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Union of India (Uoi), Ministry of Food and Agriculture (Dept. of Food), New Delhi Vs. Pearl Hosiery Mills and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtPunjab and Haryana High Court
Decided On
Case NumberFirst Appeal No. 80 of 1959
Judge
Reported inAIR1961P& H281
ActsCode of Civil Procedure (CPC) , 1908 - Sections 96; Contract Act, 1872 - Sections 133, 152 and 163; Specific Relief Act, 1877 - Sections 42
AppellantUnion of India (Uoi), Ministry of Food and Agriculture (Dept. of Food), New Delhi
RespondentPearl Hosiery Mills and ors.
Appellant Advocate B.R.L. Ayangir and; S.S. Mahajan, Advs.
Respondent Advocate F.C. Mittal,; S.L. Puri,; Minishwar Puri and;
DispositionAppeal dismissed
Cases ReferredPratapsingh Moholalbhai v. Keshavlal Harilal
Excerpt:
- sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the.....pandit, j.1. on the 3rd july, 1954, messrs d.n. revri and co., defendant no. 1, entered into a contract with the union of india, defendant no. 3, for the supply of 30,000 tons of east german white crystal sugar on the terms and conditions contained in the contract, exhibit d. 3/1. according to clause 12 of this contract, defendant no. 1 had to deposit with defendant no. 3, not later than the 19th july, 1954, an amount representing 3 per cent of the cost and freight value of the contract as security towards the due and satisfactory fulfilment of the contract, in default of which the contract was liable to be cancelled by defendant no. 3.this security deposit was to be refunded after the satisfactory completion of the contract and submission of a 'no demand certificate' by defendant no. 1......
Judgment:

Pandit, J.

1. On the 3rd July, 1954, Messrs D.N. Revri and Co., defendant No. 1, entered into a contract with the Union of India, defendant No. 3, for the supply of 30,000 tons of East German white crystal sugar on the terms and conditions contained in the contract, Exhibit D. 3/1. According to Clause 12 of this contract, defendant No. 1 had to deposit with defendant No. 3, not later than the 19th July, 1954, an amount representing 3 per cent of the cost and freight value of the contract as security towards the due and satisfactory fulfilment of the contract, in default of which the contract was liable to be cancelled by defendant No. 3.

This security deposit was to be refunded after the satisfactory completion of the contract and Submission of a 'No Demand Certificate' by defendant No. 1. It was further stated in the contract that the security deposit in favour of the President of the Union of India would be in the form of an indemnity bond or a Bank guarantee from a scheduled Bank.

The Punjab National Bank, Limited, defendant No. 2, agreed to give the required guarantee, if it was secured by defendant No. 1 against any losses that may be suffered by defendant No. 2 by furnishing this guarantee. Consequently, on the 19th July, 1954, Messrs. Pearl Hosiery Mills, plaintiff, executed a counter indemnity bond (Exhibit P, 26) in favour of defendant No. 2, undertaking to indemnify the Bank for any loss or damage which defendant No. 2 might incur in consequence of its furnishing the said guarantee to defendant No. 3.

On the same day, the plaintiff deposited Rs. 3,00,000/- in cash and pledged goods worth Rs. 2,00,000/- as securities with the Bank. It was stated that these securities shall remain with the Bank during the period of the continuance of the guarantee given by the Bank to defendant No. 3 at the request of the plaintiff and defendant No. 1, and that these securities shall be refunded to the plaintiff on furnishing to defendant No. 2 a. 'No Demand Certificate' from defendant No. 3.

2. Another counter indemnity bond (Exhibit P. 27) was executed on this very date by which both defendant No. 1 and the plaintiff undertook to make good all the losses if suffered by defendant No. 2 by furnishing the said guarantee in favour of the President of the Union of India. In this document also it was stated that if any security was deposited by the plaintiff with defendant No. 2, it would be refunded to the plaintiff alone on furnishing to defendant No. 2 a 'No Demand Certificate' from the President of the Union of India.

3. On the same date, in consideration of defendant No. 2 having issued a letter of guarantee in favour of the President of India to the extent of Rs. 4,55,500/- on behalf of defendant No. 1, the plaintiff (vide Exhibit P. 28) deposited a sum of Rs. 3,00,000/- with defendant No, 2 and also undertook that goods of the value on which a margin of 25 per cent, aggregating to Rs. 2,00,000/- would be available, would always remain pledged with defendant No. 2, and would continue to form security under this guarantee.

