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B. Jang Bahadur Singh and ors. Vs. Basdeo Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Reported inAIR1936All549
AppellantB. Jang Bahadur Singh and ors.
RespondentBasdeo Singh and ors.
Excerpt:
.....the last stipulation, the plaintiffs are clearly entitled to maintain the suits for enforcing the security bonds. in the absence of a stipulation expressly empowering the plaintiffs to sue, a question might have arisen as to whether the bond executed in favour of the district judge, as such, can be effectively enforced, and further whether the bonds can be enforced by the plaintiffs, in the absence of deeds of assignment executed in favour of the plaintiffs; it is argued that the sureties were discharged in consequence of the failure of the preemptors to institute suits for mesne profits against the vendee within limitation. so far as this high court is concerned, the view seems to have prevailed that the surety is discharged in consequence of the failure of the creditor to sue the..........brought by basdeo singh and others, appellants in s. a. nos. 1160 and 1323 of 1932, on foot of two security bonds, one executed by mt. manki kunwar, appellant in s.a. no. 1139 of 1932, on 6th august 1923, and the other by jung bahadur singh and others, appellants in s. a. no. 1133 of 1932, on 5th september 1933. the suits were decreed by the lower court. the plaintiffs and the defendants were both dissatisfied with the decree passed by the trial court. hence four appeals were filed in the court of the district judge, who upheld those decrees. the four appeals before us are from the decrees passed in appeal by the district judge. the circumstances leading to the present litigation are these: basdeo singh and others brought two suits for pre-emption against raj singh, who was the vendee.....
Judgment:

Niamat Ullah, J.

1. These four connected appeals arise out of two suits brought by Basdeo Singh and others, appellants in S. A. Nos. 1160 and 1323 of 1932, on foot of two security bonds, one executed by Mt. Manki Kunwar, appellant in S.A. No. 1139 of 1932, on 6th August 1923, and the other by Jung Bahadur Singh and others, appellants in S. A. No. 1133 of 1932, on 5th September 1933. The suits were decreed by the lower Court. The plaintiffs and the defendants were both dissatisfied with the decree passed by the trial Court. Hence four appeals were filed in the Court of the District Judge, who upheld those decrees. The four appeals before us are from the decrees passed in appeal by the District Judge. The circumstances leading to the present litigation are these: Basdeo Singh and others brought two suits for pre-emption against Raj Singh, who was the vendee under two sale-deeds from certain persons. Both these suits were decreed by the trial Court on payment of certain amounts. The vendee preferred one appeal in the Court of the District Judge and another to this Court. Two different Courts of appeal had to be restored to because the two suits had been differently valued. The successful pre-emptors deposited the sums, which they had to pay under the decrees of the Court, on 21st June 1923, and applied for execution of the decrees in their favour. The vendee applied for stay of delivery of possession pending his appeals. Stay was granted on condition of the vendee furnishing security for any loss resulting to the pre-emptors from the order of stay. It does not appear-nor is it material to know-whether the order of stay was passed in both cases by this Court, to which the appeal pending in the Court of the District Judge had been eventually transferred, or the order of stay referred to was in one case passed by the District Judge while the appeal was pending before him and in the other by this Court in the appeal pending in it. It is not in dispute that two security bonds were executed, one on 6th August 1923 by Mt. Manki Kunwar,. the appellant in S.A. No. 1139, and the other on 5th September 1923 by Jung Bahadur Singh and others, appellants in S. A. No. 1133. The two sets of sureties hypothecated certain properties as securities demanded by the Court or Courts.

