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Hariprashad Narayanjee Jaiwal Vs. Chandrojirao Sambhajeerao Angre - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMadhya Pradesh High Court
Decided On
Case NumberSecond Appeal No. 91 of 1958
Judge
Reported inAIR1962MP69
ActsContract Act, 1872 - Sections 135
AppellantHariprashad Narayanjee Jaiwal
RespondentChandrojirao Sambhajeerao Angre
Appellant AdvocateS.D. Sanghi, Adv.
Respondent AdvocateR.G. Waghmare, Adv.
DispositionAppeal dismissed
Cases ReferredDorothy Burnard v. W.D. Lysnar. In
Excerpt:
.....to pay the second instalment by 1-10-1945. he then approached the authorities whereupon the due dates of payment were altered to 1-1-1946, 1-3-1946 and 30-5-1946 pursuant to the superintendent's order no. sanghi for the appellant contented that the conclusions of the courts below on the question of the appellant having assented to the altered dates of payment are vitiated firstly on the ground that the pleadings in this regard were defective and secondly on the ground that while assessing evidence the learned judges of the courts below failed to take notice of the statement of the plaintiffs own witnesses kurban ahmed who supported and reinforced the defendant's version regarding ex. foundation to this defence, it is urged, had been laid in the cross-examination of kurban ahmed who..........personally from mm. the surety bond was accepted. thus as contemplated in this surety bond the due dates of payment of second, third and fourth instalments were as indicated above. however the principal debtor failed to pay the second instalment by 1-10-1945. he then approached the authorities whereupon the due dates of payment were altered to 1-1-1946, 1-3-1946 and 30-5-1946 pursuant to the superintendent's order no. 568 dated 22-12-1945. there is no dispute as regards the appellanthaving stood surety for payment of the dues of three instalments amounting to rs. 3,079/-. the dispute relates to alteration of the due dates of payment without reference to the surety as indicated above,at the trial it was contended on behalf of the surety that he was discharged by reason of this alteration.....
Judgment:

V.R. Newaskar, J.

1. The only question involved in this second appeal is regarding the liability of the appellant as a surety.

2. The facts of the case are that the plaintiff-respondent was the Jagirdar of the village Nevari Bhavrasa which included a Forest area known as Karanaved Forest. The Jagir was then under the Court of Wards. The Forest Officer in charge of this forest put up for sale by auction the rights of exploitation of the same on 25-11-1944 in accordance with the terms and conditions laid down in the sale-proclamation. The sale was knocked down in favour of Abdul Hamid defendant No. 1 for a sum of Rs. 4,105/-and thereafter an agreement was executed by Abdul Hamid after the auction sale was sanctioned On 11-12-1944 by the Superintendent Court of Wards, under whose charge the said estate had been placed by the Government order. Intimation of this sanction was given to Abdul Hamid on. 22-12-1944. Later, as contemplated by the terms of auction sale, the purchaser Abdul Hamid executed an agreement incorporating the terms and conditions on which he was entitled to exploit the said forest. The material terms regarding the payment of the auction amount of Rs. 4,105/- were as under :

First instalment :- 5-4-1945.Second instalment : 1- 10-1945.Third instalment : 1-2-1946.Fourth instalment : 30-4-1946.

The purchaser was also required to secure a surety-bond for the payment of the dues on the dates as would be fixed. Abdul Hamid paid the first instalment on 5-4-1945 and submitted the agreement duly executed in accordance with the agreed terms on the same date. On the following day the surety-bond executed by Hariprashad was submitted. It mentioned the fact of payment of Rs. 1,026/- of the first instilment on 5-4-1945 and contained a stipulation by the surety that the balance of the sale-price Rs. 3079/- would be paid in accordance with the terms of the agreement executed by the principal debtor and that in case any default was committed in payment as per agreement the same would be recovered personally from Mm. The surety bond was accepted. Thus as contemplated in this surety bond the due dates of payment of second, third and fourth instalments were as indicated above. However the principal debtor failed to pay the second instalment by 1-10-1945. He then approached the authorities whereupon the due dates of payment were altered to 1-1-1946, 1-3-1946 and 30-5-1946 pursuant to the Superintendent's order No. 568 dated 22-12-1945. There is no dispute as regards the appellanthaving stood surety for payment of the dues of three instalments amounting to Rs. 3,079/-. The dispute relates to alteration of the due dates of payment without reference to the surety as indicated above,

