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Mir Musar Ali Khondkar Vs. Guru Charan Sen and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Judge
Reported in7Ind.Cas.917
AppellantMir Musar Ali Khondkar
RespondentGuru Charan Sen and ors.
Cases ReferredLalji Sahay v. Odoya Sunduri Mitra
Excerpt:
civil procedure code (act xiv of 1882), section 336 - arrest of judgment-debtor--bond by surety--insolvency petition by judgment-debtor dismissal of petition--liability of surety--limitation. - .....apply to be declared as an insolvent; consequently his brother, the first defendant, executed the security bond now sought to be enforced. under the bond, he undertook that if the judgment debtor did not apply to be declared an insolvent within one month from the date there of that is the 9th february 1904, or if the said application for insolvency was rejected, he would produce the judgment-debtor when required by the court. he further covenanted that if he failed to produce him, he would deposit in court rs 500 then due as the judgment-debt with costs. as security, he hypothecated a corrugated iron shed with its furniture and materials. the judgment-debtor was thereupon released from custody and applied for insolvency within 30 days. his application was subsequently dismissed. the.....
Judgment:

1. The question of law-raised in this appeal, which has been preferred by the plaintiff in a suit to enforce a bond, is one of some novelty. There is no controversy as to the circumstances antecedent to this litigation. The plaintiff held a decree for money against the second defendant and in execution there of had him arrested. The judgment debtor expressed his intention to apply to be declared as an insolvent; consequently his brother, the first defendant, executed the security bond now sought to be enforced. Under the bond, he undertook that if the judgment debtor did not apply to be declared an insolvent within one month from the date there of that is the 9th February 1904, or if the said application for insolvency was rejected, he would produce the judgment-debtor when required by the Court. He further covenanted that if he failed to produce him, he would deposit in Court Rs 500 then due as the judgment-debt with Costs. As security, he hypothecated a corrugated iron shed with its furniture and materials. The judgment-debtor was thereupon released from custody and applied for insolvency within 30 days. His application was subsequently dismissed. The plaintiff made a fresh application for execution and the first defendant was called upon to produce the second defendant. The first defendant took time to do so, but apparently failed to produce him. The plaintiff: thereupon applied to the execution Court to enforce the security bond. The Court refused the application on the ground that the bond could not be enforced in execution proceedings under Section 336 of the Civil Procedure Code of 1882 because that section authorises the Court to realise the security in execution, only if the judgment-debtor fails to make the insolvency application. This view was upheld by the Subordinate Judge in appeal and was ultimately confirmed by this Court. The plaintiff then sued to enforce the security bond, but an objection was taken that the bond had not been assigned in his favour. He then applied to the execution Court to assign the bond to him as ho was the person interested under the bond and was entitled to sue upon it. The Court refused the application. This Court set aside that order and directed the execution Court to assign the bond to the plaintiff, upon the Authority of the decision in Gopi Nath v. Benode Lal 31 C. 162. The bond was subsequently assigned in favour of the plaintiff, who commenced the present action on the 3rd July 1907 for recovery of the principal amount, due Chereon with interest and costs. The first defendant alone contested the suit, substantially on the ground that the bond was without consideration and void; it was also urged that the suit was barred by limitation. The Courts below have concurrently dismissed the suit on the ground that the bond was not enforceable, and in this view they have not, considered the question of limitation. The plaintiff has now appealed to this Court, and on his behalf it has been argued that the bond is well supported by consideration and is enforceable in law. In our opinion, this contention is well-founded and must prevail.

2. The bond provides, as we have already stated, that the first defendant would pay Rs. 500 in either of two contingencies, namely, either if the judgment-debtor failed to make an insolvency application or if upon the dismissal of such application he failed to produce the judgment-debtor when required by the Court in so far as the first of these possible contingencies was concerned, it did not happen: but if it had happened, the bond would have been clearly enforceable under Section 336 of the Code of 1882 in the course of execution proceedings. But the second contingency has happened, and the sole point in controversy is whether the provision made for the payment of damage on the happening of the second contingency is illegal No intelligible principle has been suggested why such condition should be deemed illegal. Obviously it is not opposed to public policy. But reliance has been placed upon the cases of Koylash Chandra Shaha v. Cristophoridi 15 C. 171 Ramzan v. Gerard 13 A. 100; Dwarka Das v. Isabhai 19 B. 210 Imbichunni v. Lalji Ram 24 M. 560 and Krishnaiyan v. Krishna Swami 26 M. 366, to show that a bond of this character is not enforceable: the cases, however, are clearly distinguishable. When analysed they are found to affirm the doctrine that a bond under Section 336 cannot be enforced in execution proceedings, if the judgment-debtor has not failed to make the insolvency application under Section 336. The question raised before us was not decided in the cases upon which so much reliance has been placed. On the other hand, the decision in Janki Das v. Ram Pertab 16 A. 37, clearly indicates that a covenant of the description now before us may be perfectly legal and enforceable by suit. The cases of Jagadindra Nath Roy v. Chandra Nath Poddar 31 C. 242 and Mingale v. Ram Chandra 19 B. 694, which adopted the view taken in Poynor Bibee v. Najoo Khan 5 C. 437 : 5 C.L.R. 524 and Moidin v. Chandu 7 M. 273, also point to the conclusion that a bond of this character given under Section 349 of the Code of Civil Procedure of 1882 is valid and enforceable in law. It is further worthy of note that Sub-section (4) of Section 55 of the Code of 1908 provides for the enforcement of a bond of the character now before us in execution proceedings. In this view, it is, in our opinion, impossible to maintain seriously the position that a bond of this character is opposed to public policy and before the Code of 1908 was not merely unrealizable in execution proceedings but altogether unenforceable by reason of illegality or failure of consideration. We must consequently hold that, in the events which have happened, the plaintiff is entitled to enforce the security bond.

3. It has been finally suggested, upon the authority of this Court in Lalji Sahay v. Odoya Sunduri Mitra 14 C. 757, that as the execution proceeding, in course of which the security bond was furnished, was struck off, the surety stood discharged, In our opinion, there is no substance in this contention. The only reasonable construction which can be placed upon the bond is that the surety undertook to produce the judgment-debtor not merely in the course of the execution proceeding then pending, which would be struck off in ordinary course as soon as the Insolvency petition was filed, but in the course of: the subsequent execution proceeding, which the decree-holder might find it necessary to institute, upon dismissal of the insolvency petition. Consequently the first defendant is clearly liable under the bond. If was also suggested that the bond was inoperative as a mortgage-bond because it was not duly attested and registered. This objection is, of course, unsustainable, as what was hypothecated was essentially movable property.

4. The only other point which requires consideration is, whether the claim is barred by limitation. Now from the record of the execution ease commenced on the 28th August 1904, it appears that the surety was directed to produce the judgment-debtor on or before the 27th September 1904 The time was subsequently extended upon his application to the 30th September. On, the latter date, he failed to carry out the order of the Court and became liable. As the suit has been brought within three years from that date, no question of limitation arises.

5. The result, therefore, is that this appeal must be allowed and the decrees of the Courts below discharged. A decree will be made in favour of the plaintiff for Rs. 500, hut there will be no order for interest or costs. The amount decreed may be realived by sale of the hypothecated properties, namely, the corrugated iron shed and furniture and materials mentioned in the schedule to the bond as also from other properties of the first defendant.


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