4. On that very date, defendant No. 2, vide Exhibit D. 3/2, in consideration of the absolute guarantee given to it by defendant No. 1 furnished a guarantee to defendant No. 3 for the due performance of the contract by defendant No. 1 and held themselves responsible to the President of the Union of India to the extent of Rs. 4,55,500/-.

5. On the 10th February, 1958, the plaintiff brought the suit, out of which the present appeal has arisen, for a declaration that the Bank guarantee dated the 19th July, 1954, for Rs. 4,55,500/- furnished by defendant No. 2 to the President of the Union of India for the due performance by defendant No. 1 of the contract dated the 3rd of July, 1954, stands discharged on account of its fulfilment and on account of the expiry of the period of the guarantee and also on account of the variations made in the original contract by defendant No. 3 and defendant No. 1 without reference to the surety (defendant No. 2) and consequently the counter-guarantee furnished by the plaintiff to defendant No. 2 stood discharged in its turn and the securities and the amounts deposited by the plaintiff with defendant No. 2 could not be appropriated by it by paying security or any part thereof to the President of the Union of India in pursuance of the guarantee given by defendant No. 2.

6. Plaintiff's allegations were that defendant No. 1 and defendant No. 3 has materially varied the terms of the original contract as mentioned in para 13 of the plaint, that these variations were effected without the consent of the surety, defendant No. 2, and they therefore resulted in the discharge of thesurety, and in its turn automatically the plaintiff'scounter guarantee to defendant No. 2 stood discharged. It was also pleaded that the guarantee givenby defendant No. 2 stood discharged also becausedefendant No. 1 had duly performed his part of thecontract and on account of the expiry of the periodof guarantee.

7. Defendants Nos. 1 and 2 on the whole supported the plaintiff's claim. Defendant No. 2 however, pleaded that unless the plaintiff produced a 'No Demand Certificate' from defendant No. 3, their surety could not be considered to be discharged.

8. The suit was, however, contested by defendant No. 3 on a number of grounds. They inter alia pleaded that the suit was misconceived and was bad for misjoinder of parties and causes of action, that the plaintiff-firm was not registered under the Indian Partnership Act and therefore the suit was not maintainable as framed, and that the Ludhiana Courts had no jurisdiction to try the same.

They admitted the variations made in the terms of the original contract but, however, pleaded that defendant No. 1 had given its consent to them that these variations had been made in the interest and for the benefit of defendant No. 1 and defendant No. 2 had not in any way been prejudiced by them, that the original contract was not substituted by a fresh contract, that the surety had not been discharged, that the guarantee period of defendant No. 2 had not expired by efflux of time, and that defendant No. 1 had not performed his part of the contract,

9. The pleadings of the parties gave rise to the following issues:

1. Whether the suit is bad for misjoinder of parties, and causes of action ?

2. Whether the plaintiff firm is a registered partnership under the Indian Partnership Act and whether Shri Inder Pal Dhir is one of the registered partners ?

3. Whether defendant No. 2 has consented to the variations in the terms of the original contract dated 3-7-1954.

4. Whether surety has been discharged?

5. Whether the variations were made in the interest of and for the benefit of defendant No. 1?

6. Whether defendant No. 2 has not been prejudiced by those variations?

7. Whether the original contract was substituted by a fresh contract and defendant No. 2 did not stand surety for the due performance of fresh contract?

8. Whether the guarantee period of defendant No. 2 stands expired by the efflux of time as alleged?

9. Whether defendant No. 1 has duly and properly performed his part of the contract ?

10. Whether defendant No. 3 paid the amountto the original suppliers in spite of the instructions tothe contrary given by defendant No. 1 through hisletters dated 11-2-1955 and 15-2-55, and confirmedby defendant No. 3 by his letter dated 19-2-1953 andif so, whether the plaintiff stands exonerated from allliability and consequently the surety stands discharged?

