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State of Uttar Pradesh Vs. Jayanand Lakhera - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtSupreme Court of India
Decided On
Judge
Reported in(1972)3SCC228; 1971(III)LC262(SC)
ActsIndian Contract Act
AppellantState of Uttar Pradesh
RespondentJayanand Lakhera
Excerpt:
.....officer in course of patrolling or investigation of some other offence it is not necessary to follow conditions in all cases incorporated in section 42. - it is then endorsed that the bond sent to the s. that the bond be sent to the chief accountant and that a report has been prepared by the patwari of jakhand to the effect that the status of the surety is good. singhvi contends that jayanand lakhera offered to stand surety for making good any amount embezzled by tungeshwar prasad if he was appointed tehsildar & since tungeshwar prasad was in fact appointed, there was a completed contract and the appointment of tungeshwar prasad must be regarded as acceptance. but the state has to overcome several difficulties before this argument may be accepted. enquiry was made of the financial..........which on the evidence led by the plaintiff jayanand lakhera was the only authority competent to accept the bond. the high court was in our judgment therefore right in holding that in the absence of evidence of acceptance of the bond, jayanand lakhera was not liable to be proceeded against for recovery of the amount of rs. 10,000/-. the appeal therefore fails and is dismissed with costs.
Judgment:

J.C. Shah, C.J.

1. In the year 1944, the State of Tehri Garhwal desired to appoint a Tehsildar in the State Treasury. It was the practice a the State to require a prospective candidate to furnish surety bond in the sum of Rs. 10,000/-for proper performance of his duties. One Tungeshwar Prasad was selected for employment as Tehsildar. On June 10, 1944, the respondent to this appeal Jayanand Lakhera submitted a surety bond which is so far as it is relevant stated :

I, Jayanand Lakhera...of my own, accord execute a property as security for Shri Tungeshwar Prasad Lakhera, at present Tahsildar of Tehri Tahsil aforesaid; as Tungeshwar Prasad aforesaid has now been posted on Tehsil Tehri by the Darbar and security has been demanded from him, so, I Jayanand aforesaid stand as surety and declare that Tungeshwar Prasad aforesaid shall not misappropriate any kind of Government money in cash etc. and if he misappropriates Government money in cash, that I the surety shall be responsible for the payment of the money of that amount, and the Darbar shall have the right to realise the amount found due from the personal property of me the surety. Therefore I have executed this property by way of security, so that it may be of use when needed.

The language used in the bond is somewhat obscure. It does not set out the name of the authority in whose favour it was executed, but the clearest implication was that it was in favour of the Darbar of Tehri Garhwal State. It is not clear whether Tur geshwar Prasad was appointed Tehsildar before June 10, 1954 or after that date, though it may be stated that at the foot of the bond or in the correspondence accompanying it, there is an endorsement dated September, 15, 1944 that 'the applicant Tungeshwar Prasad Lakhera may be appointed.'

2. Tungeshwar Prasad in the course of his service was found to have misappropriated a sum of Rs. 21,300/-He was prosecuted and convicted. Thereafter, the State of Uttar Pradesh sought to recover the amount misappropriated from the respondent Jayanand Lakhera Jayanand then filed suit No. 1 of 1955 in the Court of the Civil Judge of Tehri for an injunction restraining the State of U. P. which was the successor to the Darbar of Tehri Garhwal from recovering the amount of Rs. 21.300/-which was embezzled by Tungeshwar Prasad. The suit was partially decreed. The trial Court held that the money embezzled was Government money, and the bond was accepted by the Darbar. He held however that the liability of Jayanand Lakhera was restricted to Rs. 10,000/-. He accordingly issued an injunction restraining the State of U.P. from recovering an amount exceeding Rs. 10,000/-from Jayanand Lakhera. In appeal, the High Court of Allahabad decreed the suit and restrained the State from recovering any amount from Jayanand Lakhera. The present appeal has been preferred by the State with special leave.

3. It is unnecessary to consider whether the amount embezzled by Tungeshwar Prasad was Government money. Both the Courts have held that it was Government money and on the view we take, even if the amount embezzled was Government money, the respondent Jayanand is not liable to be proceeded against for recovery of the amount of Rs. 10,000/-which the State now seeks to recover.

