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Annamalai Chettiar Vs. V.T. Chettiar Firm - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1937Mad721; 173Ind.Cas.579
AppellantAnnamalai Chettiar
RespondentV.T. Chettiar Firm
Cases ReferredHolme v. Brunskill
Excerpt:
.....view of the fact that the rangoon high court had on 26th november 1934 dismissed the petition of alagappa chettiar to set aside the ex parte order and that the stay was thereby cancelled, the surety (appellant) may according to the terms of his bond be ordered to produce alagappa chettiar before the court, and that if he failed to do so, the appellant should be ordered to pay the decree amount in accordance with the terms of the bond, and in default should be arrested and sent to jail. i however doubt very much whether these decisions can be held to be good law, at any rate in madras. this very sound reasoning would apply equally well to execution proceedings. it is clearly not one passed under order 21, rule 57, civil p. the nature of the order passed by the learned subordinate judge..........that if the court deemed itself debarred from going behind the decree of the high court, it should stay execution until he could get a stay from the rangoon high court. on the same day the present appellant appeared and offered to stand surety for alagappa chettiar if the court would release him from arrest. the court thereupon adjourned rule a. no. 1309 of 1933 and e.p. no. 359 of 1933 to 5th january 1934 to get a stay from the rangoon high court or to consider the objections and dispose of the petition. the question that arises in these appeals is whether the appellant is still liable under the surety bond. the important words by which the appellant made himself liable are:if ha (alagappa chettiar) is released from the said warrant, i hereby agree to produce him at any time required by.....
Judgment:

Horwill, J.

1. The respondent in these appeals obtained a decree against Alagappa Chettiar and the members of his family in the Rangoon High Court and got it transferred to the Devakottai Sub-Court for execution. On the application of the decree-holder in E.P. No. 359 of 1933, the Sub-Court ordered arrest, and Alagappa Chettiar was brought to the Court under arrest on 24th October 1933. On that day he filed two documents. One was a counter to the E.P. denying that he was liable under the decree in that (1) he was not a partner of the firm, although his father was, and (2) that he received no notice of the application to transfer the decree for execution to the Sub-Court of Devakottai. He also filed E.A. No. 1309 of 1933 praying for release from arrest and stay of execution until his objections to the execution petition had been disposed of. He added a further prayer that if the Court deemed itself debarred from going behind the decree of the High Court, it should stay execution until he could get a stay from the Rangoon High Court. On the same day the present appellant appeared and offered to stand surety for Alagappa Chettiar if the Court would release him from arrest. The Court thereupon adjourned Rule A. No. 1309 of 1933 and E.P. No. 359 of 1933 to 5th January 1934 to get a stay from the Rangoon High Court or to consider the objections and dispose of the petition. The question that arises in these appeals is whether the appellant is still liable under the surety bond. The important words by which the appellant made himself liable are:

If ha (Alagappa Chettiar) is released from the said warrant, I hereby agree to produce him at any time required by this Hon'ble Court till the said objections are heard and decided and till the disposal of the petition which has been filed praying for stay; and in case orders are passed against him in the two matters set forth above, I further agree to produce him subsequent to that at any time fixed by this Hon'ble Court; and if I fail to produce him as stated above I and my heirs further agree to pay the decree amount of this suit from and out of my moveable and immoveable properties.

2. The grounds on which the appellant seeks to escape liability under this bond are these: On 21st December 1933 a stay order was received from the Rangoon High Court in these words: 'Let execution be stayed pending the application', the application in question being the one by Alagappa Chettiar to set aside the order that was ex parte, so far as he was concerned, transferring the decree for execution against him from Rangoon to Devakottai. On 26th January 1934, E.P. No. 359 of 1933 and E.A. No. 1309 of 1933 were called and the Rule P. was endorsed, 'The application may be renewed after stay is vacated'. Then comes a symbol which is said to mean 'dismissed'. On the Rule A. the endorsement is 'E.P. has been dismissed. Petition dismissed'. On 26th November 1934 the Rangoon High Court dismissed the application by Alagappa Chettiar and so the stay became automatically dissolved. On 14th July 1934 the present appellant filed E.A. No. 676 of 1934 to cancel the surety bond on the ground that his liability ceased when the E.P. and E.A. were dismissed on 26th January 1934. That application was dismissed and so the surety has filed C.M.A. No. 551 of 1934. On 4th January 1935 the respondent decree-holder filed Rule P. No. 6 of 1935 for execution against defendant 6, Alagappa Chettiar, adding under his name the name of the appellant. The prayer was that in view of the fact that the Rangoon High Court had on 26th November 1934 dismissed the petition of Alagappa Chettiar to set aside the ex parte order and that the stay was thereby cancelled, the surety (appellant) may according to the terms of his bond be ordered to produce Alagappa Chettiar before the Court, and that if he failed to do so, the appellant should be ordered to pay the decree amount in accordance with the terms of the bond, and in default should be arrested and sent to jail. In view of the order passed in E.A. No. 676 of 1934, the Court naturally ordered execution to proceed and against that order the surety has filed C.M.A. No. 84 of 1935.

