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Kambham Ramamurthy v. Sagiraju Tirupatiraju.

Madras High Court
Mar 19, 1948
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Structured Summary of the Opinion

Factual and Procedural Background

The respondent, while a minor and represented by his maternal grandfather as next friend, obtained a decree in O.S. No. 351 of 1927 (District Munsiff of Peddapuram) for Rs. 1,020. On execution of a security bond by the appellant, the maternal grandfather was allowed to draw out the money under Order 32, Rule 6, Civil Procedure Code. The bond, however, was not executed in favour of the District Munsiff (or any identified person) but was in a form that did not purport to be in favour of anybody; this defect gave rise to the present difficulty.

The respondent attained majority on 10 January 1941 and on 8 August 1941 instituted O.S. No. 175 of 1941 against his former guardian (the maternal grandfather) for rendition of account and recovery of any amount payable. The guardian died during the suit; an ex parte decree was passed on 23 December 1941 against assets of the deceased in the hands of the grandmother (the legal representative).

The appellant filed an execution application in O.S. No. 351 of 1927 on 23 March 1942 to recover under the security bond; that petition was dismissed on 14 June 1943 because of a technical defect in the decree. After amendment of the decree, the appellant filed another execution application on 9 December 1943 (E.P. No. 40 of 1944), which led to the proceedings under appeal.

The learned District Munsiff held that the respondent could enforce the bond by sale of the properties secured under it and that, because the bond was not in favour of any officer but effectively in favour of the Court, the bond must be enforced under the inherent powers of the Court following the ruling in Raj Raghubar Singh v. Jai Indra Bahadur Singh. The Subordinate Judge reversed and dismissed the application as barred by the 12-year rule under Section 48, Civil Procedure Code. On appeal, Happell, J., set aside the Subordinate Judge, restored the District Munsiff's order and directed the application to be tried on the merits, answering two questions in favour of the respondent: (1) the correctness of the enforcement procedure, and (2) whether Section 48 barred the petition. The present appeal (under clause 15 of the Letters Patent) challenges that result.

Legal Issues Presented

  1. Whether the procedure adopted to enforce the security bond (a bond not executed in favour of any officer or person) was in accordance with law.
  2. Whether the respondent's petition was barred by Section 48 of the Civil Procedure Code (the 12-year limitation) because it was filed more than 12 years after the date of the original decree in O.S. No. 351 of 1927.

Arguments of the Parties

Appellant's Arguments

  • The appellant (through his counsel Mr. Somasundaram) contended that the proper procedure to enforce the security bond was to file a suit to determine the liability and to obtain enforcement of the bond (i.e., a regular suit to fix liability under the bond).
  • The appellant objected at earlier stages to the respondent's procedure and contended that the application was barred by Section 48, Civil Procedure Code (the 12-year rule); the Subordinate Judge accepted this contention.
  • The appellant alleged that the ex parte decree obtained by the respondent against the guardian's legal representative was collusive, implying that the liability relied upon was not firmly established and could be challenged.

Respondent's Arguments

  • The respondent maintained that, because the security bond was not executed in favour of any officer but in effect in favour of the Court, the bond could not be assigned and must be enforced by the Court under its inherent powers (following Raj Raghubar Singh v. Jai Indra Bahadur Singh).
  • The respondent argued that Section 48, Civil Procedure Code, did not apply because the present application was not an execution of the original decree in O.S. No. 351 of 1927 but a claim to enforce the surety bond itself.
  • The respondent relied on limitation principles (Article 181 of the Limitation Act, as adopted by earlier single-judge decisions) and asserted that the present application was filed within three years of his attaining majority and therefore was within time.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38 M.L.J. 302; L.R. 46 I.A. 228; I.L.R. 42 All. 158 (Privy Council) The Judicial Committee's ruling that where a security bond is effectively in favour of the Court (and not in favour of an identifiable officer), such bonds cannot be assigned and must be enforced under the inherent powers of the Court; and the associated admonition that bonds should be executed in favour of a person (e.g., presiding officer or chief ministerial officer). The District Munsiff applied this principle to hold that enforcement should proceed by invoking the Court's inherent powers; the present Court endorses the reasoning and also reiterates the practical direction that courts should accept bonds only when executed in favour of a person to avoid inconvenience.
Kurugodappa v. Soogamma (1917) I.L.R. 41 Mad. 40 at 43 Observations (by Spencer, J.) suggesting the remedy may be a regular suit where the bond was executed in favour of a court officer (the Subordinate Judge of Bellary in that case). The Court explained that Kurugodappa's observations arose from a bond executed in favour of a specific court officer; thus those observations do not conflict with Raj Raghubar Singh and do not establish a general rule that a suit is required in all Order 32, Rule 6 cases.
Jamundas Ravuji Sait v. Krishnan (1933) 65 M.L.J. 507 (single-judge) Application of Article 181 of the Indian Limitation Act to cases of this nature (treating enforcement of such bonds as falling under Article 181). The Court relied on the view taken in this single-judge decision (and another similar decision) in concluding that Article 181 is the most appropriate limitational provision to apply and that the respondent's application was within time.
Annamalai Chettiar v. Sundaresa Iyer (1943) 2 M.L.J. 444 (single-judge) Application of Article 181 of the Indian Limitation Act in analogous circumstances. Used as supporting authority for applying Article 181 to the present enforcement application, reinforcing the Court's conclusion on limitation.

