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Kandaswami Chettiar Vs. A.R.M. Annamalai Chettiar - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1933Mad360; 145Ind.Cas.531
AppellantKandaswami Chettiar
RespondentA.R.M. Annamalai Chettiar
Cases Referred and Aishan Bi v. Mahabir Parshad
Excerpt:
- - if the said kulandavelu chettiar fails to present the insolvency petition within one month from this date, or if i fail to produce the said kulandavelu chettiar when so ordered by the court in the course of those proceedings or in execution, i hereby agree to make the deposit amount liable for the decree debt of the said kulandavelu chettiar. it clearly says 'until he presents the insolvency petition and is adjudicated and discharged. if i fail to produce the said kulandavelu chettiar when so ordered by the court in the course of these proceedings, to mean that so long as the insolvency proceedings are in force and are pending in court, the judgment-debtor-insolvent-shall-when called upon-appear before the court and if he should commit default the surety's liability should continue......arrested in execution of that decree. then the present petitioner kandasami chettiar executed a surety bond the construction of which is in dispute before me. the surety bond is dated 24th september 1923 and the relevant portion is as follows:the said kulandavelu chettiar has been brought under arrest before the court. the said kulandavelu chettiar intends to present an insolvency petition within one month from this date. i have deposited the decrees amount in court as security for the due presentation of the insolvency petition, and, until its disposal, i shall hereby undertake to produce the said kulandavelu chettiar either before this court or before the official receiver until he presents the insolvency petition and is adjudicated and discharged. if the said kulandavelu chettiar.....
Judgment:

Anantakrishna Ayyar, J.

1. Kulandavelu Chettiar defendant in S.C. Suit No. 1319 of 1922: on the file of the Sub-Court, Madura, was arrested in execution of that decree. Then the present petitioner Kandasami Chettiar executed a surety bond the construction of which is in dispute before me. The surety bond is dated 24th September 1923 and the relevant portion is as follows:

The said Kulandavelu Chettiar has been brought under arrest before the Court. The said Kulandavelu Chettiar intends to present an insolvency petition within one month from this date. I have deposited the decrees amount in Court as security for the due presentation of the insolvency petition, and, until its disposal, I shall hereby undertake to produce the said Kulandavelu Chettiar either before this Court or before the Official Receiver until he presents the insolvency petition and is adjudicated and discharged. If the said Kulandavelu Chettiar fails to present the insolvency petition within one month from this date, or if I fail to produce the said Kulandavelu Chettiar when so ordered by the Court in the course of those proceedings or in execution, I hereby agree to make the deposit amount liable for the decree debt of the said Kulandavelu Chettiar.

2. Kulandavelu Chettiar applied in I.P. No. 12 of 1923 to be adjudicated an insolvent. He was directed to apply for discharge by 17th December 1926. Subsequently he applied for his discharge. The Court however dismissed the application relying on the report of the Official Receiver that the outstandings shown were unrealizable and that a large credit of over Rs. 500 was given to a woman without any security. After the said order refusing to grant a discharge to the insolvent, the surety filed the present application on 4th May 1927 praying that he may be discharged from his liability under the surety bond. The learned Subordinate Judge has dismissed the application on the ground that the surety bond stipulates that the surety is liable until a discharge is obtained; and as no discharge has been obtained the learned Subordinate Judge held that under the terms of the surety bond the surety was not entitled to the relief claimed by him. The surety has accordingly filed the present revision petition to the High Court. On his behalf it was argued by his learned advocate that on a proper construction of the surety bond it must be held that the obligation subsists only so long as an application for discharge has not been filed; and in support of that argument an unreported decision of a Bench of this Court was strongly relied upon. I am unable to agree with that contention. In my view the words of the surety bond in the present case are clear that the liability enures not only till an application for discharge is filed but till there is discharge. I have already quoted the relevant portion of the surety bond. It clearly says 'until he presents the insolvency petition and is adjudicated and discharged.' I am therefore unable to agree that the surety's obligation ceased the moment the application for discharge was filed by the insolvent. The unreported case relied upon by the learned advocate for the petitioner, namely, A.A.A.O. 224 of 1927, does not apply to the facts of the present case. The wordings of the surety bond in that case were

this surety bond shall remain operative until the above insolvent shall put in a discharge application and an order is passed therein.

