Jafar Ali v. Ramloo & Another

Jaganmohan Reddy, O.C.J:— This Civil Miscellaneous Appeal has been referred to a Bench by Basi Reddy, J., in view of conflict of judicial opinion. The question is whether a security bond executed out of court by the father of the judgment-debtor during the execution of a decree against the judgment-debtor can be enforced by recourse to summary proceedings under Section 145 of the Code of Civil Procedure.

2. It may be stated that the decree-holder had obtained a decree in Original Suit No. 272 of 1950 on the tile of the I Additional Judge, City Civil Court, and tried to attach a house alleged to belong to the judgment debtor. But the rather of the judgment-debtor tiled claim petitions on two occasions when the decree-holder was executing his decree against the judgment-debtor, and thus success-fully prevented the execution of the decree. It is the decree-holder's contention that when he wanted to tile another E.P for arrest of the judgment-debtor, Jafar Ali, the father of the judgment-debtor, being apprehensive of the arrest of his son in the execution proceedings, promised to pay the decretal amount after his house is sold; but on the decreeholder insisting on the father executing a surety bond in his favour, the father executed such a security bond in favour of the Additional City Civil Judge, in the house of one Abdul Rashid, an Advocate, for satisfying the decree in C.S 272/1950. As the father has failed to pay the decretal amount within the stipulated period, E.P No. 70 of 1958 was filed, adding the father as judgment-debtor No. 2. with a prayer that the same be executed against them, The 2nd judgment debtor contended that he has neither signed nor filed any surety bond, that he is the owner and is in possession of House bearing No. 20-3-416 situated at Baragalli, Hyderabad, that the security bond was not executed in compliance with any order of the Court nor was it recorded by the Court in accordance with the Civil Procedure Code and is there fore not enforceable against him. He further stated that the judgment-debtor neither resides in that house nor has he any goods therein. The executing Court held that, though the bond in question was not executed at the instance of the principal debtor, the same can be enforced against the surety in the execution proceedings, and that it would be a sheer injustice if the decree-holder is directed to bring a separate suit against the surety to enforce the bond in question. The objection was therefore overruled and attachment of the property prayed for was effected. Against this order, the Civil Miscellaneous Appeal has been filed. Sri Harihar Rao, the learned Advocate for the 2nd judgment-debtor, the appellant herein, frankly admitted at the outset that he is not going to contest the finding that the 2nd judgment-debtor, the father, had executed the security bond. It was however contended that security bond amounts to a contract of indemnity under Section 124 of the Indian Contract Act, and that it is not a bond executed in the presence of a Court or pursuant to order of Court in order to avail himself of the summary procedure under sec. 145 of the Code of Civil Procedure. It is not denied that there was no £. P. pending at the time the bond was executed, nor was there any order of the Court directing execution of the indemnity. The indemnity bond was filed only with the execution petition against the 2nd judgment-debtor enforcing his liability.

3. Section 145 C.P.C which took the place of Section 253 of the Code of 1882, provides thus:—

“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 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 within the meaning of Section 47:

Provided that such notice as the Court in each case thinks sufficient has been given to the surety”.

4. Clause (a) of the above section is of a general nature and was designed to set at rest the conflict under Section 253 of the old Code and to make it wide enough to cover a decree that has already been passed as well as a decree that may be passed after the person concerned has become liable as surety, as also to suretyships given for the performance of appellate decrees. Clause (b) of course is clear enough and does not apply in this case. It is clause (c) that is relevant for the purposes of this appeal, under which the liability of a surety who hat rendered himself personally liable may be enforced by attachment and sale of his property. In the application of that clause, a question arises as to whether the personal liability of the surety was incurred as a consequence of an order of the court or executed in favour of the court during the process of execution against the judgment-debtor.