11. Whether the plaintiff is not entitled to maintain this suit ?

12. Whether the Ludhiana Courts have no jurisdiction to try the suit ?

13. Can the Bank withhold the security of the plaintiff even it the plaintiff gets the declaration prayed for ?

14. Relief.

10. The trial Judge held that the suit was not bad for misjoinder of parties and causes of action, that the plaintiff-firm was duly registered under the Indian Partnership Act and could file the present suit, that defendant No. 2 had neither actively nor impliedly consented to the variations in the terms of the original contract, dated the 3rd July, 1954, that defendants Nos. 1 and 3 had made such variations in the terms of the original contract which resulted in the discharge of the surety bond executed by defendant No. 2, that since the surety-bond of defendant No. 2 was discharged, the indemnity bond executed by the plaintiff in favour of defendant No. 2 also stood discharged, that under the law it was not necessary that the variations in the contract should have resulted in prejudice to the surety, and consequently questions whether the variations were made in the interest of and for the benefit of defendant No. 1 and whether those variations had in any way prejudiced defendant No. 2, did not arise, that the original contract was not substituted by a fresh contract on account of these variations, that the plaintiff had no right to seek a declaration that the guarantee furnished by defendant No. 2 to defendant No. 3 stood discharged, because the plaintiff-firm had no privity of contract with defendant No. 3 and therefore they could not seek any relief on behalf of defendant No. 2, but their suit for a declaration that their counter guarantee to defendant No. 2 stood discharged, was, however, maintainable, that in view of the finding on issue No. 4, defendant No. 2 could not withhold the securities of the plaintiff even if defendant No. 3 was not in a position to issue a 'No Claim Certificate' to the plaintiff, and that the Ludhiana Courts had jurisdiction to try the suit,

11. Issues Nos. 8, 9 and 10 were not pressed by the learned counsel for the plaintiff,

12. On the above findings, the trial Court passed the following decree:

' * * It is declared that the plaintiff firm which was the counter guarantor to defendant No. 2, stands discharged of his surety and that the' security and amount deposited by the plaintiff with defendant No. 2 cannot be withheld by defendant No. 2. The remaining relief claimed by the plaintiff is refused. Parties are left to bear their own costs'.

13. Aggrieved against the decree of the trial Court, defendant No. 3 has come here in appeal.

14. Learned counsel for the plaintiff-respondent has raised a preliminary objection that defendant No. 3 has no locus standi to file this appeal, because the decree under appeal is not against defendant No. 3 and as a matter of fact the relief claimed by the plaintiff against defendant No. 3 has been specifically refused in the decree. He further submitted that in order to give relief to the plaintiff it was necessary to decide whether the surety bond executed by defendant No. 2 in favour of defendant No. 3 had been discharged or not, because the indemnity bond executed by the plaintiff in favour of defendant No. 2 would be considered as discharged only after the surety bond of defendant No. 2 in favour of defendant No. 3 was discharged.

This finding was given against the Union of India by the trial Judge, but an appeal does not lie against a finding on a particular issue, and it lies only against the decree passed in the case. In support of his contention, the learned counsel relied mainly on Jumna Singh v. Kamar-un-Nisa, ILR 3 All 152 (FB), and Ali Ahmad v. Amarnath, AIR 1951 PUNJ 444, It was held in AIR 1951 Punj 444 as under:

'Where a decree is 'absolutely in favour' of a party but some issues are found against him, he has no right of appeal against the findings because he is, 'firstly' not 'adversely affected' thereby, and secondly because such findings are not embodied in and do not form part of the decree. Hence where the plaintiff's suit for injunction is dismissed by the two lower Courts, the defendant would have no right of appeal against the decree passed in his favour merely because he is dissatisfied with a finding in the judgment. Such a finding cannot be said to adversely affect the defendant inasmuch as it would not operate as res judicata against the defendant in a subsequent suit because the finding must be taken to have been superseded by the decree and thus not having been heard and finally decided'.

15. Learned counsel for the appellant on the other hand, submits that they have a right to come in appeal under Section 96 of the Code of Civil Procedure against the decree passed by the trial Court, because they have been adversely affected by the same.

16. After hearing the counsel for the parties, I am of the opinion that there is no merit in this preliminary objection and defendant No, 3 have a locus standi to file the present appeal, because (a) the plaintiff-firm itself, in spite of the objections of defendant No. 3, impleaded them as necessary party to the suit on the ground that the suit could not be effectively disposed of in their absence, the finding of the trial Court on this point being also to the same effect; (b) they had undoubtedly an interest in the subject-matter of the suit; (c) they have been adversely affected by the decree passed by the trial Court, because the securities deposited by the plain-tiff-firm with defendant No. 2, which could only be returned to them on the production of a 'No Demand Certificate' from the President of the Union of India, would be returned (and as a matter of fact have actually been returned) to them on the basis of this decree without the production of the above mentioned 'No Demand Certificate'; (d) Section 96, Civil Procedure Code, does not in terms lay down as to who can file an appeal; it does not prescribe that it is only that person against whom a decree has been passed or against whom a relief has been granted, who can come in appeal. Any person who can show that he is aggrieved by the decree, can file an appeal against the same. For determining as to who is an aggrieved person, one has to look to all the circumstances of the case and the substance of the decree passed.

