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O.A. Narayanaswami Ayyar Vs. S.A. Narayana Iyengar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1943Mad288; (1943)1MLJ114
AppellantO.A. Narayanaswami Ayyar
RespondentS.A. Narayana Iyengar and ors.
Cases ReferredRamanatham Filial v. Dorauwami Ayyangar
Excerpt:
- - he cannot, much less can the appellant, claim that the orders in question are bad because of want of notice to either. it is however unnecessary to pursue the matter further as we are satisfied that this ground was not urged in the court below. the appeal failed. if, as was conceded, such a question can be gone into by the executing court after the initiation of proceedings for enforcing the bond, we fail to understand why the surety should be denied the privilege of anticipating those proceedings beforehand by an application filed by himself......48 of 1938 the order on which is now under appeal before us the receiver is seeking to enforce a security bond executed by the first respondent for enabling the respondents belonging to the mangalavilas group to draw out from court the share of the monies decreed to them by the sub-court, tanjore, in the first instance. he claims recovery of rs. 2,48,090-3-7 which according to him represents the amount to which the first defendant became entitled by way of restitution from defendants 5, ii to 11, 25, 26, 27, 28 and 29. the appeal against the order rejecting this petition is c. m. a. no. 161 of 1940. e. p. no. 50 of 1938 is another petition by the same receiver seeking to enforce another security bond executed by the first respondent therein for the same purpose as that for which the.....
Judgment:

1. These two appeals have been filed against the orders of the District judge of West Tanjore dismissing two execution petitions in both of which the receiver appointed in E. P. No. 82 of 1934 was the petitioner. In O.S. No. 26 of 1912 which was an interpleader suit on the file of the Sub-Court, Tanjore, instituted to determine the rights of the several claimants to the Tanjore Palace estate, the first defendant, the senior prince, obtained a decree for a one-eighth share and his younger brother, the second defendant, for another one-eighth share. The balance of the estate, namely, three-fourths was decreed to the illegitimate sons of the late Maharajah, compendiously referred to as the Mangalavilas group. There were appeals preferred to this Court against the decision of the Sub-Court, Tanjore. The result was that the shares of defendants 1 and 2 were enhanced from one-eighth to two-sevenths and the shares of the Mangalavilas group, were correspondingly reduced. These latter consisted of six branches and each branch got an one-fourteenth share. The sum total of the shares of these branches amounted to three-sevenths. The estate under litigation consisted not only of extensive immovable properties but also comprised a sum of 20 lakhs of rupees collected and deposited into Court by a receiver appointed pending the disposal of O.S. No. 2 6 of 1912. When the appeals were pending in this Court the successful parties were permitted by order dated 7th November, 1919, to draw their respective shares in the fund in Court deposit, on their furnishing sufficient security. Under this order the Mangalavilas group consisting of defendants 5, 8 to 11, 25,26, 27, 28 and 29 applied for and obtained their shares of the money in Court as determined by the decree of the trial Court. As a consequence of the modification introduced by the decree of this Court on appeal which reduced the quantum of their share to three-sevenths instead of three-fourths, the Mangalavilas group became liable to refund the difference. Each of the six branches had accordingly to bring back into Court an amount represented by the difference between the one-eighth and one-fourteenth shares and this liability was ascertained and embodied in the final decree passed by the District Court, West Taniore, to which Court O.S. No. 26 of 1912 was withdrawn, the suit being thereupon re-numbered as O.S. No. 3 of 1919. It may be mentioned that the decree of the High Court was confirmed by the Privy Council. The rights of the parties were thereby finally determined to be those declared by the High Court.

2. The appellant before us was appointed receiver in E. P. No. 82 of 1934 at the instance of a creditor of the first defendant. It would seem that the first defendant became heavily indebted and his rights under the decree had not only been mortgaged by him but had also been attached by creditors who had obtained decrees against him. It was on the application of one of such decree-holders, namely, the decree-holder in O.S. No. 126 of 1933 on the file of the District Munsiff's Court, Tanjore, that the appellant was appointed receiver to realise the estate and assets of the first defendant by an order made in E. P. No. 82 of 1934. In E. P. No. 48 of 1938 the order on which is now under appeal before us the receiver is seeking to enforce a security bond executed by the first respondent for enabling the respondents belonging to the Mangalavilas group to draw out from Court the share of the monies decreed to them by the Sub-Court, Tanjore, in the first instance. He claims recovery of Rs. 2,48,090-3-7 which according to him represents the amount to which the first defendant became entitled by way of restitution from defendants 5, ii to 11, 25, 26, 27, 28 and 29. The appeal against the order rejecting this petition is C. M. A. No. 161 of 1940. E. P. No. 50 of 1938 is another petition by the same receiver seeking to enforce another security bond executed by the first respondent therein for the same purpose as that for which the security bond in E. P. No. 48 of 1938 had been executed. The appeal against the order dismissing this execution petition is C. M. A. No. 162 of 1940.

