Mukta Prasad (Decree-Holder) v. Mahadeo Prasad And Others (Judgement-Debtors).

Piggott, J.:— The appellant in this case held a decree against Munno Lal and Radha Rawan. He attached certain property in execution of the decree. One Mahadeo Prasad objected that the property attached belonged to him. The three parties to this controversy, the decree-holder, the judgement-debtors and Mahadeo Prasad respondent came together and arrived at a compromise, A portion of the decree was paid up at once. A promissory note was given for a further sum, and there was a covenant that the rest of the decree-holder's claim should be satisfied by annual instalments of Rs. 350. The attached property was accordingly released. Mahadeo Prasad, however, executed a security bond, making himself liable as a surety for the due performance by the judgement-debtors of that portion of the agreement which related to the payment of the stipulated annual instalments. He expressly covenanted that, in the event of default of payment in respect of any two consecutive instalments, he would himself make good the default out of his own pocket. He further covenanted that, should he fail to do this, the decree-holder might proceed in execution of the decree against his person and his property. At the same time, for further assurance of the decree-holder, Mahadeo Prasad hypothecated certain property, namely, two houses and a shop belonging to him, which were to be the security for the due performance by him of his contract of suretyship. The compromise was accepted by the court and was made the basis of an order by the execution court. There has now been default in respect of two consecutive instalments, and the surety Mahadeo Prasad has failed to make good the default as covenanted by him. The decree-holder applied to the court below to execute the decree by selling for his benefit the two houses and the shop referred to in the security bond. The application is in my opinion not very happily worded, but must nevertheless be understood as an application for attachment and sale of the houses and shop in question. It is admitted that there was no decree for sale in existence against these houses and this shop, so that they could not be sold without previous attachment. I think it not unreasonable to regard the decree-holder's prayer for sale of these properties as equivalent to a prayer for their attachment and sale. At any rate, if the only possible objection to the granting of this application were the fact that there was no express prayer for attachment before sale, I think the decree-holder should have been allowed an opportunity of amending his application. The courts below have, however, rejected his application on grounds which go much further than the technical objection above suggested. They have held, in effect, that by reason of the operation of section 67 of the Transfer of Property Act, and of order XXXIV, rule 14, of the Code of Civil Procedure, the decree-holder cannot bring these houses to sale at all in execution of his decree, and that his only remedy is to institute a suit against Mahadeo Prasad for the enforcement of the hypothecation contained in the security bond and so obtain decree for sale of the properties. We have been referred in the course of argument to a good deal of case-law more or less bearing on this question. I am not sure that any one case, not distinguishable from the present on some point or other of fact, has been laid before us. It seems to me, however, that on the broad question involved there has been a difference of opinion between the Allahabad and the Calcutta High Courts. The ruling of the Calcutta High Court referred to in the judgement of the lower appellate court, is that in Lakhan Singh v. Girwar Singh. This case seems to have been doubted by the Full Bench of the same Court in Baij Nath Goenka v. Mahant Sia Ram Das. On the other hand we have been referred to Musammat Chandrabati v. Mahadeo Prasad and Brajendralal Das v. Lakhmi Narain, in which principles substantially in accordance with the older ruling have been enforced. The Allahabad High Court in the case of Janki Kuar v. Sarup Rani, took a different view, and I am not aware that the principles there laid down have ever been questioned so far as this Court is concerned. What the learned additional Judge in the present case has really decided is that there has been a change in the law by the substitution of section 145 of the present Code of Civil Procedure for section 253 and other sections of Act XIV of 1882, by which a decree-holder proceeding against a person who has become liable as a surety for the performance of any decree or a part thereof is limited to the personal liability of the surety, as distinguished from the liability of any property which the surety might have hypothecated as security for his own due performance of his covenant. I think the general point taken with regard to the effect of the words, “to the extent to which he has rendered himself personally liable” in section 145 of the present Code of Civil Procedure, is a very arguable one; but with regard to the case immediately before us, I would be content to determine it on the ground that no question of the effect of the hypothecation, or of the liability of the mortgaged property as such, at present arises. It may be that the decree-holder would have been entitled to bring a separate suit for the enforcement of the hypothecation contained in the security bond, and would have been in a stronger position if he had done so. I do not decide this point one way or the other. It seems to me, however, that the liability which it is sought to enforce by the present application for execution is a personal liability and nothing else. There is, I repeat, no decree in existence for the sale of this property, and it can only be attached and brought to sale, under the terms of the simple money decree now under execution, by reason of the liability incurred by the surety and under the provisions of section 145 of the present Civil Procedure. I call this enforcing the surety's liability to the extent to which he has rendered himself personally liable, and to no greater extent. It seems to me, therefore, that there is no force in the suggestion that there has been any material change in the law with regard to the particular point in controversy between the Allahabad and the Calcutta High Courts. The question is whether the provisions of order XXXIV, rule 14, prevent these particular properties from being taken in execution at all. To this question my answer would be that the said rule only applies when the mortgagee has obtained a decree for payment of money in satisfaction of a claim arising under the mortgage. In the present case the appellant has not obtained a decree against Mahadeo Prasad at all. He has obtained a decree against other persons, and Mahadeo Prasad has become liable to have his property seized in satisfaction of the decree by reason of a special covenant entered into by him, which covenant, under the provisions of section 145 of the Code of Civil Procedure, can be enforced in the execution department without any decree being obtained against Mahadeo Prasad at all. It therefore seems to me that the provisions of order XXXIV, rule 14, have no application and cannot be put forward as a bar to the present proceedings. Subject to the remarks which I have made as to the necessity for an attachment prior to sale, I would accept this appeal and send the case back through the lower appellate court, to the court of first instance, with orders to re-admit the appellant's application for execution on to its pending file and to proceed with it according to law, I think the appellant is entitled to his costs in all three courts.