17. It was held by Woodroff, J., in Krishna Chandra Goldar v. Mohesh Chandra Saha, 9 Cal W. N. 584, that

'* * * a defendant has the right to appeal notwithstanding that the suit has been dismissed as against him, if he is aggrieved by the decree.

The question whether a party is aggrieved by a decree is a question of fact to be determined in each-case according to its peculiar circumstances.

An order under Section 108 of the Civil Procedure Code setting aside an ex parte decree is not an order affecting the decision of the case on the merits, so as to come within the purview of Section 591 of the Code. The fact that the order was made upon the application of a person against whom the suit had been dismissed makes no difference, as the effect of the order is the same, namely, to ensure merely a rehearing on the merits.'

At page 588, it was observed by the learned Judge ;

'The question who may appeal is determinable by the common sense consideration that there can be no appeal when there is nothing to appeal about. It is for this reason that, apart from cases of estoppel, only a party to the suit at the time the decree is made or his representatives or assigns when brought on the record, or an auction-purchaser in an appeal from an order passed in execution, may appeal as they alone can be affected by the decree or order. Again of such parties only those can appeal who are adversely affected by the decree. Usually, only the party against whom a decree is passed, i.e., the person ordinarily injuriously affected by the decree can appeal. For the same reason, the person against whom a suit has been dismissed cannot usually appeal against the decree as he is not ordinarily affected, otherwise than beneficially by it. But in some cases a suit may be dismissed as against the defendant and yet the latter may have a right of appeal. It is not because the suit is formally dismissed as against the defendant that no appeal lies but because dismissal is ordinarily not merely no grievance but an actual benefit to the defendant. There is in such cases nothing to complain of. If there is, then notwithstanding that the suit is dismissed against him he may appeal.

So, an appeal has been held to lie by defendants against whom specifically no decree was made but whose defence to the suit was necessarily disposed of by the decree, Jamna Das v. Udey Ram, ILR 21 All 117 and in Ram Gholam v. Sheo Tahal, ILR 1 All 266, an appeal was held to lie on the ground that the respondent's suit should have been dismissed absolutely and not in such a manner, by negativing the defence, that the respondents were at liberty to come into Court again. In order to see what the decree really means, it has been held that the Court may look not only into the judgment but also into the pleadings. If the decree, although apparently, and so far as it goes, is favourable to the defendants but when read by the light of the record, is really unfavourable and may prove injurious to them, then the defendants being aggrieved by it and having every interest to appeal, may appeal, Mt. Pan Kooer v. Bhugwant Kooer, 6 NWP 19 (23. 25) (FB), Lachman Singh v. Mohan, ILR 2 All 497 (501, 504, 507, 508) (FB). The test appears to be whether the appellant-defendant is aggrieved by the decree. If so, he may appeal not withstanding that the suit has been dismissed as against him.'

18. If the preliminary objection is sustained, it will result in multiplicity of proceedings, because the appellant will in that case be driven to file a separate suit against defendant No. 2 to enforce their rights which have already been determined by the trial Court and against which the present appeal has been filed and in the subsequent litigation there is likelihood of complications arising due to the possible pleas of res judicata etc. being raised by defendant No. 2.

19. The rulings cited by the learned counsel for the appellant (sic) have no application to the facts of the present case, because in the decree under appeal it has been specifically mentioned that the security and the amount deposited by the plaintiff with defendant No. 2 cannot be withheld by the latter. The result of this direction in the decree has been that the securities deposited by the plaintiff with defendant No. 2 have been taken away by him without the production of the 'No Demand Certificate' from the President of the Union of India, Which was a condition precedent for the return of the securities. This direction in the decree has therefore, adversely affected the rights of the appellant, who have, consequently, a right of appeal against the decree.

20. Coming to the merits of the case, learned counsel for the appellant has submitted the following points:

(1) The suit as framed is not maintainable under Section 42 of the Specific Relief Act, 1877, because in substance this is a suit for money and does not involve any legal character, for which no declaration can be granted.

(2) Taking into consideration the peculiar nature of the contract between the parties, the ordinary principles of surety would not apply to this case.

(3) The security offered in this case was a composite sort of transaction, partly of a surety and partly of a security. The personal obligation of the surety as such could be discharged, but the security offered could not be released.