3. The main argument adduced on behalf of the appellant is that it must be presumed that he stood surety for Alagappa Chettiar only for the pendency of Rule P. No. 359 of 1933, and that he could nob possibly be liable indefinitely until such time as the decree, holder thought fit to proceed against him. Mr. Patanjalai Sastri has quoted a number of cases in which various High Courts have held that when an execution petition has been dismissed for default, any subsequent proceedings are entirely distinct from the proceedings in respect of the prior execution petition that was dismissed, and that the surety could only have contemplated becoming so for the appearance of the judgment, debtor during the proceedings that were then pending and not for proceedings that had not then even been contemplated. We are not prepared to disagree with the principle laid down in these cases; but they differ in an important respect from the proceedings we are now considering. When a petition is dismissed for default, it naturally comes to an end; and the argument that the surety could not have considered proceedings which were not in the contemplation of even the principal parties is a very sound one. In Kali Ram v. Umrao Singh AIR 1934 Lah 92 and Kashmiri Lal v. Chuni Lal AIR 1934 Lah 319, the dismissed petitions were restored to file and the Judge who decided these cases held that the surety was not liable after the petition was restored. I however doubt very much whether these decisions can be held to be good law, at any rate in Madras. In Veeraswamy v. Ramanna AIR 1935 Mad 365, a Full Bench case of this Court, a surety furnished security for the decree amount pending disposal of the suit. The suit was dismissed for default but later restored on an application by the plaintiff. It was held that with the restoration of the suit all the ancillary proceedings must be deemed to be restored also and that the surety bond must therefore be deemed to have been restored with the restoration of the suit. This very sound reasoning would apply equally well to execution proceedings. A case, where the execution petition was dismissed and not restored, presents no difficulties. The important distinction between the present case and those above quoted is that in this case the petition was not dismissed for any fault on the part of the decree-holder; it was dismissed merely because there had been a stay order from the Rangoon High Court and because the Subordinate Judge was not willing to keep the Rule P. and Rule A. on the file indefinitely. This would appear from the expression, used in dismissing the E.P. 'The application may be renewed after stay is vacated.' There is no justification for an order of this sort. It is clearly not one passed under Order 21, Rule 57, Civil P.C., for any default, nor can it be said to be an order passed under Section 47, Civil P.C., which provides for the determination by the Court of all questions arising between the parties to the suit in which the decree was passed. The nature of the order passed by the learned Subordinate Judge is well understood, especially in this Presidency, as one passed for administrative or statistical purposes, so that the Subordinate Courts shall not be called in question by the High Court for having a large pendency of applications. The Court which passes such an order and the parties and their pleaders all understand it as being equivalent to an order adjourning the petition sine die. It is usual to revive the proceedings by the filing of a fresh E.P. properly stamped, and it is not usual in such an E.P. to state definitely that it is in renewal of the prior E.P.; but the decisions of this High Court have made it quite clear that it is in fact a renewal of the prior E.P., provided of course that the nature of the proceedings is the same as in the E.P. that has been dismissed for administrative or statistical purposes, or such as to necessitate a revival of the earlier E.P. If on the other hand, the reliefs asked for in the two Rule P.s have no necessary connexion, the later would not revive the earlier. A later B.P., for example, applying for arrest, would not ordinarily revive one praying for attachment or some entirely different relief. A paragraph from Pattannayya v. Pattayya AIR 1926 Mad 453 illustrates the attitude of this Court towards petitions of this nature:

In Subba Chariar v. Muthuveeran Pillai (1913) 36 Mad 553, Benson and Abdur Rahim, JJ. follow the decision of Miller and Munroe, JJ. in Chalavadi Kotiah v. Poloori Alimelammal (1908) 31 Mad 71. The principle of these oases is that if an execution application is pending, a subsequent application is not an application under Art. 181 but an application asking the Court to continue the proceedings in a pending application.

The decision in Ayissa Umma v. P.K. Abdulla AIR 1924 Mad 178, to which one of us was a party, is in point. It was held in that case that an order of dismissal of an execution petition for statistical purposes did not amount to a dismissal of the petition but that the petition should be considered as pending.