Court's Reasoning and Analysis

The Court proceeded by breaking the problem into discrete legal points and applied the relevant principles strictly as derived from the text:

  1. Section 48, Civil Procedure Code: The Court held that Section 48 (the 12-year rule) has no application because the respondent's application is not an application for execution of the decree in O.S. No. 351 of 1927. That decree had been satisfied long ago; what the respondent seeks to enforce now is the liability of the appellant under a security bond, which is distinct from the judgment-debtor's liability under the earlier decree.
  2. Section 145 and assignment/suit procedure: Section 145 was held inapplicable to the present bond. The Court explained that if the bond had been executed in favour of a court officer, the obvious procedure would have been to obtain an assignment and then sue on the bond; but where the bond is not executed in favour of any officer (as in the present case), Section 145 and the assignment/suit route do not govern.
  3. Whether a suit was necessary: The appellant's argument that a suit must be filed to determine liability was considered. The Court observed there is no direct authority establishing a general rule that a suit is required in every case under Order 32, Rule 6; Kurugodappa was found fact-specific (bond in favour of a specific officer) and not inconsistent with Raj Raghubar Singh. The Court concluded it was unnecessary to require a suit in every case of this kind where the bond is filed in the Court that can itself enforce it.
  4. Quality of the underlying decree: Because the respondent's decree against the guardian was ex parte and the appellant alleged collusion, the Court found that a liability binding the appellant had not been conclusively established for present purposes; the appellant should be permitted to challenge the asserted liability in the enforcement proceedings.
  5. Nature of the application and inherent powers: The Court concluded the respondent's application was not properly an execution application but rather an invocation of the inherent powers of the Court to enforce a security bond filed therein. Rather than dismissing it for form, the Court directed that the application be treated as an independent application within O.S. No. 351 of 1927 and dealt with on the merits.
  6. Limitation: The Court considered limitation and held that Article 181 of the Limitation Act was the most appropriate provision to apply, adopting the view of two single-judge precedents. Time questions as to commencement did not arise because the application was filed well within three years of the respondent attaining majority; the bond's language also negated any earlier running of time.
  7. Result on merits direction: The Court observed that because liability under the bond was not conclusively established by the ex parte decree, the merits must be gone into by the trial Court; this aligns with Happell, J.'s directions to remand the application for disposal on merits.

Holding and Implications

APPEAL DISMISSED — The Court dismissed the appeal with costs.

Direct consequences for the parties:

  • The respondent's application to enforce the security bond was held to be maintainable (though not as an execution application) and is to be treated as an independent application in O.S. No. 351 of 1927 and remitted for hearing and determination on the merits.
  • The application was held to be within time under Article 181 of the Indian Limitation Act (it was filed within three years of the respondent attaining majority).
  • The appellant remains entitled to challenge the asserted liability under the bond in the merits hearing because the underlying decree was ex parte and the appellant has alleged collusion.

Broader guidance and practice point:

  • The Court expressly regretted the continued practice of accepting security bonds not executed in favour of a person (e.g., presiding officer or chief ministerial officer) notwithstanding the Privy Council's ruling in Raj Raghubar Singh. It directed that in future no security bond should be accepted by any Court unless it is executed in favour of a person; otherwise such bonds cannot be assigned and create practical hardship and inconvenience.

The opinion does not impose a new rule of law beyond its decision in this case, but it applies existing authorities (notably Raj Raghubar Singh) and issues a clear practice exhortation concerning the proper form of security bonds.