3. Before proceeding further it is necessary to mention one other fact in order to appreciate the contentions raised in these appeals. On an application made on 7th July, 1930, by the surety S. A. Narayana Iyengar who is the first respondent in E. P. No. 48 of 1938, the District Court, West Tanjore, passed an order on 13th December, 1930, cancelling the security bond executed by him. A similar order of cancellation was passed in favour of the surety in E. P. No. 50 of 1938 on 12th April, 1931. It is to be observed that these orders were passed long before the institution of O.S. No. 126 of 1933 on the file of the District Munsiff's Court, Tanjore. It was at the instance of the decree-holder in this suit and in execution of the decree passed therein that the appellant was appointed receiver. When the District Court, West Tanjore, passed its orders cancelling the security bonds aforesaid, it presumably followed the decision of this Court in C. M. A. No. 263 of 1926 where it was held that the bonds enured only to the benefit of the party on whose application the receiver appointed in the interpleader suit was continued during the pendency of the appeals therefrom and permission was granted to the successful claimants to withdraw the money from the Court. The judgment in this Civil Miscellaneous Appeal was pronounced on 24th April, 1928. On 29th March, 1933, however a different Bench of this Court held in C. M. A. No. 127 of 1933 that the earlier decision was erroneous and declared that the security bonds enured to the benefit of all persons who might be affected by the subsequent decisions in the appeals then pending, though the application for the continuation of the receiver was made at the instance of one alone of the appellants. This difference of opinion was finally resolved by a Full Bench on 27th November, 1936 and it was held that the decision of the learned Judges in C. M. A. No. 127 of 1933 laid down the correct law on the point. It thus turns out that the cancellation orders were made on what has since been declared to be an erroneous view of the effect of security bonds. But unfortunately the orders themselves were allowed to become final without being challenged by appeals, or otherwise. If these orders stand and are not to be treated as nullities, the appellant is faced with an insuperable obstacle inasmuch as the very bonds that are sought to be enforced had been cancelled and declared to be inoperative. This was exactly the contention raised by the respondent in the Court below. The learned District Judge went into the matter and held that the orders of cancellation were valid and accordingly dismissed both the petitions, K. P. No. 48 and E. P. No. 50 of 1938. The learned advocate for the appellant has advanced the same contention before us and has rested it upon two grounds, (1) that the orders of cancellation were passed without notice to all the parties interested and therefore they are void, and (2) that the Court which passed the orders had no jurisdiction whatever to pass them.

4. The application for cancellation of the security bond executed by Kolandavelu Pillai, the first respondent in C. M. A. No. 162 of 1940 was filed on 9th March, 1931, in the District Court of West Tanjore, and the order of cancellation was made on 12th April, 1931, as we have already mentioned. To this application the Mangalavilas group alone were made respondents but not the first defendant or his legal representatives. To. the application made by the first respondent in C. M. A. No. 161 of 1940 for cancellation of the security bond executed by him, both the legal representatives of the first respondent and the Mangalavilas group were made respondents. In neither of the applications, however, were the attaching decree-holders made parties and no notice appears to have gone to them. When the execution petitions, E. P. Nos. 48 and 50 of 1938 were filed in the Court below the attention of the appellant was drawn to the fact that the security bonds had been cancelled and he was asked to explain how the petitions lay in the face of these orders. The appellants' explanation was that ' the attaching decree-holders of the first defendant's restitution right whom this petitioner represents had no notice of the application to cancel the security bond and hence the said cancellation could not affect their rights to enforce the security. It is submitted that this petitioner is therefore entitled to enforce the security bond.' In this explanation there is no reference whatever to the objection taken before us, viz., the absence of notice to the first respondent or his legal representatives. Further it is clear even on the assumption that the attaching decree-holders were entitled to notice on the application for cancellation, the decree-holder at whose instance the appellant was appointed receiver was not one of them since, as already mentioned, his suit and decree were of a much later date. He cannot, much less can the appellant, claim that the orders in question are bad because of want of notice to either. It is doubtful whether the sureties were bound to give notice of their applications to other attaching decree-holders as their attachments gave them no interest in the property and the holder of the decree attached, namely, the first defendant who was entitled to restitution would fully represent their interests also. It is however unnecessary to pursue the matter further as we are satisfied that this ground was not urged in the Court below. We may observe that there is no reference to it in the judgment of the learned District Judge and what is more remarkable, no ground of appeal has been taken covering the point. We are not prepared to allow this point to be raised for the first time in this Court.