2. The vendee's appeals were eventually dismissed by this Court, and possession was delivered to the pre-emptors on 11th March 1927. Two suits were brought by the pre-emptors on 8th July 1930 for enforcement of the aforesaid security bonds. The plaintiffs claimed mesne profits for three years (1924-26) by sale of the properties hypothecated in the bonds aforesaid. They impleaded, as defendants, the sureties and the vendee Raj Singh. The sureties contested the suits inter alia on the grounds: (1) That the plaintiffs were not entitled to sue on the security bonds; {2) That the remedy sought by the plaintiffs could not be obtained in separate suits and that the same should have been obtained, if at all, in the pre-emption suits; and (3) That as the plaintiffs had allowed their remedy against the vendee, Raj Singh, to become barred by limitation, they were not entitled to enforce the security bonds, as by their own omission to sue the principal debtor, Raj Singh, the sureties were discharged. These defences did not find favour with the trial Court, whose decrees in the two suits were affirmed by the lower appellate Court. The plaintiffs were dissatisfied with the decrees passed by the trial Court so far as the mesne profits decreed to them fell short of the gross rental claimed by them. Their appeals were also dismissed by the lower appellate Court. The sureties have pressed in their appeals all the three grounds on which they contested the plaintiffs' claim. The plaintiffs' appeals involve consideration of the amount of the mesne profit claimed by them.

3. Taking the sureties' appeals first the first question which we are called upon to decide, is whether the plaintiffs are entitled to sue on the security bonds. It is pointed out by the sureties' learned Counsel that one of the bonds is in favour of the District Judge while the other is in favour of the Registrar of this Court, and that no assignment has been made by the two officers to the plaintiffs of their right to sue on the bonds. It is also argued that the District Judge, as such, could not make any assignment of his right to sue, assuming such right was vested in him. We have carefully considered the stipulations contained in the security bonds; and are of opinion that the consideration involved in the argument indicated above did not arise in these appeals. The two security bonds are substantially identical, except that one of them is in favour of the District Judge and the other in favour of the Registrar of this Court. The executants of the bonds set out the point at issue in the pre-emption appeals and the fact that the vendee Raj Singh had to furnish security in pursuance of the orders of the Courts, in which the appeals were pending. The sureties proceeded to stipulate that they hypothecated properties specified in the bonds to ensure payment of damages and costs to which the pre-emptors might be found to. be entitled. On the face of them the bonds purport to be in favour of the District Judge and the Registrar of this Court respectively. In the end it is declared that the pre-emptors will have a right to enforce the bonds by instituting suits for recovery of damages and costs by sale of the hypothecated property. We think that, having regard to the last stipulation, the plaintiffs are clearly entitled to maintain the suits for enforcing the security bonds. In the absence of a stipulation expressly empowering the plaintiffs to sue, a question might have arisen as to whether the bond executed in favour of the District Judge, as such, can be effectively enforced, and further whether the bonds can be enforced by the plaintiffs, in the absence of deeds of assignment executed in favour of the plaintiffs; but we hold in the circumstances of this case, that the stipulation already referred to entitled the plaintiffs to institute the suits for enforcing the security bonds.

4. The second contention, namely that the plaintiffs should have obtained relief by applications in the pre-emption suits, has no force. A decree in a suit for pre-emption is completely executed when the pre-emptor deposits the purchase money and takes delivery of possession. An application for enforcement of a collateral security is wholly out of place in execution proceedings in the pre-emption case. In this view we reject the second contention put forward on behalf of the sureties.

5. The third and the last contention raises a question of some importance. It is argued that the sureties were discharged in consequence of the failure of the preemptors to institute suits for mesne profits against the vendee within limitation. Reliance is placed on Section 134, Contract Act, which provides that the surety is discharged by any contract between the creditor and the principal debtor by which the principal is relieved, or by any act or omission of the creditor the legal consequence of which is the discharge of the principal debtor. Section 137 of the same Act lays down that 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. There is some difference of opinion among the High Courts on the question whether, if the creditor allows his remedy against a debtor to be barred by limitation, the surety is discharged, or whether his omission amounts to no more than a forbearance on his part to sue the debtor. So far as this High Court is concerned, the view seems to have prevailed that the surety is discharged in consequence of the failure of the creditor to sue the debtor within limitation: see Salig Ram Misir v. Lachhman Das 1928 50 All 211. In the peculiar circumstances of this case, we do not think it necessary to pronounce an opinion on this question.