(4) That, in any case, the relief granted by the decree was contrary to law and could not be given in the circumstances of the case.

21. With regard to points Nos. 2 and 3 submitted by the learned counsel for the appellant, at may be stated that he admitted that variations in the terms of the original contract, dated the 3rd July, 1954, had been made by defendant No. 1 and defendant No. 3 without the active or implied consent of defendant No. 2. If one were to apply the provisions of Section 133 of the Indian Contract Act, the result of these variations would be that the liability of the surety (defendant No. 2) would be discharged on account of these variations.

In order to overcome this difficulty, learned counsel for the appellant argued that the provisions of this section were subject to any special contract to the contrary between the parties, because in this section it is not stated that these provisions would apply 'notwithstanding any contract to the contrary'. In the present case, according to the learned counsel it was not a case of an ordinary contract of suretyship as contemplated by the provisions of this section, but it was a composite contract where both surety and security were given, and it was expressly agreed that the securities will not be returned with-out the production of a 'No Demand Certificate' from the President of the Union of India. Therefore, if the parties had agreed on certain terms, they would have precedence over the provisions of this section and the surety will not be discharged under its provisions by the mere fact that variations were made in the original contract.

22-24. I am of the view that this contention of the learned counsel for the appellant is not well founded. (After discussing the circumstances in which Exts. D-3/1 and D-3/2 were executed, His Lordship proceeded:)

It was a simple case of an ordinary surety and not a composite guarantee as contended by the learned counsel for the appellant. Besides, the parties had not contracted anything to the contrary to what is contained in Section 133 of the Indian Contract Act.

25. Moreover, I am of the opinion that the provisions of Section 133 of the Indian Contract Act are not subject to a contract to the contrary between the parties to the contract. This section is in unqualified terms. It was not necessary to put in the words 'notwithstanding any contract to the contrary' in this section, because wherever the legislature wanted that the terms of the contract between the parties should take precedence over the provisions of any section, the words 'in the absence of any contract to the contrary' or 'in the absence of any special contract' have been inserted in that particular section as has been done in Sections 152 and 163 of this Act.

26. It may also be mentioned that points Nos. 2 and 3 raised by the learned counsel for the appellant in this Court were neither taken by defendant No. 3 in their written statement, nor were these points argued before the Court below, and this conclusively shows that defendant No. 3 are trying to put an entirely new case here which, as already discussed above, has no substance even.

27. As regards points Nos. 1 and 4, raised by the learned counsel for the appellant, in the first place it was submitted by him that the plaintiff had asked for a mere declaration which, by virtue of the proviso to Section 42 of the Specific Relief Act, could not be granted in their favour because the plaintiff had omitted to seek the consequential relief (namely, the prayer for the return of the securities which were lying with defendant No. 2) which was available to them. Secondly, he submitted that even a declaration could not be granted in favour of the plaintiff, because in substance this was a suit for money or for the return of securities, and no question of the plaintiff being 'entitled to any legal character or to any right as to any property' was involved in this case.

According to him, no declaration under Section 42 of the Specific Relief Act could be granted where ft affected only the pecuniary relationship between the parties to a contract. Reliance for this submission was made on Nathu Ram v. Mula, AIR 1937 Lah 25, and Gopal Das Parmanand v. Mul Raj, AIR 1937 Lah 389, which were both by the same Division Bench consisting of Addlson and Abdul Rashid JJ. It was held in AIR 1937 Lah 25 :

'A suit for a declaration that the defendant would be liable to contribute to the plaintiff all moneys which the plaintiff as the defendant's surety would he liable to pay does not come under Section 42, as it affects only the pecuniary relationship between the parties to the contract.'

28. The prayer clause in the plaint, which I have mentioned in the opening part of this judgment, clearly shows that the plaintiff, after making a prayer for the grant of two declarations (one of which has been refused by the Court below) had also asked for a consequential relief in the following words :

'* * and the securities and amounts deposited by the plaintiff with defendant No. 2 cannot be appropriated by it by paying the security or any part thereof to the President of India in pursuance of the guarantee given by it (defendant No. 2) * *'

29. As a matter of fact, the learned counsel for the plaintiff-respondent also submitted that this was not a case of pure declaration, but of declaration with consequential relief, which he had specifically asked for in the prayer clause and the same had been granted to them by the Court below. He further submitted that at the most it would have involved the payment of more court-fee by the plaintiff if this objection had been raised by the defendants in the Court below and similarly the appellant would have to pay more court-fee in this appeal. But since this objection was not taken, the question of payment of more court-fee did not arise.