3. The learned Judges held that the moment a discharge application was filed and an order was passed the surety's obligation under his bond ceased. The bond in that case did not specify that the obligation was to enure till discharge was obtained. It therefore seems to me that the unreported judgment is not really applicable having regard to the wordings of the surety bond before me. Then it was argued that so much of the surety bond as contained any provision outside Section 55, Civil P.C., should be taken to be ultra vires and not enforceable in those proceedings, and reliance was placed on Janaki Das v. Ram Partab (1893) 16 All 37 and Aishan Bi v. Mahabir Parshad AIR 1929 Lah 262. The answer to this contention will largely depend upon the interpretation of Section 55, Clause 4, Civil P.C. That, clause is to the following effect:

Where a judgment-debtor expresses his intention to apply to be declared an insolvent and furnishes security, to the satisfaction of the Court, that he will within one month so apply,, and that he will appear when called upon, in any proceeding upon the application or upon, the decree in execution of which he was arrested, the Court may release him from arrest, and if he fails so to apply and to appear, the Court may either direct the security to be realized or commit him to the civil prison in execution of the decree.

4. It will be seen that the section contemplates a security bond to be in order if it contains words to the effect that the judgment-debtor would appear when, called upon 'in any proceeding upon, the application,' etc., the application contemplated being the application for insolvency. In my view the wordings of the present bond are, on a proper construction, within the scope of Section 55 Clause (4). I construe the words:

if I fail to produce the said Kulandavelu Chettiar when so ordered by the Court in the course of these proceedings,

to mean that so long as the insolvency proceedings are in force and are pending in Court, the judgment-debtor-insolvent-shall-when called upon-appear before the Court and if he should commit default the surety's liability should continue. Therefore as I construe the surety bond in question, the clause in question is not beyond the scope of Section 55 of the Code. Then it was argued that having regard to the fact that the opposing creditor has not really taken any active steps in the course of insolvency, he should not be heard to argue against the prayers in the surety's application. For my part I cannot understand the conduct of the opposing decree holder in this case. But the question before me is not whether his conduct is up to the high water mark or not, but whether having regard to the wordings of the surety bond and to the fact that no order of discharge-absolute or conditional-has been obtained by the insolvent, the surety is entitled to the relief claimed in this application at present. Sections 41, 42 and 43, Provincial Insolvency Act, have been referred to. Discharge may be either absolute or conditional. And any order of discharge, however conditional it might be would, according to my construction of the surety bond, be enough to discharge the surety from the obligations of his bond. But unfortunately for the surety no order of discharge-not even a conditional discharge-has been passed in this case. That being so according to the terms of the bond, his application is I think premature and he is not at present entitled to the relief claimed by him.

5. Finally it was contended that all that the surety can be called upon to do under the terms of his bond at present is that the insolvent should be asked to appear before the Court, and if the surety manages to produce the insolvent before the Court, the learned advocate for the petitioner argues that the obligations under the surety bond cease. I am unable to agree with that contention however much I might sympathize with the surety having regard to the circumstances of the case. The insolvency proceedings do not end on mere adjudication. The insolvent's presence and help would be greatly needed so long as the estate has not been fully administered, but continues to be in the hands of the Official Receiver. Simply because the judgment debtor has been adjudicated insolvent and he has applied for discharge (which application has not been granted), it cannot be said that the proceedings in insolvency have terminated and it seems to me that so long as the insolvency proceedings are really pending and so long as (according to the terms of the surety bond in question) no order of discharge has been obtained the surety should be under an obligation to produce the judgment-debtor whenever called upon to do so by the Court. That being so 1 am unable to grant the request of the surety in the present case; I therefore dismiss this revision petition; but having regard to the conduct of the decree-holder, who now opposes the petition, I think this is a proper case in which I should decline to give him his costs of this petition.


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