1. The first defendant in the suit mortgaged certain immoveable properties to one Venkatappa Chetty. The mortgagor (1st defendant) sued for redemption in Original Suit No. 14 of 1909. It was held in that suit that Venkatappa advanced only about Rs. 800 although the deed of mortgage stated that a larger sum was lent. The learned City Judge held in that case that only Rs. 800 was advanced and directed redemption on the payment of that sum. The first defendant paid the decree amount into Court and claimed the return of the title-deeds. Meanwhile Venkatappa appealed to the High Court against the decree. Before handing over the title-deeds, the City Judge ordered that security for a sum of Rs. 1,300 should be furnished. Thereupon the second defendant paid into Court the said sum as security, and the first defendant was given the title-deeds. In the High Court, it was held that the mortgagee, Venkatappa Chetty, was entitled to a further sum of about Rs. 2,000 more. On this decree being passed, Venkatappa claimed the payment of the money deposited as security. During the pendency of the appeal, the property was sold to the wife of the present plaintiff. The money was also attached by a person who had obtained a decree in the Small Cause Court. That attaching creditor is the third defendant in the suit. The City Civil Judge held in the claim proceedings that Venkatappa Chetty must first proceed against the property purchased by the plaintiff's wife. In consequence of this order the plaintiff had to pay the balance of the decree debt in order to protect the property in his hands. This suit is brought by him for the payment of the money deposited by the 2nd defendant as surety in the mortgage suit.
2. The learned City Judge has come to the conclusion that his order in the claim proceedings was wrong and held that the plaintiff was entitled to recover the amount. The attaching creditor raised a question that the money deposited by the 2nd defendant really came from the first defendant and that he was entitled to attach it. The plaintiff and the attaching creditor entered into a compromise by which they agreed that the former should get Rs. 700 and the latter Rs. 600. The decree is in terms of the compromise. The 2nd defendant has appealed against this decree. As the compromise does not affect the rights of the 2nd defendant, we see nothing illegal in the City Judge having accepted it.
3. The main contention of Mr. Seshachariar is that the liability of the 2nd defendant can arise only on the failure of the first defendant to satisfy the decree and that consequently there is no cause of action against his client.
4. It is well-settled that a creditor is entitled to proceed against the surety: without exhausting his remedies against the principal debtor. Sections 28, 137 and 140 of the Indian Contract Act make this clear. The last Section pre-supposes that the surety is compelled to pay without the creditor resorting to the principal debtor, for payment. Sankana Kalana v. Virupakshapa Ganeshapa 7 Ind. Jur. 317, Hajarimal v. Krishnarav 6 Ind. Jur. 139. and Totakot Shangunni Menon v. Kurusmgal Kaku Varid (3) 4 M.H.C.R. 190. support this proposition. We, therefore, hold that it was not incumbent upon the creditor to have proceeded against the mortgaged properties and the person of the first defendant before seeking to enforce his claim against the money deposited by the 2nd defendant. Moreover, as we read the order directing security to be furnished we understand it to direct that the amount paid into Court be held primarily liable.
5. Mr. Seshachariar relied on Gopal Nana Shet v. Joharmal 19 B.S 578, In that case the learned Judges held that the bonds etc., produced by the judgment-debtor should be first applied towards the satisfaction of the decree, before the amount paid by the surety is proceeded against. Apparently, the learned Judges understood the liability of the surety to be limited to satisfying the claim which may arise in case the judgment-debtor failed to satisfy the decree. We do not think this case is any authority for the proposition that a surety cannot be proceeded against before the creditor exhausts all his remedies against the principal debtor.
6. As regards the argument based on the order passed on the claim proceedings, it is enough to say that the present suit is brought to vacate that very order. Consequently it cannot operate as res judicata.
7. No question about the right of the plaintiff to sue was taken in the Court below and we cannot allow it to be argued here.
8. There can be no question on the statement of the facts that plaintiff is entitled to claim payment of the money which he was compelled to pay and which money should have been recovered from what was deposited in Court by the 2nd defendant.
9. We think the learned Judge is right and dismiss the appeal (City Civil Court Appeal 5 of 1916) with costs. In view of our decision in the connected snit, the decree should be modified by inserting in Line 41 in Page 13 after the Words '700 only,' the words and the third defendant to Rs. 600'. A decree in the suit by the attaching creditor (Original Suit No. 189 of 1913) has become unnecessary owing to his having secured his right in the purchaser's suit (Original Suit No. 258 of 1913). We must, therefore, reverse the decree which we may point out, was not in form a proper one under any circumstances. The parties will bear their costs in this and in the Court below in this case (City Civil Court Appeal No. 6 of 1916).