6. Section 134, Contract Act, presupposes the existence of a contract of guarantee, to which the creditor and the surety, if not also the debtor, are parties. The liability of the surety arises from an undertaking given by him to the creditor;in consideration of something done by the latter. In the case before us, there was no contract between the sureties and the plaintiffs. The security bonds were executed by the sureties at the instance of the debtor and in pursuance of the orders of the Courts granting stay. The plaintiffs, the pre-emptors, were not privy to the arrangement which resulted in the execution of the security bonds. The Court put the vendee on terms when it granted his application for stay of execution of decrees. For ought we know, the pre-emptors were opposed to any stay being granted. In any case, there is no evidence that they were party to the contract of guarantee, under which the sureties become liable. The bonds clearly recited the circumstances in which the sureties agreed to hypothecate their properties. As already stated, the bonds are in favour respectively of the District Judge and the Registrar. The fact that the sureties empowered the plaintiffs to enforce the undertaking given by them (the sureties) to the Court does not imply that the plaintiffs became a party to the contract of guarantee embodied in the bonds. In this view, Section 134 , Contract Act, does not apply to the facts of the present case. Assuming Section 134 is otherwise applicable, and if the clause empowering the plaintiffs to enforce the security bonds be taken to be no more than an assignment by the obligee under the bonds, i.e., the District Judge in one case and the Registrar in the other and the plaintiffs be considered to be assignees of the aforesaid officers, Section 134 Contract Act, does not lead to the result contended for by the sureties. It is clear that no such act or omission can be attributed to the District Judge or the Registrar which had the legal consequence of discharging the principal debtor. The deeds being in favour of the District Judge and the Registrar respectively the plaintiffs cannot be considered to be the creditors in their own right under a contract of guarantee. For these reasons we think that Section 134, Contract Act, is not applicable to the circumstances of the present case.

7. As regards the appeals filed by the plaintiffs (the pre-emptors), the only question thereby raised has reference to the amount of mesne profits to which they are entitled in consequence of the vendee remaining in possession of the preempted property after the deposit by the pre-emptors of the pre-emption money on 21st June 1923. The plaintiffs became entitled to take possession immediately after they deposited the pre-emption money on 21st June 1923. The plaintiffs have claimed mesne profits for three years, via., 1924-26, which is practically covered by the period for which they are entitled to mesne profits. The trial Court calculated mesne profits on a somewhat peculiar basis. The learned Subordinate Judge assumed that immoveable property was sold at 33 years' purchase, and held that the plaintiffs were entitled to mesne profits at the rate of 3 per cent on the purchase money paid by them in the preemption suit. We do not think this is a satisfactory mode of awarding mesne profits in a case like this. A pre-emptor becomes entitled to possession of the preempted property immediately on depositing the purchase money, and the vendee retaining possession after that event roust be considered to be in wrongful possession and liable to pay mesne profits to the pre-emptor. The expression 'means profits' has been defined in the Civil Procedure Code as profits which the person in wrongful possession of property actually received or might with ordinary diligence have received therefrom together with interest on such profits. According to the plaint in each of the two cases, the plaintiffs are entitled to Rs. 4.22 per year and interest thereon in each case. The accuracy of the figure mentioned in the plaints has not been specifically challenged in the written statements or at any time after they were filed, and we are disposed to accept the plaintiffs' figures. The plaintiffs have claimed interest at the rate of 9 per cent per annum; but we think that no more than 6 per cent per annum simple should be awarded. Accordingly we modify the decrees passed by the lower Courts and award to the plaintiffs mesne profits for each suit at the rate of Rs. 422 per annum from 1st January 1924 till realization with interest at 6 per cent per annum simple. Appeals Nos. 1133 and 1139 of 1932 are dismissed. Appeals Nos. 116 and 1323 of 1932 are partly allowed and the decrees of the lower Courts are modified as indicated above. The plaintiff-appellants shall have 7/8ths of their costs in all the Courts.


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