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Sundara Reddi and anr. Vs. Varadharaja Pillai - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in34Ind.Cas.407
AppellantSundara Reddi and anr.
RespondentVaradharaja Pillai
Cases ReferredAshutosh Sikdar v. Behari Lal Kirtania
Excerpt:
civil procedure code (act v of 1908), sections 55(4), 145(c) - civil procedure code (act xiv of 1882), section 336--surety bond--presentation of insolvency petition by judgment-debtor, whether discharges surety--under taking to produce judgment-debtor--issue of notice to judgment-debtor--waiver of notice--execution petition, dismissal of, effect of, on surety's liability--construction of surety bond--statutory obligations of surety. - - the district munsif did not accept the plea which was clearly untenable, but at the same time dismissed the execution application, execution petition no......code, on his undertaking to file an insolvency petition and upon the appellants executing a security bond on 23rd january 1914. the judgment-debtor did not appear within 30 days, nor did he file an insolvency petition. the decree was transferred to the villupuram munsif's court, and on the application of the decree-holder the sureties' moveables were attached. the appellants applied for the release of the properties from attachment, and this was ordered on 29th july 1914, the district munsif being of opinion that the sureties had not undertaken to see that the judgment-debtor would present an insolvency petition within a month of the date of his release but merely to produce him in court whenever the court may direct. on 3rd august 1914, a notice was issued to the sureties to.....
Judgment:

1. One Velayudam Pillai was arrested in execution of a decree and produced before the District Munsif of Cuddalore. The judgment-debtor was released under-section 55 (4), Civil Procedure Code, on his undertaking to file an insolvency petition and upon the appellants executing a security bond on 23rd January 1914. The judgment-debtor did not appear within 30 days, nor did he file an insolvency petition. The decree was transferred to the Villupuram Munsif's Court, and on the application of the decree-holder the sureties' moveables were attached. The appellants applied for the release of the properties from attachment, and this was ordered on 29th July 1914, the District Munsif being of opinion that the sureties had not undertaken to see that the judgment-debtor would present an insolvency petition within a month of the date of his release but merely to produce him in Court whenever the Court may direct. On 3rd August 1914, a notice was issued to the sureties to produce the judgment-debtor on or before 25th August 1914. They appear to have taken advantage of the presence of the judgment-debtor in Court to point him out on 18th August. The judgment-debtor was, however, allowed to go, in fact, it is said that he ' ran away' from the Court. The sureties pleaded that they were absolved from their liability as they had produced the judgment-debtor on 18th August. The District Munsif did not accept the plea which was clearly untenable, but at the same time dismissed the execution application, Execution Petition No. 679 of 1914, on the ground that the sureties' liability under the bond was confined to their producing the judgment-debtor in connection with the insolvency proceedings. The decree-holder then appealed to the District Court. The District Judge reversed the lower Court's order, holding that the sureties were liable for the judgment-debtor's non-appearance within 30 days and also for the non-production of the judgment-debtor between 8th August and 25th August.

2. The following is a translation of the material portion of the security bond: 'The plaintiff has got the defendant in the above suit arrested under a warrant for the decree amount and produced him in Court. The said defendant states that he is unable to discharge the said decree-debt and that he is putting in an insolvency petition. On whatever dates the Court may direct the defendant to appear (in Court) in connection with the above matter, the said defendant will appear in Court on all such dates. In the event of the defendant failing so to appear, We shall cause him to appear (in Court). In the event of our failing so to make him appear we shall deposit the said decree amount.' We agree with the District Judge that it is to be regretted that the District Munsif should have accepted such a loosely worded security bond, which is not in the terms of Sub-section (4) of Section 55, Civil Procedure Code. Three questions were argued by the learned Advocate-General who appeared for the appellants. He contended (1) that the security bond, not being in accordance with the terms of Section 55 (4), Civil Procedure Code, the sureties cannot be held to be liable; (2) that inasmuch as the judgment-debtor was not called upon to appear before the Court, the ancillary obligation which rested upon the sureties to produce him had not yet arisen; (3) that the execution proceedings having been closed, the sureties were no longer liable.

