Arjan Lal and another vs Parbash Chander and another

P.C. Pandit, J.—This order will dispose of two connected execution second appeals Nos. 1532 of 1965 and 1088 of 1966, in which a common question of law arises for decision. It was conceded by the Learned Counsel for the parties that the decision in the former would govern the latter as well. I would, therefore, deal with the facts of E.S.A. 1532 of 1965 only.

Arjan Lal and his wife Smt. Dhanno Devi had rented out a shop situated in Rohtak city to Maksoodan Lal. This shop was constructed in 1958 and indisputably the provision of the East Punjab Urban Rent Restriction Act had not to apply to it for a period of five years. This exemption from the provisions of the Act was to expire on 15th of July 1963. On a suit having been filed by the owners of the shop for the ejectment of the tenant a decree was passed in their favour on 4th of, April, 1963 Maksoodan Lal instituted an appeal against it and also applied for staying the execution of the decree passed by the trial court. On 12th June 1963, the appellate court ordered the stay of dispossession of the tenant on his furnishing security in the amount of Rs. 2500/- to the satisfaction of the lower court for the due performance of such decree or order as might ultimately be binding upon him, because the learned Judge was satisfied that substantial loss would result to him if he was dispossessed in the execution of the decree under appeal. This security had to be furnished by the tenant in the executing court by 13th of June 1963. Accordingly on the said date, Prabash Chander furnished a surety bond in favour of the court guaranteeing due performance of the decree that might ultimately be passed by the appellate court and binding on Maksoodan Lal and if, however, he failed to do so, the surety undertook to deposit Rs. 2500/- in court. The statement of the surety was also recorded on 13th August 1983 in corroboration of the facts mentioned in the surety bond. On 30th of September 1963 the appeal of Maksoodan Lal was dismissed by the appellate court. Thereafter, on 14th of October, 1963 the decree holders applied for the revival of the execution proceedings which were stayed by the appellate court and prayed for the ejectment of Maksoodan Lal from the shop. It was alio said that if Maksoodan Lal could not be ejected and he did not deliver possession of the shop to the decree-holders, then the surety be made liable to pay Rs. 2500/- under the terms of the bond furnished by him in court. On 6th of August 1964 the executing court held that the decree could not be executed against Maksoodan Lal on account of the provisions of section 13 of the Kent Act, because five years exemption in the case of the shop in question had elapsed by then. The Court, however, directed the surety to pay Rs. 2500/-. Against this order Prabash Chander filed an appeal which was accepted by the learned Senior Subordinate Judge, Rohtak, on 20th of August, 1965. He held that as the decree for ejectment could not, admittedly be executed against the judgment debtor, Maksoodan Lal, the surety, was also discharged alongwith the judgment-debtor. Against this decision, the present execution second appeal has been filed by the decree-holders.

It is common ground that the ejectment decree passed against Maksoodan Lal could not be executed against him by virtue of the provisions of section 13 of the Rent Act, because the five years exemption granted u/s 3 of the Rent Act regarding the shop in question had expired. Prabash Chand had, however, executed a surety bond in favour of the court that if Maksoodan Lal did not comply with the decree that was ultimately passed against him. Prabash Chander would pay Rs. 2500/- in court. It is noteworthy that this surety bond was furnished on 13th June, 1963, when the decree-holders knew that the exemption in favour of the shop would expire on 10th of July 1963 and it was possibly on that account that the court imposed that condition on the judgment debtor for staving the execution of the trial court''s decree against him under the terms of the surety bond. Prabash Chander had given a solemn undertaking to the court that if the judgment-debtor did not comply with the decree, that is to say, that if he failed to give possession of the shop to the decree-holders he would be liable to deposit Rs. 2500/- in court. It is undisputed that Maksoodan Lal was not handing over possession of the shop to the decree-holders. Strictly under the terms of the surety bond, therefore, Prabash Chander was liable to pay Rs. 2500/-. It was not mentioned in the bond that in case the ejectment decree could not be executed against the judgment debtor, the surety would not be responsible for the payment of the said amount. The parties to the ejectment suit were supposed to know that on 15th July, 1963, the exemption in the case of the shop in question was going to expire and the decree-holder would not be able to execute the decree against the tenant. If knowing that fact, the surety did not specifically mention in the bond that he furnished to the court that in that event he would not be liable to pay the stipulated amount, it was clear that he undertook to deposit that amount under all circumstances irrespective of the fact whether the decree could be executed against the judgment-debtor or not. He could not now be heard to say that since the said decree was incapable of execution against the judgment-debtor he too was absolved from the payment of the amount of Rs 2500/-.

