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Hajee Moosa Sait and Brothers thro' Its managing partner Abdulla Salai Muhammed Sait Vs. P.S.P. Abdul Karim (26.10.1936 - MADHC) - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1937Mad360; (1937)1MLJ143
AppellantHajee Moosa Sait and Brothers thro' Its managing partner Abdulla Salai Muhammed Sait
RespondentP.S.P. Abdul Karim
Cases ReferredLaurie v. Scholefield
Excerpt:
.....the defendant in that case stood surety as required by the bankers and the condition of the said surety bond was for the payment by a and the surety on demand to the bankers of the sum of 4,824-4-9 due to them and also such further sum or sums as the bankers may thereafter advance to a in the course of his business, not exceeding on the whole 5,000. in a suit on the bond the plea raised by the surety was that on diverse days the bankers allowed a to overdraw his account to such an amount that the further sums advanced even if there had been a recital that the agreement had been to give credit for the 1,000 and the condition was for securing 1,000, it is well established by the judgment of the learned judges in parker v. r 1232, that unless the bond clearly showed that the parties..........the defendant in that case stood surety as required by the bankers and the condition of the said surety bond was for the payment by a and the surety on demand to the bankers of the sum of 4,824-4-9 due to them and also such further sum or sums as the bankers may thereafter advance to a in the course of his business, not exceeding on the whole 5,000. in a suit on the bond the plea raised by the surety was that on diverse days the bankers allowed a to overdraw his account to such an amount that the further sums advanced together with the said sum of 4,822-15-9 exceeded in the whole at one time 5,000 contrary to the said condition and therefore he was discharged from his obligation under the bond. this plea was negatived and bailey, j., observed:if the true construction be that the.....
Judgment:

Venkataramana Rao, J.

1. This Civil Revision Petition arises out of a suit instituted by the plaintiff to recover a sum of Rs. 256-1-6, being the amount due in respect of goods supplied to the first defendant between the 17th December, 1931, and 31st December, 1932. The 2nd defendant was sought to be made liable as surety in virtue of a letter of guarantee executed by him in plaintiff's favour dated 16th December, 1931, which runs thus:

Letter of surety regarding supply of goods, 16th December, 1931.Kandramanickam, P.C.P. Madura.Haji Musa Sait and Brothers

1st Margali Prajorpathi year

(16th December, 1931)

Karim writes as follows:

Please supply the bearer of this letter Section Shamsuddin Sahib Avergal of Tirupathur, goods in current account 'up to the extent of Rs. 250 (Rupees Two hundred and fifty) and have debit and credit transactions in his name. 'For the said amount I shall be surety for a period of one year. Thereafter I shall not be surety. If any amount be due to you within the aforesaid period of one year during which I shall be surety, I shall pay the same and take this letter. After one year I shall not be surety.

With compliments.

Nayan's help

(Sd.) P.C.P. Abdul Karim.

During the period of one year during which the guarantee was to subsist the first defendant was supplied goods on four occasions and on two of such goods of the value of more than Rs. 250 were supplied. The plea of the second defendant is that as the plaintiff exceeded the limit indicated by him in his said letter there was a variation of the terms of the contract entered into with him and he was there f6re discharged from all liability thereunder. This plea prevailed in the Court below.

2. The question is whether it is sound. No doubt as pointed out by Lord Atkin in Seth Pratap Singh v. Keshavlal (1934) 68 M.L.J. 339 : L.R. 62 IndAp 23 : I.L.R. 59 Bom. 180 :

the surety like any other contracting party, cannot be held bound to something for which he has not contracted.

3. And he refers to the observations of Lord Westbury in Blest v. Brown (1862) 4 De G.F. and J.

He (surety) is bound therefore merely according to the proper meaning and effect of the written engagement that he has entered into. If that written engagement is altered in a single line, no matter whether it be altered for his benefit no matter whether the alteration be, innocently made, he has a right to say, 'The contract is no longer that for which I engaged to be surety; you have put an end to the contract that I guaranteed, and my obligation therefore is at an end'.

