This case appears to be provided for by the illustration (b) to Section 141 where G takes B's goods in execution after a guarantee has been received from A. In such a case if G without the knowledge of A withdraws the execution A is discharged. Under Section 139 of the Act the surety is discharged if the creditor does any act which is inconsistent with the rights of the surety, and the Court evidently considered that by releasing the property the decree-holder did an act which was inconsistent with the rights of the surety, with the result that his eventual remedy against the judgment-debtors was impaired, that is to say, the property which was under attachment against which the surety might have proceeded was released. I think therefore that the order of the trial Court cannot be said to be otherwise than in accordance with law, except to this extent; that the discharge of the surety should not be an absolute discharge under Section 139, Contract Act but only a discharge under Section 141 to the extent of the value of the security that is to say the extent of the value of the property which was released by the decree-holder. The value will be a matter for the trial Court to determine. The application is therefore allowed to this extent, but in the circumstances I make no order as to costs.


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