5. It is contended by the appellant that inasmuchas no execution proceedings were pending at the time when the security was given, though the security has been executed in favour of the Court, the personal liability under that bond cannot justify the court in having recourse to summary procedure by attaching the surety's propertied in execution. On the other hand, the respondent contends that inasmuchas the decree-holder had intended to execute the decree and in order to avoid the arrest of his son, the father has executed the surety, which is tantamount to a security being executed in the execution proceedings, the summary procedure under Section 145 is available to the decree-holder.

6. We may state that three conditions are necessary for the applicability of clause (c), namely, that the person should be liable as a surety, that he undertakes the performance of the decree and that there is a personal liability. The Words “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” would no doubt make the execution conditional on the order of the Court; but this clause is independent and applied only in respect of fulfilment of any condition imposed by such order, It is contended that on plain reading of the clause, there is no warrant for the assumption that where a person becomes liable as a surety for the payment of any money under a decree, the liability should only be incurred under an order of Court or that the execution should be pending at the time. There are, however, several decisions which are cited before us, which are said to support the contention, in that the applicability of the section is conditional upon an order of the court being made or that the liability of the surety has been entered into in the face of the court or has been recorded under the provisions of the code.

7. In Nanjunda Row v. Matwadi Dharmaji . AIR 1919 Mad 527, the facts were, that the judgment-detor was arrested in execution of a decree; the appellant and another executed a security bond in favour of the respondent-decree holder, to obtain the release of the judgement-debtor from his imprisonment in execution, and his release was ordered under the proviso to Section 58 C.P.C The respondent subsequently applied for a warrant of arrest against the appellant as he failed to pay the decree amount in accordance with the provisions of the bond. It was there argued that as the bond was given out of court, it could only be enforced by a separate suit and not by proceedings in execution of the decree in connection with which it was given. The Bench distinguishing on facts the case of Subbaraya Pillai v. Sathanath pandaram and the observations of Spencer, J., in Nadanal C.H Kuhicodappa v. Angadi Soogamma . 41 Mad. 40, stated that the facts before them differ from those assumed in material respects inasmuch as the security bond was filed in court and was left there. While no doubt the Court was not asked to consider its terms or their propriety, it was certainly asked to take action, and as the bond refers to the request which pre-ceded its execution, it must be taken to have been presented to the court with the concurrence of the surety and judgment-debtor, the bond provides that in case of the judgment-debtor's default, execution can be taken against him. It was argued that the parties cannot give the court jurisdiction by their consent but inasumuch as the facts of that case resembled those in Sadsiva Pillai v. Ramalinga Pillai the circumstance that the bonds in question therein were executed to the Court not affecting the general ground on which the decision proceeded, the lower court's decision to issue execution against the surety was confirmed. In Sadasiva Pillai…Plaintiff; v. Ramalinga Pillai…Defendant. . 2. I.A 219. it was observed that the respondent had by the proceedings in question, come under an obligation, which was capable of being enforced by proceedings in execution and that upon the ordinary principles of estoppel he could not be heard to say that the relief claimed was not obtainable under the decree. In Subbaraya v. Sathanatha another Bench of the same High Court held that Sec. 145 is confined to cases where the liability of the surety has been entered into in the face of the court or has been recorded by Court in accordance with the provisions of the Code, and that it does not extend to surety bonds taken by a judgment-creditor outside the Court. In that case, as a consideration for a surety bond being executed in favour of the plaintiff in O.S No. 110 of 1913 in the court of the District Munsif, the plaintiff-petitioner stayed execution of the decree against the defendant. The District Munsif applied the procedure under, section, 145 C.P.C The question was whether it has been properly applied. Napier. J., sifter examining the several cases and the provisions of the Code said, at page 815 thus:—

“But as at present advised I think that considering that the language of the various sub-sections can be referred to specific provisions of the Code and considering that the object of the section is to allow execution against a person who is not a party to the suit or legal representative it is more proper to confine it to cases where the liability has been entered into in the face of the Court or has been recorded by the Court in accordance with the provisions of the Code”

8. With this view, the appeal was allowed. Sadasiva aiyar J., while agreeing with Napier J., said that the only security which could be so realised is one to be furnished to the Court or at least filed in Court. A Bench of the Allahabad High Court in Ram Kishore v. Chiranjilal, followed this last mentioned Madras case.