Walsh, J.:— I agree. In my opinion this appeal can be disposed of on one simple point of construction applicable only to this case. The appeal raises no question of principle at all, but merely a question of the construction of a particular bond. As part of a compromise the respondent Mahadeo Prasad gave a bond, or a mortgage, over certain property and in that document he also entered into an express covenant that the decree-holder could realise by execution of the decree against himself personally or any property of his including the mortgaged property. I think that brought him within section 47 of the Code of Civil Procedure by means of section 145. In the judgement appealed from are these words:—“Although the property hypothecated was attached, yet there is no evidence that it belonged to the judgement-debtors. The surety is admittedly the proprietor of it and the decree-holder had no right to proceed against it.” That decision was wrong. The surety had entered into an express agreement that his property including the hypothecated property might be seized in satisfaction of this decree, and I have heard nothing in the course of the argument which renders such an agreement invalid in the eye of the law. If it is not invalid, the surety who had obtained time for the judgement-debtors is bound by every obligation, legal or otherwise, to carry it out. In my opinion the application ought not to have been worded as though it were for the enforcement of the mortgage, but as though it were an application for executing the decree. The respondent has no merits of any kind, and I agree in any proposal for amendment, in order to do justice, which my brother Piggott thinks desirable.

With regard to the question that has been raised as to the meaning of section 145 of the Code of Civil Procedure, I prefer to express no opinion. In my view there is a clear distinction between a bond entered into by a surety with the Court and given to the Court as was the case in Janki Kuar v. Sarup Rani, and a bond, such as this, entered into between the parties. In the latter case, in the absence of some express covenant by the surety binding himself and his property as though it were property of the judgement-debtor to make it available for the satisfaction of the decree, I can see considerable difficulties in the way of enforcing the bare security which the decree-holder chooses to take, without going through the formality of a suit, and to that extent I agree with the view taken by the Calcutta High Court. I think the parties to this compromise were fully alive to these difficulties and made provision in it for the express purpose of getting rid of them.

By The Court.— The appeal is allowed and the case is ordered to be sent back through the lower appellate court to the court of first instance with directions to re-admit the appellant's application for execution on to its pending file and proceed with it according to law. The appellant is entitled to his costs in all three courts.

Appeal decreed and cause remanded.