Show all summary ...

1. This is an appeal under clause 15 of the Letters Patent from the judgment of Happell, J., allowing an appeal filed against the order of the learned Subordinate Judge of Coconada who reversed the order of the District Munsiff of Peddapuram on an application filed by the respondent to enforce a security bond executed by the appellant. The respondent, when he was a minor represented by his maternal grandfather, obtained a decree in O.S. No. 351 of 1927 on the file of the Court of District Munsiff of Peddapuram for a sum of Rs. 1,020. The maternal grandfather as next friend was allowed to draw out the money under Order 32, Rule 6, Civil Procedure Code, on the execution of a security bond by the appellant. By that bond, the appellant undertook to pay any amount that may be found to be payable to the plaintiff if within 3 years of his attaining majority he raised any dispute and churned to recover any money from his guardian in respect of the decree amount. Unfortunately, this bond which was accepted by the District Munsiff, Peddapuram, was not executed in favour of the District Munsiff as it ought to have been. Actually the bond does not purport to be in favour of any person. The difficulty in this case has arisen purely on account of this circumstance.

2. The respondent became a major on the 10th January, 1941, and on the 8th August, 1941, he instituted a suit, O.S. No. 175 of 1941 against his erstwhile guardian, his maternal grandfather, for rendition of account and for recovery of the amount which may be found payable to him on the taking of the account. The guardian died pending the suit and the grandmother was brought on record as his legal representative. On the 23rd December, 1941, an ex parte decree was passed in favour of the respondent against the assets of the deceased grandfather in the hands of the grandmother. Thereafter, on the 23rd March, 1942, the appellant filed an execution application in O.S. No. 351 of 1927 to recover the amount mentioned in the security bond. This petition, however, was dismissed on the 14th June, 1943, owing to a technical defect in the decree. Subsequently, there was an amendment of the decree and again, on the 9th December, 1943, the appellant filed another application for execution in O.S. No. 351 of 1927, E.P. No. 40 of 1944 out of which the present appeal arises.

3. The learned District Munsiff of Peddapuram, overruling the objections raised by the appellant, held that the respondent could proceed to recover the amount claimed by sale of the properties secured under the security bond. He held that that as the surety bond was not in favour of any officer of the Court but in favour of the Court itself, it could not be assigned, but the procedure indicated in the ruling of the Judicial Committee in Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38 M.L.J. 302 : L.R. 46 I.A. 228 : I.L.R. 42 All. 158 (P.C.) must be adopted and the bond must be enforced under the inherent powers of the Court. He held that the application in question could not be deemed to be an application to execute the decree in O.S. No. 351 of 1927 and therefore could not be said to be barred by the 12 years rule under Section 48, Civil Procedure Code. On appeal the learned Subordinate Judge reversed the decision of the District Munsiff and dismissed the respondent's application on the ground that it was barred under section, 48 Civil Procedure Code. There was an appeal to this Court which was heard by Happell, J., who set aside the decision of the Subordinate Judge and restored the order passed by the District Munsiff and directed the application to be restored to file and to be heard and determined on the merits. Two questions were raised before him : namely, (1) whether the procedure adopted by the appellant to enforce the security bond was in accordance with law and (2) whether in any case, the petition was not barred under Section 48 of the Civil Procedure Code by reason of the fact that it had been filed more than 12 years after the date of the decree in O.S. No. 351 of 1927. On both these questions, the learned Judge gave his decision in favour of the respondent.

4. The second point can be disposed of easily. In our opinion, it is clear that Section 48, Civil Procedure Code has no application whatever to the present case. In no sense can the application of the respondent be said to be an application for the execution of the decree in O.S. No. 351 of 1927. That decree had been satisfied long ago. What the respondent is now seeking to enforce is not the liability of the judgment-debtor in that suit. Whether the application can be said to be barred by reason of any other provision in the Indian Limitation Act will be dealt with later on after deciding the other question, namely, the procedure to be adopted in cases where a security bond like the present has not been executed in favour of the presiding officer of the Court. If the security bond had been so executed in favour of an officer of Court, then the obvious procedure for the respondent was to obtain an assignment of the bond and to file a suit on it. This procedure, of course, should be understood to refer to security bonds like the present which are executed under Order 32, Rule 6, Civil Procedure Code or executed in circumstances which will not fall within the scope of Section 145 of the Civil Procedure Code. It was not contended before us, and rightly, that Section 145 applies to the enforcement of a bond like that in the present case.