“In Sunkunni v. Vasudhevan, the surety undertook to produce certain property of the judgment-debtor attached in execution of a decree or in default to be liable for its value. There was no undertaking by the surety for payment of any money under an order of the Court. The contention in that case that Sec. 145 is applicable because the sureties had become liable under clause (c) for the payment of any money under an order of the Court in any suit or in any proceeding consequent thereon, was negatived. It was held that the liability under Section 145 attaches only in the case of a person who is “surety” for the payment of any money under an order of the Court and not a surety liable to pay owing to default, and since there was no order of the Court directing payment of any money by the judgement-debtor and consequently the sureties were not sureties for such payment Section 145 was not applicable. Notwithstanding this, following a judgment of Their Lordships of the Privy Council in in Raj Raghubar Singh v. Jai Indra Bahadur, the learned judges held that even though the case did not strictly come within the terms of Section 145, the Court has inherent powers to enforce the bond without recourse to a suit. Philips, J., at page 1006 observed thus:—

“It has always seemed to be anomalous that, when the Court has granted indulgence to the judgment-debtor upon terms, that court should not be able to enforce those terms without recourse to a separate suit. If the security had not been furnished the property would have remained in the custody of the Court and would have been available for sale at any moment. The sureties having undertaken to produce the property or in default to be liable for its value, they cannot evade that liability. With this view. Madhavan Nair, J. agreed.

9. In Raj Ragubar Sing v. Jai Indra Bhadur. Their Lordships of the privy Council construed the surety bond as giving only a charge upon property and riot making the surety personally liable, and consequently. Their Lordships thought, section 145, which was referred to by the Courts in India had no application, nor did the application purport to rely upon that section. Their Lordships then considered the applicability of Sections 47 and 144 and held that these sections apply only to the parties or the representatives of the original parties, and do not apply to sureties, and that, therefore, no reliance can be placed upon these sections as authorising the inclusion of the sureties as parties to the application made against the widow, It was then that they considered the question of liability of the sureties upon the instrument-whether they were personally liable and whether, in the events which happened, it had become applicable.

10. In order to determine whether enforcement of the charge under the instrument can only be done in a suit. Their Lordships said that it was necessary to examine the instrument itself. The instrument which was executed in the High Court of Calcutta where the practice was for the parties to bind themselves to some named officer of the court, and if it has to be put in suit, either the officer sues, or he, under order of the Court, assigns the security to the party who wishes to avail himself of it; but, the instrument does not purport to bind the sureties to any individual officer or to any one, It was suggested that the sureties were bound to the Court. But, Their Lordships said, the court is not a juridical person. It cannot be sued. It cannot take property and it cannot assign it. In those circumstance, it was held that there was inherent power in the Court to enforce the obligation. At page 238, Lord Phillimore delivering the opinion of Their Lordships of the Privy Council observed thus:—

“It remains, therefore, that here is an unquestioned liability, and there must be some mode of enforcing it and that the only mode of endorsing it must be 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. This form of procedure is that to which the High Court of Allahabad gave its sanction in the case of Janki Kuar v. Sarup Rani (I.L.R 17 All. 99)”

11. The net result of this discussion is that where a surety makes himself personally liable to the Court for the satisfaction of a decree enforceable in execution proceedings, taken or to be taken, the decree can be executed against such surety, Inasmuchas the surety in this case has executed the bond in favour of the Additional City Civil Court to satisfy the decree in 0. S. 272 of 1950, he is bound by it and the surety may be proceeded against in execution of the decree. In this view, the appeal is dismissed with costs

12. Reference answered.