3. We are of opinion that there is no substance in objections (1) and (3) and that Section 145 (c), Civil Procedure Code, which provides that 'where any person has become liable as a surety 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', is applicable. Section 145, Civil Procedure Code, differs in several respects from the corresponding Section 253 of the Code of 1882. The present section applies not only to security bonds for the performance of a decree but the suretyship for the restitution of property taken in execution of a decree and also to bonds for the payment of money and for the fulfilment of any condition under an order of the Court. The terms of Sub-section (c) are very wide and include, we think, a case where security is given for the production of a judgment-debtor, who is arrested in execution of a decree and who is released on furnishing security and on expressing his intention to apply to be declared an insolvent. Section 145, Civil Procedure Code, provides a summary remedy in execution for the realisation of the security in execution to the extent to which the surety has made himself personally liable. In support of his contention that the execution proceedings having been closed the liability of the sureties ceased, the Advocate-General relies on the ruling in Lalji Sahoy v. Odoya Sunderi Mitra 14 C.d 757.

4. That was a decision under Section 336 of the Code of 1882, and is, we think, no longer law. Under Section 336 the security required was, that the judgment-debtor will appear when called upon and that he will within one month apply to be declared an insolvent. The words in Sub-section 4 of Section 55, Civil Procedure Code, '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', seem to make it clear that the surety will not be released by the mere filing by the judgment-debtor of the petition for insolvency or by the dismissal of an execution application. Moreover, though a particular execution petition is terminated by its dismissal orits being struck off, all proceedings upon the decree do not come to an end. In the present case, all such proceedings under the decree were not terminated by the order passed on 29th July directing the release from attachment of the sureties' moveables or by the dismissal of Execution Petition No. 679 of 19l4 or by the 'struck off' of the execution petition on which the judgment-debtor was under arrest when the security bond was executed. The present proceedings against the sureties are also proceedings upon the decree.

5. It remains to consider the argument advanced by the Advocate-General that, owing to the omission on the part of the Court to issue a notice to the judgment-debtor to appear in Court, the obligation of the sureties to produce the judgment-debtor has not yet arisen.

6. Admittedly no notice was sent to the judgment-debtor directing him to appear. It appears to be clear from the strict wording of the security bond that the undertaking which the appellants gave was that they would see that the judgment-debtor would appear in Court whenever he was directed by the Court to do so, and that in the event of the judgment-debtor failing so to appear they would produce him, in other words, the issue of a notice by the Court was a condition precedent to the sureties undertaking the obligation to produce him.

7. It appears, however, from the District Munsif's order on Execution Petition No. 679 of 1914 that during the hearing of the petition the 'sureties were asked to state whether they wanted to be given another chance of producing the debtor and a notice to be sent to the judgment-debtor to appear on a given date, and that their Vakil stated that the decree-holder and judgment-debtor were colluding and that it was no longer possible for them to produce the debtor.

8. Mr. Venkatarama Sastri contends that this amounted to a waiver on the part of the sureties of their right under the terms of the bond to have a notice sent to the judgment-debtor in the first instance before they could be held to be liable. We think that his contention is correct, and that there was nothing to prevent the appellants from waiving the right which they possessed to insist on a notice being first issued by the Court. The sureties, for whose benefit the clause was inserted, must be deemed to have waived the benefit of that clause and we do not see anything illegal in their so waiving it and sparing the decree-holder the useless expense and delay which would be incurred in sending notice to the judgment-debtor to appear, especially as such expense might ultimately have to be borne by themselves as sureties. Reference may be made to the observations of Mr. Mookerjee, J., in Ashutosh Sikdar v. Behari Lal Kirtania 11 C.W.N. 1011 cited by the respondents' Vakil. The security bond is not happily worded but we think that it has been rightly construed by the District Judge, and that the sureties were liable for the non-production of the judgment-debtor in pursuance of the Court's order dated 8th August 1914.

9. We accordingly dismiss the appeal with costs.


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