5. The position then is this : The procedure laid down in Section 145 of the Civil Procedure Code cannot apply, and a suit cannot be filed on the security bond after it had been assigned. Mr. Somasundaram, the learned advocate for the appellant, contended that the proper procedure would be to file a suit to have the liability determined and the bond enforced. There is no direct decision to support this contention. We do not consider that the observations in Kurugodappa v. Soogamma (1917) I.L.R. 41 Mad. 40 at 43 should be understood to lay down the procedure to be followed in all cases of bonds under Order 32, Rule 6, Civil Procedure Code. We find from an examination of the papers in that case that the bond in that case was executed in favour of the Subordinate Judge of Bellary. Having regard to that fact, the observations of Spencer, J., at page 43, that the remedy was a regular suit are not inconsistent with what was laid down in Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38 M.L.J. 302 : L.R. 46 I.A. 228 : I.L.R. 42 All. 158 (P.C.).

6. There is no authority that it is, nor docs it appear to us to be necessary, that the person seeking to enforce a security bond like the present should file a suit to determine the extent of the liability under the bond. According to the terms of the bond, the appellant undertook to pay any amount which may have to be paid to the respondent in pursuance of a dispute which he may raise within three years of his attaining majority with regard to the sum of Rs. 1,020 withdrawn by his guardian. If the amount so payable is determined after a contest and without any suspicion of fraud or collusion in a suit properly laid and conducted by the erstwhile minor on attaining majority against his guardian, we fail to see why he cannot seek the help of the Court in which the security bond was filed to enforce the liability undertaken by the surety. In this case, however, the facts are different in important particulars. The suit filed by the respondent against his guardian was not contested; the decree was ex parte and passed against the legal representative of the guardian and confined to such of his assets as could be traced to the possession of his legal representative, the grandmother. The appellant charges that the proceedings were collusive. On these facts, it cannot be said that a liability has been established which the appellant cannot challenge in an application to enforce the security bond executed by him.

7. It now remains to consider whether the application filed by the respondent was maintainable as an execution application. In our opinion, it was not. It was. really an application invoking the inherent powers of the Court to enforce the security bond filed before it. On that ground, however, we do not think it just to dismiss the application. It shall be treated as an independent application in O.S. No. 351 of 1927 and dealt with accordingly.

8. The article of the limitation act which appears to us to be most proper to apply to the present case is Article 181. This is the view taken by two learned Judges, each sitting alone in Jamundas Ravuji Sait v. Krishnan (1933) 65 M.L. J. 507 and Annamalai Chettiar v. Sundaresa Iyer (1943) 2 M.L.J. 444. Questions may arise as to when exactly time commences to run in applying this Article, but such questions do not arise in this case as the application was filed well within three years of the date on which the respondent attained majority, and it cannot in any event be contended that time began to run against the respondent before he attained majority. The language of the bond negatives any such contingency. We therefore find that treated as an independent application for the enforcement of the surety bond by the Court in which it was filed, the application was in time.

9. As we have already mentioned, it cannot be said in this case that the liability of the guardian to pay any sum of money out of the money withdrawn by him.. has been established in such a way as to be binding on the appellant. It will be for the Court disposing of the application on the merits to go into that question. We understand the directions of Happell, J., to indicate this.

10. We wish to point out that it is a matter of regret that in spite of the clear pronouncement of the Judicial Committee in Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38 M.L.J. 302 : L.R. 46 I.A. 228 : I.L.R. 42 All. 158 (P.C) so early as 1919 and in spite of the forms contained in the Civil Rules of Practice relating to bonds to be executed by the guardians under the Guardians and Wards Act, security bonds should continue to be taken not in favour of the presiding officer or any other officer of Court but in a form in which the bonds cannot be said to be executed in favour of anybody unless by implication they must be deemed to have been executed in favour of the Court, which, as has been pointed out by the Privy Council, is not a juridical person capable of assigning such bonds. It is unfortunate that sufficient attention is not paid to this aspect, and the omission to adopt and use the correct form often results in inconvenience and hardship to parties, both seeking to enforce the bonds as well as those who will be liable under them. In future no security bond should be accepted by any Court unless it is executed in favour of a person, be he the presiding officer of the Court or the Chief Ministerial officer of the Court.

11. As we have held that the application of the respondent is maintainable and is within time, the order of the learned Judge remanding the application for disposal: on the merits was right. The appeal, is, therefore, dismissed with costs.