4. This practice in mofussil Courts was recognized by their Lordships of the Privy Council in Qamar-ud-din Ahmad v. Jawahar Lal (1905) 27 All 334 and it is now too late to deny that applications of the kind under consideration, where it is quite clear from the orders passed that they were dismissed merely because the Court did not want to keep its file encumbered with petitions on which no action could be taken, are dismissed in any sense contemplated by the Civil Procedure Code or that against orders on such petitions appeals can be preferred. I cannot see in what way the surety is prejudiced by an order of this kind. It is true that he had no idea at the time when the order was passed of the date when the application would be revived; but the same might be said of an order adjourning the petition sine die. It has been pointed out by this Court on more than one occasion that the closing of petitions by dismissal or by adjourning them sine die is objectionable; and that the proper course is to adjourn the petitions from time to time for a few months. However, the practice is still in vogue and the nature of the order passed is perfectly well understood by all parties concerned. If the surety thought himself aggrieved by such an order because his liability was to continue for an indefinite time, he could have moved this Court by revision or he could have done what he has done; he could have moved the Court to cancel his surety bond in case the decree-holder did not take prompt steps. The practice of removing from the file execution petitions in which immediate action cannot be taken is so widespread that if Courts did not take the sensible view set out in Pattannayya v. Pattayya AIR 1926 Mad 453 and a host of other cases, a great deal of injustice would be done; for the dismissal of such petitions would cause future petitions to be time-barred, and in cases like the present both the judgment-debtor and the surety would escape liability. The appellant here has secured the release of the judgment-debtor, Alagappa Chettiar, who has since filed an insolvency petition, and gross injustice would be done if the surety were now allowed to wriggle out of his responsibility.

5. In interpreting a bond, it is necessary to see what the parties contemplated when they entered into the agreement. It would seem from the careful wording of the bond in question that it was drawn up by the legal advisers of the parties in express contemplation of such a disposal of the execution petition as has actually taken place; for the surety undertook to produce Alagappa Chettiar at any time required by the Court until the said objections were hoard and decided and till the disposal of the petition which had been filed praying for stay. It has been pointed out that the petition was not disposed of, even though it was dismissed, and that the order passed was merely one removing it temporarily from the file of pending applications. The other contingency had certainly not arisen; for, the objections had not been heard and decided and the introduction of the two conditions, the hearing of and deciding the objections and the disposal of the petition, shows that the parties did intend that the surety should be liable until both the conditions had been fulfilled. It is contended that the objections have not been heard and derided by the Devakottai Court and never will be and that the bond should not be read as if the surety remained liable in perpetuity; but this contention is not warranted. As soon as the stay was raised, the surety could himself have asked the Court, as he did, to dispose of the pending execution petition. It is true that the execution Court at Devakottai did not directly hear and decide the objections of Alagappa Chettiar to the execution of the decree. The decision of the Rangoon High Court on the disputed points had to be followed by the sub-Court of Devakottai; but in deliberately following the decision of the Rangoon High Court, the sub-Court must be deemed by implication to have heard and decided the same matters. The reason why no reference was made to those objections in the final order of the Court in E.P. No. 6 of 1935 is that nobody then referred to these objections, because the parties knew that the sub-Court at Devakottai was bound to follow the decision of the Rangoon High Court.

6. It is argued that B.P. No. 6 of 1935 did not purport to revive Rule P. No. 359 of 1933; but I am satisfied that it did. It in not customary, as I have already pointed out, to ask expressly in the subsequent execution petition for the old execution petition to be revived. If it is referred to in the later execution petition and the prayer in the later execution petition is such that it makes it clear that it continues the old execution petition, it has the effect of reviving it. In Rule P. No. 6 of 1935 the decree-holder refers to the arrest of Alagappa Chettiar in Rule P. No. 359 of 1933 and the execution by the appellant of the surety bond. He states that as the petition of Alagappa Chettiar was dismissed and the stay raised, the surety (appellant) is bound to produce defendant 6 in Court. He thereupon prays that the Court may order the surety to produce Alagappa Chettiar in Court and penalise him in default. By this the decree-holder was asking that execution should be resumed at the stage at which it was discontinued when B.P. No. 359 of 1933 was dismissed. The state of affairs then was that Alagappa Chettiar had been arrested and released on the undertaking by the appellant that he would produce Alagappa Chettiar whenever called upon to do so at any time before the hearing and the deciding of the objections and under certain conditions after that. When E.P. No. 6 of 1935 was filed, the decree-holder asked that the surety, in pursuance of the terms of his bond, should produce Alagappa Chettiar once more before the Court. This would leave the decree-holder free to pursue his remedy against Alagappa Chettiar in the same way as if the security had never been furnished. It has been pointed out that E.P. No. 359 of 1933 prayed for the arrest of three judgment-debtors, whereas E.P. No. 6 of 1935 related only to Alagappa Chettiar; but as the object of E.P. No. 6 of 1935 was only to bring Alagappa Chettiar once more before the Court and to bring back E.P. No. 359 of 1933 to the stage at which it was before Alagappa Chettiar was released, this could not be otherwise. It therefore seems clear that E.P. No. 6 of 1935 did purport to revive E.P. No. 359 of 1933 and did in fact do so. The appellant is therefore still liable under his bond.