4. The question therefore is, what is the meaning and scope of the Ex. C in this case? On a construction of the document as a whole the reasonable intendment of the parties seems to be to define the duration and limit of the liability of the second defendant and not to impose a limit on the supply of goods. The words 'up to the extent of Rs. 250' do not mean that, once the goods of the said value have been supplied no further goods should be given because the debit and credit transactions were intended to go on at least so far as the second defendant was concerned for one year. Therefore, the words 'up to the extent of Rs. 250' must be construed in relation to what follows, namely, ' for the said amount I shall be surety for a period of one year', thereby plainly indicating that the extent of the second defendant's liability is limited to the said amount. Ex. I is merely a request to the plaintiff by the second defendant to supply goods to the extent of Rs. 250 without any restraint upon his advancing more but with a condition on his part that he is answerable to that extent only. The case in Parker v. Wise (1817) 6 M. and S. 239 : 105 E.R 232 is instructive. In that case A had overdrawn his account with his bankers in a sum of 4,822-15-9 and in order to enable him the better to carry on his business requested the bankers to allow him to overdraw his account at any time and from time to time such further sums as he might require so as that the same sum together with the said sum 4,822-15-9 should not exceed as a whole at any time the sum of 5,000. The bankers agreed provided they were indemnified by the bond of a surety, and the defendant in that case stood surety as required by the bankers and the condition of the said surety bond was for the payment by A and the surety on demand to the bankers of the sum of 4,824-4-9 due to them and also such further sum or sums as the bankers may thereafter advance to A in the course of his business, not exceeding on the whole 5,000. In a suit on the bond the plea raised by the surety was that on diverse days the bankers allowed A to overdraw his account to such an amount that the further sums advanced together with the said sum of 4,822-15-9 exceeded in the whole at one time 5,000 contrary to the said condition and therefore he was discharged from his obligation under the bond. This plea was negatived and Bailey, J., observed:

If the true construction be that the parties intended to stipulate against any advance beyond 5,000 then this advance will have the effect of cutting down the obligation altogether. But the Court ought to see plainly that this was the intention, before they give a construction to the language of this bond which would have the effect of avoiding it if one shilling beyond the sum named should be advanced'.... 'If the parties had intended to attach a consequence so penal to an advance beyond that sum, can it be supposed that they would have contented themselves with language so equivocal, and would not have introduced express words of condition as it were by way of caution, that such should be the effect?

In Gordon v. Roe (1858) 8 El. A. l. 1065 : 120 E.R 396 , Crompton, J., followed Parker v. Wise (1817) 6 M. and S. 239 : 105 E.Rule 1232, and explained its scope thus:

Even if there had been a recital that the agreement had been to give credit for the 1,000 and the condition was for securing 1,000, it is well established by the judgment of the learned Judges in Parker v. Wise (1817) 6 M. and S. 239 : 105 E.R 1232, that unless the bond clearly showed that the parties intended that the restriction was to operate as a condition upon which the whole security was to become void, the advancing to a greater amount would be no defence.

I may also usefully refer to the case of Laurie v. Scholefield (1869) L.R. 4 C.P. 622, which is almost on all fours with the present case. In that case at the commencement of the dealings a letter of guarantee was given in the following form:

In consideration of the Union Bank of London agreeing to advance and advancing to the firm of Russel & Co., any sum or sums of money they may require during the next eighteen months, not exceeding in the whole the sum of 1,000 we hereby jointly and severally guarantee the payment of any such sum as may be owing to the said bank at the expiration of the said period of eighteen months, and undertake to pay the same on demand in the event of Russel & Co., making default in the payment of the same.

5. The contention in that case was relying on the words not exceeding in the whole the sum of 1,000 that the bankers during the period of eighteen months specified in the document made advances greatly exceeding in the whole 1,000 and therefore the surety was discharged from the liability and guarantee. Montague Smith, J., did not accept this contention and he remarked:

The words not exceeding in the whole 1,000 do not amount to a condition. They were intended to express the limit of the defendant's liability, and not to prohibit the bank from making any further advances to Russel & Co. If it had been intended that no advances beyond 1,000 should be made during the currency of the suretyship, I should have expected more precise words.

6. Following the principle laid down in the above decisions I hold that there has been no variation of the engagement in Ex. C by reason of the fact that goods of the value of more than Rs. 250 were supplied to the first defendant and the second defendant is not discharged from his liability thereunder. He is liable under Ex. 1 to pay to the plaintiff the value of the goods supplied to the first defendant to the extent of Rs. 250 during the year in question. But he is not bound to pay his interest as there is no stipulation in the document to pay any interest, nor has it been established in the case by any evidence that the dealings carried or were intended to carry interest.

7. I therefore reverse the decree of the lower Court and pass a decree for Rs. 188 with interest at 6 per cent, against the second defendant. In the circumstances of the case I direct each party bear his own costs throughout.


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