4. The plaintiff-Jayanand Lakhera in his plaint expressly averred that his security bond was not accepted. In the written statement it was stated that the allegation of the plaintiff that he stood security for Rs. 10,000/-only is wrong. It is further stated that the financial status of the plaintiff was fully enquired into and the bond was accepted. An issue was raised on the plea raised by Jayanand Lakhera, Issue No. 1, read :

Whether the security bond dated 10-6-1944 was accepted by the Defendant

Jayanand examined one Jit Singh Bhatia who deposed that since 1944, he was Reader of S.D.M. Pratapnagar, and that he had to deal with the security bond Ex. A-1 produced in the case. He identified the attestation of Sheo Prasad, and deposed that the Ruler of the State used to accept the security bond at the recommendation of the Chief Secretary. There is no cross-examination on this part of the case nor was any evidence led by the State of U.P. to prove that the practice deposed to by the witness was not the true practice Witness Sarat Chand who was the only witness examined on behalf of the State says nothing in that behalf. There was therefore an averment in the plaint that there was no acceptance of the security bond and a denial of that averment by the State. There was evidence by the plaintiff Jayanand that it was the practice in the State that the Ruler of the State on the recommendation of the Chief Secretary accepted the bond. There was no evidence to the contrary on behalf of the State of U. P.

5. On the record there is no evidence of any express acceptance of the bond by the Durbar. But Dr. Singhvi for the State contends that Tungeshwar Prasad was appointed by order dated September 15, 1944 and that the appointment amounts to acceptance by the Ruler of Tehri Garhwal of the bond submitted by Jayanand Lakhera. It is recited in the bond that Tungeshwar Prasad was posted at Tehri Garhwal by the Ruler, but there is no clear evidence as to whether the appointment was made on the 10th June, 1944 or after that date. On the bond submitted by Jayanand, there are several endorsements, the first being that it was forwarded to the A/C Sahib for information and necessary action. It is then endorsed that the bond sent to the S.D.O. Mohal Kirtinagar, requesting him to make full enquiry about the actual status of the surety and to intimate the same. Then there is the endorsement, presumably of the S.D.O. Mohal Kirtinagar that 'the Patwari of Bariula is ordered to write as to what area of land of what particular and 'what other properties he possesses'. There is then an endorsement of the S.D.O. that the bond be sent to the Chief Accountant and that a report has been prepared by the Patwari of Jakhand to the effect that the status of the surety is good. Relying upon Section 8 of the Indian Contract Act, Dr. Singhvi contends that Jayanand Lakhera offered to stand surety for making good any amount embezzled by Tungeshwar Prasad if he was appointed Tehsildar & since Tungeshwar Prasad was in fact appointed, there was a completed contract and the appointment of Tungeshwar Prasad must be regarded as acceptance. But the State has to overcome several difficulties before this argument may be accepted. There is nothing or the record to prove that the Indian Contract Act on a statute analogous thereof was in force at the relevant time in the Tehri Garhwal State. Again, it cannot be stated with certainty that Tungeshwar Prasad had not been appointed prior to the 10th June, 1944 The evidence led on behalf of Jayanand Lakhera that the Darbar used to accept the surety bond was not challenged in cross-examination, and was not controverted by any evidence on behalf of the State. No rules relating to the appointment of Tehsildar and submission of the surety bonds, and delegating the authority of the Darbar or the Ruler have been produced. The record is completely silent on these points. Since there is nothing to prove that the Indian Contract Act applied to this area, we must proceed on the broad ground of equity. Here is a case in which the respondent Jayanand had submitted a bond for the acceptance of the State under which he offered to render himself liable for any amount that Tungeshwar Prasad may embezzle, such amount being Government money. Enquiry was made of the financial status of Jayanand Lakhera and it was found that he was good for the amount of Rs. 10,000/-for which it appears the bond had been taken. But thereafter, there is no evidence of any acceptance of the bond by the Darbar which on the evidence led by the plaintiff Jayanand Lakhera was the only authority competent to accept the bond. The High Court Was in our judgment therefore right in holding that in the absence of evidence of acceptance of the bond, Jayanand Lakhera was not liable to be proceeded against for recovery of the amount of Rs. 10,000/-. The appeal therefore fails and is dismissed with costs.


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