7. The appellant further complains that he was not given a reasonable time to produce Alagappa Chettiar. He was served on 6th February 1935 with a notice to produce Alagappa Chettiar in Court by the 1st March. He had therefore ample time to do so. He appeared in Court on 1st March and at his request the Court gave him a further three days, which the Court considered sufficient to bring a man from his residence 15 miles away. 15 days' time was asked for on the ground that it was not easy to procure Alagappa Chettiar; but it was clear that this was a misrepresentation and that 15 days were required not to produce Alagappa Chettiar but to get a stay order from the High Court. Had the appellant made a truthful representation to the Court, time to move the High Court would doubtless have been granted; but under the circumstances I do not think that the lower Court failed to give the surety reasonable time to produce Alagappa Chettiar. In the result the appeals are dismissed with costs in C.M.A. No. 551 of 1934 only.

Mockett, J.

8. I have had the advantage of reading my learned brother's judgment and I agree with it. I do not propose to repeat his statement of the facts. The difficulties arising in this case are of course entirely due to the continuance of the objectionable practice of disposing of execution petitions in a summary manner for statistical purposes so frequently condemned by this High Court. This practice should now become extinct owing to the recent amendment of Order 21, Rule 57. The cases are referred to in a judgment of a Bench of this High Court, A.S. Nos. 358 and 359 of 1924. As to this, I do not think there is any more or less magic in the words 'dismissed' than in the words 'struck off,' 'rejected', 'closed', or 'recorded'. In all such oases in the absence of any suggession that the matter has been disposed of under Order 21, Rule 57, which is certainly not the case here, and in the further absence of any suggestion of a disposal under Section 47, Civil P.C., the Courts in this Presidency have, for the prevention of gross injustice, treated such disposals as virtually being adjourned sine die and capable of revival, and I agree that E.P. No. 6 of 1935 did revive Rule P. No. 359 of 1933.

9. The appellant has argued that by the dismissal of Rule P. No. 359 of 1933 he has been relieved of his liability under the bond, but the short answer is that the execution petition has never in fact been dismissed but has been revived by B.P. No. 6 of 1935. What the intention of the learned Judge was in this matter is abundantly clear from his order dated 4th August 1934, and I have not the slightest doubt that the whole course of events in the case was entirely in the contemplation of all the parties including the surety. The bond is dated 24th October 1933 and its whole basis is the obtaining of a stay. Can it be doubted that the parties contemplated that this matter might be finally disposed of by the Rangoon High Court? It will be observed that what was also contemplated was that the obligation of the surety should continue 'till his said objections are heard and decided and till the disposal of the petition which has been filed praying for a stay'. It is quite obvious that, to put it shortly, a decision as to the liability of Alagappa Chettiar was what was to be awaited, he having objected that he was not a partner and not liable. The surety bond was executed on the same day as Alagappa's objections and his petition for release. The two were direotly connected. He went to Rangoon with the knowledge of the surety and raised those objections there. It is quite clear that the moment they were decided there, they became res judicata in the Devokattai Court. What it comes to therefore is that the surety's complaint in this case is that the decree-holder has not gone through the formality of reviving E.P. No. 359 of 1933, the issue in which had already been decided in his--the decree-holder's--favour in Rangoon in order that the objections of Alagappa already decided against him might be disposed of. The only disposal could be their rejection because they had been rejected in Rangoon. It seems to me that if there has been any variation in the surety's liability it has never been a material variation but one on the face of it unsubstantial: Holme v. Brunskill (1878) 3 QBD 495. I agree that ample time has been given to produce Alagappa who lived quite near the Devakottai Court, and it has not been suggested to us that any attempt has ever been made to produce him. I agree that these appeals should be dismissed with costs in C.M.A. No. 551 of 1934.


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