At the trial it was contended on behalf of the surety that he was discharged by reason of this alteration and reliance was sought to be placed upon the terms of Section 135 of the Contract Act in that connection, The answer of the plaintiff to this contention as indicated in the rejoinder filed on his behalf, is that in the first place this alteration of dates did not involve any material change and in the second place the surety had notice of this alteration and subsequent to this alteration, when the principal debtor committed default and the surety was called upon to pay, he accepted the correctness of the dues against the principal debtor as shown in the notice dated 19-4-1946 and asked for time without ever challenging his liability therefor. Not only this he actually executed an agreement dated 14-6-1946 for the payment of the amount of the third and final instalment falling due on 30-5-1946. He thus should, according to plaintiff, be taken to have assented to the grant of time to the principal debtor. The trial Court's finding on this controversy is that in the first place in view of the terms in surety-bond that the surety was bound to secure the payment if instalment on dates which might thereafter be fixed by the department, he was bound not only by the dates initially fixed but also dates which might be fixed later on. Assent to the alteration without reference to the surety under an agreement between the principal debtor and the department had thus been given beforehand in the surety-bond itself and no further assent was therefore needed.

In the second place, according to it, evenassuming that the assent of the surety was needed to the alteration as contemplated under Section 135 of the Contract Act, that assent could have been given even after the alteration had been agreed to between the creditor and the principal debtor and that in the present case such assent can be inferred from his conduct in acknowledging the dues after the receipt of notice, in asking for time for payment and in executing a fresh agreement with reference to his liability on the basis of the altered dates. The trial court in this connection referred to the decision in AIR 1935 PC 21, Pratapsingh v. Keshavlal and relied upon the observations of the Bombay High Court in AIR 1932 Bom 168, Keshavlal v. Pratapsingh. It was not prepared to hold that the signature of the defendant upon Exs. 6 and 9 had been obtained by Mr. Pancholi under coercion, although in its view even on assumption that Ex. 9 had been obtained by coercion that would not affect his conclusion that the surety had assented to the alteration of the dates since he had put his signature upon Ex. 6, had sent the application Ex. 8 by post and had kept silent in spite of notices Exs. 10 and 11. The learned trial judge had made specific reference to the statement of Kurban Ahmed in this connection.

3. The appellate court practically confirmed this finding and held that the defendant had assented to the alteration of the dates and was therefore not discharged,

4. In this second appeal Mr. Sanghi for the appellant contented that the conclusions of the courts below on the question of the appellant having assented to the altered dates of payment are vitiated firstly on the ground that the pleadings in this regard Were defective and secondly On the ground that while assessing evidence the learned judges of the courts below failed to take notice of the statement of the plaintiffs own witnesses Kurban Ahmed who supported and reinforced the defendant's version regarding Ex. 9 having been obtained by coercion. It fleas pointed out that there was clear issue namely issue No. 3 upon the case of the plaintiff regarding alleged assent of the appellant to the alteration of the dates of payment. The respondent, upon whom the burden of proving this issue lay, was bound to prove the fact of voluntary and free assent of the appellant surety and the latter was entitled to rebut that evidence by suggesting that it was not free and voluntary but had been obtained by the Forest Officer of the Plaintiff's Jagir Mr. Pancholi by the exercise of threat and coercion. Foundation to this defence, it is urged, had been laid in the cross-examination of Kurban Ahmed who clearly admitted that Mr. Pancholi had insisted upon making the payment of the dues of the principal debtor had made him sit in his office and had even slapped him. After the evidence of the plaintiff was over the defendant examined the attesting witnesses to Ex. 9 namely Mohanlal and Abdul Rehman and sought to establish by their evidence that at the time Ex. 9 was executed the appellant wag beaten and was required to sign under threat.

5. In order to appreciate this contention we should first advert to Section 135 of the Contract Act which has a material bearing on the question of extension of time for the performance of a contract. That section is as follows :

'A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the principal debtor discharges the surety, unless the surety assents to such contract.'

6. It is clear from this provision that if, subsequent to the original contract performance of which is guaranteed by the surety a fresh contract is entered into between the creditor and the principal debtor whereby the creditor agrees to give further time to the principal debtor for performance without reference to the surety then In the absence of assent of the surety to such extension the surety will be discharged.