30. It is true that in paragraph 24 of his plaint, the plaintiff had stated that no consequential relief was being asked for in this suit and the same was not necessary in the circumstances of the case. But this averment in the plaint would not affect the real situation which would depend upon the interpretation of the plaint read as a whole and especially the prayer clause in the same.

31. In my opinion, reading of the plaint and especially the prayer clause contained therein, leaves no manner of doubt that the case was one for declaration and consequential relief and not for a declaration simpliciter.

32. In view of my finding that this was a suit for a declaration and consequential relief, the second contention of the learned counsel for the appellant, namely, that a pure declaration could not be given in the circumstances of this case, under Section 42 of the Specific Relief Act. has no force. But assuming for the sake of argument that if it be held that this was a pure declaratory suit and a declaration could not be given under the proviso to Section 42 of the Specific Relief Act, unless the plaintiff had asked for further relief which was open to him, the suit under the law could not be dismissed but the plaintiff would be given an opportunity to amend his plaint so as to include the prayer for consequential relief. It was held by a Bench decision of this Court in Bhagat Singh v. Satnam Transport Co., Ltd., F. A. 189 of 1956: (AIR 1961 Punj 278) in which I wrote the judgment, that:

' * * * In a case where the plaintiff who is able to sue for further relief, omits to do so and sues for a declaration alone, and the proviso to Section 42 of the Specific Relief Act is attracted, the Court should not dismiss the suit but should give the plaintiff an opportunity to amend his plaint so as to include a prayer for consequential relief. It is then for the plaintiff either to amend the plaint and include the prayer for consequential relief, or face the possibility of the suit being dismissed. But if after an opportunity to amend the plaint has been given to the plaintiff, he fails to avail of that opportunity, then there is no alternative but to dismiss the suit.'

33. The result would be that in case this contention of the learned counsel for the appellant were to prevail we will have to send the case back to the trial Court for giving the plaintiff an opportunity to amend his plaint so as to include a prayer for consequential relief. No useful purpose will be served by remanding the present case, because all the points in controversy between the parties have already been determined by the trial Judge.

34. We have also heard the criticism of the learned counsel for the appellant regarding the findings given by the trial Judge against defendant No. 3. I am of the view that the finding of the trial Court on issue No. 4 is correct, namely, that the surety bond executed by defendant No. 2 in favour of defendant No. 3 stands discharged, because of the variations having been made in the terms of the original contract, dated the 3rd July, 1954, without the consent of the surety (defendant No. 2).

35. It was held in Pratapsingh Moholalbhai v. Keshavlal Harilal, AIR 1935 PC 21:

'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.'

36. It is not denied, as mentioned in the judgment of the trial Court under issue No. 4, that if the surety bond of defendant No. 2 is considered to be discharged, then the indemnity bond executed by the plaintiff in favour of defendant No. 2 also stands discharged. The plaintiff in that case will be entitled to get back his securities from defendant No. 2, because as provided in the counter indemnity bond Exhibit P. 26, the securities furnished by the plaintiff had to remain with defendant No. 2 during the period of continuance of the guarantee given by defendant No. 2 to the President of the Union of India.

We have as a matter of fact been informed by the counsel for the parties that after the decision of the trial Court, the plaintiff has got back the securities from defendant No. 2. We are also told that defendant No. 3 had moved this Court for an injunction restraining defendant No. 2 from giving back the securities to the plaintiff, but they had failed to get this relief up to the Letters Patent Bench.

37. The main grievance of the appellant in this appeal is that the finding of the trial Court that the surety bond executed by defendant No. 2 in favour of the President of the Union of India stands discharged is wrong. But since I am of the view that the finding on this question which was necessary to determine in order to give relief to the plaintiff in this case, was correct, I think that no useful purpose will be served in remanding the case, as already mentioned above.

38. As regards the contention of the learned counsel for the appellant that the trial Judge could not pass the decree in terms he has done, I find that there is no legal defect in the decree framed by him. After giving the plaintiff-firm a declaration that his counter guarantee to defendant No. 2 stands discharged, he has given the plaintiff a further relief that the securities and the amount deposited by him with defendant No. 2 cannot be withheld by the latter. There was nothing wrong in granting this relief to the plaintiff in the circumstances of this case.

39. In view of what I have said above, I find no force in this appeal which is hereby dismissed. In the circumstances of the case, however, I would leave the parties to bear their own costs in this Court.

Dua, J.

40. I agree.


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