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Arumugam Chettiar Vs. Sadasivam Pillai and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Reported in(1971)1MLJ228a
AppellantArumugam Chettiar
RespondentSadasivam Pillai and ors.
Cases ReferredWright v. Simpson
Excerpt:
- .....below that the decree had made it clear that his liability was only as a surety and not as a principal debtor, and that the execution could be levied against him only after exhausting the remedies against the first defendant who is shown as the principal debtor in the decree. both the courts below overruled the objection raised by the appellant and allowed the execution to proceed. they had taken the view that as the liability of the sureties is co-extensive with that of the principal debtor, it was not necessary for a creditor to exhaust his remedies against the principal debtor before he proceeds against the sureties.2. in this appeal, the learned counsel for the appellant, brings to my notice a decision of this court in srinivasa v. subramaniam (1965) 2 m.l.j. 502, wherein.....
Judgment:

G. Ramanujam, J.

1. The third defendant in O.S. No. 629 of 1964 on the file of the District Munsif's Court, Nagercoil, is the applicant herein. There was a decree in the suit on 31st March, 1965, for a sum of Rs. 2,700 on the basis of a promissory note executed by the first defendant in respect of which the second and third defendants were sureties. In execution of the decree in E.P. No. 411 of 1965, the appellant's properties were attached on 30th June, 1965. The appellant contended before the Courts below that the decree had made it clear that his liability was only as a surety and not as a principal debtor, and that the execution could be levied against him only after exhausting the remedies against the first defendant who is shown as the principal debtor in the decree. Both the Courts below overruled the objection raised by the appellant and allowed the execution to proceed. They had taken the view that as the liability of the sureties is co-extensive with that of the principal debtor, it was not necessary for a creditor to exhaust his remedies against the principal debtor before he proceeds against the sureties.

2. In this appeal, the learned Counsel for the appellant, brings to my notice a decision of this Court in Srinivasa v. Subramaniam (1965) 2 M.L.J. 502, wherein Anantanarayanan, O.C.J. has observed as follows:

But it is equally clear that, strictly in law, with reference to a decree on the negotiable instrument as such, the maker alone would be liable. The present decree therefore really falls into two parts, first a decree on the instrument against the maker (first defendant) and the second, a separate decree on the debt against the guarantor. I therefore, direct allowing the revision to this limited extent, that it now be incorporated as part of the decree that the decree should be executed against the maker (first defendant) for the suit claim, and that, only if that execution fails, should further execution proceed against the second defendant, as guarantor.

3. The view taken in that case was that where the decree is against two persons, one as principal debtor, and the other as guarantor, the decree must be treated as two separate decrees and that the plaintiff in execution of such decree has first to proceed against the principal debtor and only if that execution fails, the decree can be executed against the guarantor.

4. But it is seen that a recent judgment of the Supreme Court in Bank of Bihar v. Damodar Prasad : [1969]1SCR620 , has put an end to the controversy in the matter. The Supreme Court has, while dealing with a similar question, held that under Section 128 of the Contract Act, save as provided in the contract, the liability of the surety is coextensive with that of the principal debtor, that the surety thus becomes liable to pay the entire amount immediately on the passing of the decree and that it is not deferred until the creditor exhausts his remedies against the principal-debtor. The learned Judges have also quoted with approval a passage from the observations of Lord Elden in Wright v. Simpson 31 E.R. 1272 .

But the surety is a guarantee; and it is his business to see whether the principal pays and not that of creditor.

5. As laid down by the Supreme Court, in the absence of some special equity the surety has no right to restrain an action against him by the creditor on the ground that the principal is solvent or that the creditor may have relief against the principal in some other proceedings and before payment, the surety has no right to dictate terms to the creditor and ask him to pursue his remedies against the principal in the first instance. In view of the said categorical pronouncement of the Supreme me Court, it is not possible to accept the contention of the learned Counsel for the appellant that the decree-holder in this case has to proceed against the first defendant, the principal-debtor at the first instance. I therefore accept the views of the Courts below and dismiss the appeal. There will, however, be no order as to costs. No leave.


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