7. In the present case in the first place under the original surety-bond it was stipulated by the surety to guarantee payment by the principal debtor of Rs. 3,079/- on the appointed dates in accordance with the terms of contract as might be settled by the Forest Department (of the jagir). Therefore it follows that what the surety guaranteed was the payment of a fixed sum and as forthe terms regarding instalments and their due dates he agreed to abide by what the department might fix. The department therefore could fix dates of their choice and might alter the same, because that would also be fixation of the period by the department. Thus the surety had given his assent to fixation and consequently to extension of time beforehand and did not concern himself as to what dates had been fixed or would be fixed. Section 135 of the Contract Act therefore will not apply because there is no initial tripartite agreement between the principal debtor, the surety and the creditor fixing specified dates for payment and subsequent extension of time by the creditor without reference to the surety,

8. In the second place when on 19-4-1949 notice was handed over to the surety Hariprashad to make payment of second and third instalments falling due on the extended dates 1-1-1949 (original date 1-10-1945) and 1-3-1946 (original date 1-2-1946) and his signature was obtained, there was no protest by him then on the ground of alteration of dates. Second notice Ex. 7, dated 24-4-1946 was then issued on his Karnawad address. This was served on him on 2-5-1946. Subsequent to this appellant Hariprashad submitted an application on 7-5-1946 admitting the receipt of notice an 2-5-1946 and suggested to the creditor that the father of the principal debtor was present at the field from whom the dues of the debtor should be recovered or that the same might be recovered from the debtor's property including property at Karanavad and the deposits made by him with the Government and further praying for a month's time to produce the principal debtor. Subsequent to this the third instalment fell due and the surety then executed the disputed document Ex. 9, D/- 14-6-1946 in respect of that instalment. Under that document he asked for four days time to make the payment.

The documents Ex. 8 dated 7-5-1946 and Ex. 9 dated 14-6-1946 both of which are applications by the appellant himself are consistent. About Ex. 8 all that the appellant says is that he wrote it at the dictation of Mr. Pancholi (the then Forest Officer). Having regard to the tenor of the document as also the circumstances in which it was submitted it cannot be believed that it was written at the dictation of Mr. Pancholi. The petition seems to have been sent by him either through some person or by post. It was sent five days subsequent to the receipt of the notice Ex. 7 demanding Rs. 2,149-4-0 of first two instalments. It was stated in the petition that he was applying postal stamps and that when he would attend the office of the department he would furnish necessary court fee stamps for an application. Thus the contents of the petition and what is endorsed by the appellant, thereon negative the suggestion that it was written at the dictation of Mr. Pancholi. Therefore even excluding Ex. 9 about the voluntary character of the execution, about which there may be some doubt, there is enough material to indicate assent of the surety to altered dates and his request for granting him time.

9. The learned counsel for the appellant drew my attention to the decision of the Privy Council in AIR 1935 PC 21(24) and particularly to the following observations therein :

'It appears to their Lordships that the law on the discharge of sureties has been somewhat obscured by the emphasis laid in the cases on an agreement between the parties to vary the terms of the original agreement. The principle is that the surety, like any other contracting party, cannot be held bound to something for which he has not contracted. If the original parties have expressly agreed to vary the terms of the original contract no further question arises. The original contract has gone, and unless the surety has assented to the new terms, there is nothing to which he can be bound, for the final obligation of the principal debtor will be something different from the obligation which the surety guaranteed. Presumably he is discharged forthwith on the contract being altered without his consent, for the parties have made it impossible for the guaranteed performance to take place'.

10. It is however clear from these observations that if we can infer assent of the surety to the alteration of terms then the surety will be bound. The assent may have been obtained prior to arriving at the altered terms or may even be obtained subsequent thereto the position will be the same as will be clear from the decision of the Privy Council in AIR 1929 PC 273, Dorothy Burnard v. W.D. Lysnar. In the latter case their Lordships held that even if the arrangement regarding alteration of terms was arrived at between the principal debtor and the creditor which was not previously authorised by the surety yet the surety will be bound if he ratifies and thereby assents to what had been done.

11. The foregoing discussion will show that under the original surety-bond the surety had consented to guarantee payment of Rs. 3,079/- on terms which might be settled by the department on appointed dates. Thus he had left the matter of dates of payment to depend upon what the department might choose to appoint or alter thereafter. The extension of time by the department under the circumstances would not be strictly affected by Section 135 of the Contract Act. But even assuming that initially there was fixation of dates of payment with the assent of all and later there was variation by the agreement arrived, at between the creditor and the principal debtor the surety should on facts be taken to have assented to this alteration, The finding as to this of both the courts below is a finding of fact with which for reasons discussed above I agree. Even if I were to disagree that finding as long as there are some materials to support that finding there would be no question of law involved in such a finding and it will be binding upon me in second appeal.

12. The appeal consequently cannot be allowed. It is dismissed with costs.


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