What the surety had undertaken was the compliance of the decree that might ultimately be passed against Maksoodan Lal. This undertaking was not subject to any condition, namely that if under the law, the decree could not be executed against Maksoodan Lal, the surety would also be automatically discharged. The lower appellate court had stayed the execution of the decree passed by the trial court specifically on that condition and when a solemn undertaking is given by some surety to the court, the same has to be honoured and if the surety is not prepared to abide by his promise, the court has to see that he acts upon it.

It has contended by the Learned Counsel for Prabash Chander that the liability of the surety was co-extensive with that of the principle debtor u/s 128 of the Indian Contract Act and when the principle debtor was not liable under the decree, the surety was also discharged unless under the bond given by him it was otherwise provided. In the instant case, according to the Learned Counsel, there was nothing to the contrary mentioned in the bond. There is no merit in this contention; because the ejectment decree passed against the judgment-debtor was not a nullity and the latter had not been, in anyway, debarred from complying with the same. It was only the decree-holder who could not execute the said decree against the judgment debtor who could, if he so desired and wanted to comply with the decree, deliver possession of the shop to the decree-holders. There was no legal bar in his doing so. The surety had undertaken that the judgment debtor, would comply with the decree and the said judgment debtor, as I have already mentioned, could comply with the decree. If he failed to do that, the surety who had guaranteed the compliance of the decree, was under the terms of the bond, bound to pay Rs. 2,500/-.

It was then submitted by the Learned Counsel for Prabash Chander that although the provisions of sections 133 to 135 of the Indian Contract Act did not strictly apply to the surety bond in question, but the principles underlying those sections did not apply to the said bond, which had been executed under the orders of the court. That might be so, but the Learned Counsel was unable to point out the particular section of'' the Contract Act which applied to the facts of the instant case under which the surety''s liability had been discharged and he could not be asked to pay Rs. 2,500/-.

The next contention of the Learned Counsel was that since the ejectment decree was not executable against Maksoodan Lal under the law, there could not be any execution proceedings regarding the payment of Rs. 2,500/- by the surety, because there was no decree or executable order for the recovery of Rs. 2,500/- against Prabash Chander unless the decree-holders brought a suit against the surety on the basis of the bond executed by him and obtained a decree, argued the counsel, the stipulated amount could not be recovered from him. There is no merit in this submission as well. It is true that the ejectment decree could not be executed against Maksoodan Lal because of the provisions of section 13 of the Rent Act, but as I have already held above under the terms of the surety bond, Prabash Chander was bound to pay the said amount when Maksoodan Lal had not complied with the decree. There was no necessity for filing a separate suit on the basis of the bond against Prabash Chander and getting a decree against him for the said amount. The provisions of section 145 of the CPC would, in my view fully cover this situation. The said section says -

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 fulfillment 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 personality 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.

According to this section, when any person had become liable as surety for the performance of any decree, the decree might be executed against him to the extent to which he had rendered himself personally liable. In the instant case, Prabash Chander had indisputably stood surety for the performance of any decree that might be passed against Maksoodan Lal. A decree for ejectment had undoubtedly been passed against Maksoodan Lal and he admittedly had not complied with it. Under the provisions of this section, therefore, that decree could be executed against Prabash Chander to the extent to which he had rendered himself personally liable. Under the terms of the bond, he had made himself personally liable to pay Rs. 2500/- in case Maksoodan Lal did not comply with the decree, Under these circumstances, the amount of Rs. 2500/- could be recovered from Prabash Chander in execution.

The last argument raised by the Learned Counsel for Prabash Chander was that the payment of Rs. 2500/- was applied clause in the surety bond and that represented the maximum amount of damages which the decree-holders would suffer by the non compliance of the decree obtained by them? Unless some court actually determined the exact amount of damages suffered by the decree-holders, the surety could not be held liable for the entire amount. