Joyman Bewa v. Easin Sarkar .

The Judgment of the Court was as follows:

Page, J.:— This is an appeal from an order refusing to permit execution to be levied against a person who is alleged to have stood surety for the judgment-debtor in execution proceedings.

The suit out of which the controversy arose resulted in a consent decree under which the judgment-debtor was ordered to pay Rs. 330 and the costs of the suit. An execution case followed. In the course of that case an agreement was arrived at between the surety, who is the present contending Respondent, the decree-holder and the judgment-debtor. The decretal amount was not paid by the judgment-debtor, but after an application had been made to execute the decree against the surety, a petition was filed on behalf of all the parties concerned stating the terms of the tripartite agreement which had been arrived at, and praying that the execution case might be withdrawn. That petition bears a court-fee stamp appropriate to a petition, but is not stamped either as a contract of suretyship or as a security bond. The Court, having regard to the petition, permitted the execution case to be withdrawn.

Subsequently, the judgment-creditor applied for execution of the decree against the surety to the extent to which he had made himself personally liable for the decretal amount. This application was made under sec. 145, ??? procedure Code, which provides that—

“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 in 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 sec. 47.”

The objection of the surely to an order being made under sec. 145, Civil Procedure Code, was that he had never become a surety within sec. 145, C.P.C, or otherwise for the fulfilment of any obligation of the judgment-debtor under the decree. Now the contract of suretyship upon which it was sought to make the Respondent liable in execution of the decree obtained against the judgment-debtor was contained in the petition of compromise, which was in the following form:—

“Both sides hereby state:— It being inconvenient to pay money at present and the judgment-debtor, Petitioner, having approached the decree-holder and Easin Sarkar of Mahajanpur having stood surety for the said money it is arranged that the judgment-debtor will pay the entire amount due after deducting the amount paid and the costs of this execution case to the decree-holder by the month of Kartik 1328 B.S, otherwise I, Easin Sarkar, stand surety for the entire amount aforesaid. If Easin Sarkar does not pay the money to you, the decree-holder, then you, the decree-holder, will be able to realise the money from me Easin Sarkar by executing this decree. Let it be known that the entire cattle attached are released from attachment. Let it be known that we, the decree-holders, have got Rs. 100 which was in deposit with Kutub Mandal which will be credited in the decree. The judgment-debtor and the surety remain liable for Rs. 253-1-3 (Two hundred and fifty-three rupees, one anna and three pies only) and costs of this execution case after deducting the aforesaid Rs. 100.”

The contest of fact at the hearing of this application was whether the Respondent had become liable as surety for the performance of the decree or for the payment of any money within the meaning of sec. 145, C.P.C The Respondent asserted that he had not signed and was neither a party nor privy to the contract set out in the petition. The finding of fact by the trial Court was adverse to this contention.

It was held by the learned Munsif that the Respondent signed this petition and that the petition embodied the terms of the agreement which had been arrived at between the parties. This finding was not animadverted upon by the lower Appellate Court and must stand.

In both the lower Courts this document was admitted in evidence and was marked as an exhibit. The lower Appellate Court, however, dismissed the application upon the ground that, inasmuch as the contract of suretyship was not duly stamped, it was not valid as a contract, and further held that whether that were so or not, the only mode by which a person could become liable as a surety under sec. 145, Code of Civil Procedure, was by executing a security bond in favour of the Court, which the Court accepted.

On a further appeal to this Court, the contention that the contract contained in the petition was rendered void because it was not duly stamped was not persisted in.

In my opinion there is no substance in that contention. Failure duly to stamp a document which must needs be stamped by reason of the provisions of the Stamp Act does not affect the validity of any contract therein contained, but renders the document inadmissible in evidence.

In my opinion, the contract contained in the petition signed by the three parties concerned amounted to a contract of guarantee within sec. 126 of the Contract Act. Under sec. 126 such a contract “may be either oral or written.” In my opinion, the contract must be stamped not only as a petition but also with a further stamp appropriate to a contract of guarantee as provided by the Stamp Act. Under sec. 35 of the Stamp Act; the instrument in suit ought not to have been received in evidence or acted upon unless it was duly stamped. It was conceded, however, that this instrument was admitted in evidence in the Courts below. It falls therefore within the ambit of sec. 30 of the Stamp Act, which provides that—

“Where an instrument has been admitted in evidence such admission shall not, except as provided in sec. 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped.”

The admissibility of the document therefore cannot be challenged in this appeal or in any proceeding subsequent to the trial and incidental to the suit.

Now, the meaning and effect of sec. 30 of the Stamp Act was considered in the case of Rung Lal Kalooram… v. Kedar Nath Kesriwal…. (1). In that case Richardson, J., at page 520, observed with reference to sec. 30:—

“Under that provision if any penalty is to be exacted, it can only be exacted under sec. 61. The revenue is then protected, so far as it is protected, by that section.

“In my opinion, once an instrument A admitted in evidence in any proceeding, either under sec. 35 or under sec. 36, it is available in that proceeding for all purposes as if it had been properly stamped from the outset. The proceeding will go through to a valid termination and cannot afterwards be challenged for want of jurisdiction merely by reason of non-compliance with the Stamp Act.

“Sec. 36 would be entirely nullified if on the conclusion of the proceeding in which the instrument is admitted, the proceeding could be set aside by a separate proceeding initiated by one of the parties on the sole ground that the person having authority to receive evidence had admitted or acted upon on unstamped or insufficiently stamped instrument.”

See also per Chitty, J., in The Bombay Company, Ld. v. National Jute Mills (2).

The learned pleader for the Respondent, however, contended that such a contract of suretyship not being a security bond in favour of the Court but merely a private arrangement between the decree-holder, the judgment-debtor and the surety did not render the surety amenable to the provisions of sec. 145. Code of Civil Procedure. In my opinion, for such a contention there is no warrant either in the Code of Civil Procedure or in the Contract Act. Under sec. 115, Code of Civil Procedure, in order that execution may be levied against a surety, it is incumbent upon the applicant to prove that the surety had rendered himself personally liable for the performance of some obligation as provided in the section.

Having regard to the terms of the contract of suretyship in this case, it is apparent that the Respondent expressly contracted that he should be personally liable to perform the decree as provided in the compromise, and that if he failed to fulfil his obligation as a guarantor of the judgment-debtor, “the decree-holder will be able to realize the money from me Easin Sarkar by executing this decree.” It is clear therefore that if the instrument in question is within sec. 145, Code of Civil Procedure, the contract is one under which the Respondent rendered himself liable to have the decree executed against him personally to the extent to which he had guaranteed the performance by the judgment-debtor of his obligations under the decree. It is urged, however, that a contract of suretyship under sec. 145, Code of Civil Procedure, must be in the form of a security bond. No authority for such a Contention has been cited before us, although we have been referred to numerous cases upon the subject and the terms of the section contain no reference to the form which a contract of suretyship within the meaning of the section must take. The words are: “Where any person has become liable as surety,” and under sec. 126 of the Contract Act a contract of surety, ship “may be either oral or written.” In my opinion, the instrument in suit conforms to the requirements of sec. 145, Code of Civil Procedure.

Lastly, it is urged that it is only where the contract of suretyship is in favour of the Court that execution can be levied against the surety under sec. 145, Code of Civil Procedure.

No doubt in many cases the security for the performance of the obligation referred to in sec. 145 will be given to the Court, and in such a case it is usual to require that a security bond should be entered into. But I see no warrant in any of the cases to which we have been referred for the proposition that it is only a security bond in favour of the Court which can be executed against the surety under sec. 145.

No such limitation is contained in the section, and, in my opinion, it follows from the ratio decidendi of the judgments delivered in Mukhta Prosad v. Mohadeo Prosad (3) and Brojendra Lal Das v. Lakhmi Narain Khanna (4) that no such limitation as is suggested ought to be placed upon the language used in sec. 145, Code of Civil Procedure. In my opinion, in a case where a person has contracted expressly that he will guarantee the performance of any of the obligations set out in sec. 145, whether such a contract be oral or in writing, he has rendered himself liable to be proceeded against in execution of the decree as provided in sec. 145, Code of Civil Procedure.

For these reasons, in my opinion, the order against which this appeal is brought should be set aside and the decree-holders would be permitted to proceed with the application under sec. 145, Code of Civil Procedure, for execution against the surety.

In my opinion, this instrument ought not to have been admitted in evidence without having been stamped with an additional eight annas stamp, and we determine that the amount of duty with which the instrument is now chargeable is eight annas exclusive of any penalty which may be levied, and that the duty is payable by the decree-holders. The document will be impounded, and a copy of the declaration of the Court as to the duty payable will be sent to the Collector.

The Appellants are entitled to their costs in all the Courts. The hearing fee on this appeal is assessed at three gold mohurs.

Cuming, J.:— I agree.

S.C.M