5. The second ground taken by the appellant appears to be equally without substance. What is urged is that the sureties had no locus standi to file applications for the cancellation of their bonds and the Court had no jurisdiction to entertain the applications or pass orders thereon. In this connection reliance is placed on the language employed in Section 145 of the Code of Civil Procedure, which enacts as follows

Where any person has become liable as surety--(a) for the performance of any decree or any part thereof, or (b) for the restitution of any property taken in execution of a decree, or (c) for the payment of any money, or for the fulfilment of any condition imposed on any person, under an order of the Court in any suit or in any proceeding consequent thereon, the decree or order may be executed against him, to the extent to which he has rendered himself personally liable, in the manner herein provided for the execution of decrees, and such person shall, for the purposes of appeal, be deemed a party wishin the meaning of Section 47:Provided that such notice as the Court in each case thinks sufficient has been given to the surety.

It is contended that the surety, if he is a third party, cannot invoke the aid of the executing Court for any purpose whatsoewr unless and until the party entitled to enforce the security bond initiates proceedings against him for enforcing it; and stress is laid on the words ' and such person shall, for the purposes of appeal, be deemed a party within the meaning of Section 47.' It may be conceded that by the mere execution of a security bond in favour of a party to the suit, a stranger does not entitle himself to the privileges of a party, nor is he bound by those restrictions which bind the latter. The object of the section appears to be two-fold : it provides a summary remedy by way of an application available to the party entitled to enforce the bond and at the same time confers on the surety proceeded against, a right of appeal as if he were a party within the meaning of Section 47, Civil Procedure Code. The ordinary remedy by suit is left untouched by the section and either party may, if he so chooses, avail himself of it. The question that we are here called upon to decide is of a different character altogether and it is whether the surety is entitled to apply to the Court in whose favour the bond was executed not for the purpose of impugning its validity but for the purpose of construing it and determining its scope and deciding whether in the events which have happened the bond had spent itself and become for that reason unenforceable. It can scarcely be disputed that the Court below had jurisdiction to decide the question independently of the provisions of Section 145 of the Civil Procedure Code. In Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38 M.L.J. 302 : L.R. 46 IndAp 228 : I.L.R. 42 All. 158 (P.C.) the widow of a deceased taluqdar obtained a decree for possession of the taluka against his brother who had taken possession of it on his death. When she applied for execution of the decree an order was made under Section 545, Civil Procedure Code, 1882, giving her possession on her furnishing security to restore the property with mesne profits to the extent of one lakh of rupees in case the decree should be reversed by the Appellate Court. The appeal failed. But on a further appeal to the Privy Council by the son of the original defendant the decree of the trial Court was reversed and the widow's suit was dismissed. Thereafter the successful party, namely, the brother's son of the late taluqdar applied to the executing Court under Sections 47 and 144, Civil Procedure Code, for the fixation of mesne profits and damages. To this application both the widow and the sureties were made parties. The sureties raised two contentions, namely, that their liability ended with the decree of the appellate Court and secondly, that the liability, if any, cannot be determined and enforced in execution proceedings. Their Lordships of the Privy Council held that Section 145 was not applicable to the case, because the sureties had not made themselves personally liable under their bonds. As regards Sections 47 and 144 the opinion was expressed that these sections apply only to parties or representatives of the original parties and not to the sureties who were third parties. The contention was advanced that the only way in which the security bond could be enforced was by a separate suit to enforce the charge and not by an application. Their Lordships pointed out that where the sureties bind themselves by a security bond to the Court which is not a juridical person, it cannot be sued and that the only mode of enforcing it was by the Court making an order in the suit upon an application to which the sureties are parties, that the property charged be sold unless before a' day named the sureties find the money. Their Lordships rejected the objection to the jurisdiction of the Court in emphatic terms observing,

It is idle to talk of the proceedings as if they had been taken before a Court which had no jurisdiction.

This case lays down the principle that the Court has an inherent power to decide . questions arising between sureties and parties to the suit claiming the benefit of their bonds. In Ayyaswami Ayyar v. Sivakki Ammal (1932) 65 M.L.J. 407 : I.L.R. Mad. 909. a Bench of this Court (Venkatasubba Rao and Reilly, JJ.) held that even in cases where section 145 of the Civil Procedure Code is inapplicable by reason of the fact that the sureties had not made themselves personally liable, the Courts possess a general power in regard to executing orders made against sureties, and in such cases, having regard to the decision of iftie Privy Council in Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38 M.LJ. 302 : L.R. 46 LA. 238 : I.L.R. 42 All. 158 (P.C.) and the policy underlying section 145, the sureties have a remedy by way of appeal against any orders that may be passed against them. The learned advocate for'the appellant, however, contends that Ramanatham Filial v. Dorauwami Ayyangar (1919) 38 M.L.J. 65 : 1.L.R. Mad. 325. precludes us from holding that the surety has a rigljt to apply to the executing Court to cancel the security bond. In this case a security bond had been executed by the judgment-debtor and a surety on his behalf to obtain the release of the former from arrest. The executants of the bond, namely, the surety and the judgment-debtor undertook a joint and several liability for the payment of the amount mentioned in the bond and in default it was stipulated the money should be recovered from the surety personally and the properties hypothecated under the security bond and from the other properties of the surety. The surety filed a suit for a declaration that the security bond was not binding on him as it had been executed owing to undue influence, fraud and coercion practised upon him. To the maintainability of the suit a preliminary objection was taken on the ground that it was barred by section 47 of the Code of Civil Procedure.

6. Both the Courts below took the view that the surety had alternative remedies, (i) in execution proceedings in the Court which passed the decree, and (2) by way of an independent suit. But inasmuch as he had a remedy in execution which he did not take, the Courts refused to pass a declaratory decree which was held to be a discretionary relief. When the matter came up to this Court in second appeal the main argument was that the surety cannot apply to the executing Court under section 4.7 of the Civil Procedure Code for cancellation of the security bond on the ground that it was obtained by fraud. The Court held that the words in section 145 ' shall for the purposes of appeal be deemed to be a party'

only mean that if an order is made in execution against a surety, the surety may appeal against the order as if he were a party to the suit in which the decree or order sought to be executed was passed, and that the reference to section 47 does not in other respects import into section 145 the provision, contained in section 47, which bars a separate suit. If it were not for the provisions of section 145,'the liability of the surety would have to be enforced by a separate suit, because it does not arise under the decree but subsequently and under a separate contract with the Court. The effect of the section is that the surety may be made a party to the execution proceedings against the principal debtor, and an order against the surety is in effect a decree upon his separate contract against him for the payment of money. The surety is not a party to the suit, or to the decree made therein, nor does he become a party to execution proceedings until application is made for an order against him. He is not a party to the suit within section 47 and section 145 only makes him a party for a limited purpose, namely, for appeal.

In this view the Court held that the surety had no right to apply under section 47 to have the security bond cancelled. It is to be observed that the surety in the above case was seeking to attack the bond executed by him on the ground of undue influence and fraud, thus raising questions alien to an enquiry by the Court executing a decree. Very different considerations arise where the surety does not t dispute the validity of the bond when it was executed but only states that by reason of the events that subsequently happened it has become discharged. In our opinion a question of the latter kind properly falls within the jurisdiction of the Court in whose favour the bond had been executed. If, as was conceded, such a question can be gone into by the executing Court after the initiation of proceedings for enforcing the bond, we fail to understand why the surety should be denied the privilege of anticipating those proceedings beforehand by an application filed by himself. In our opinion, section 145 does not impose a bar to the surety invoking the aid of the Court independently of an application under Section 145. We therefore concur in the orders passed by the learned District Judge and dismiss the appeals with costs.


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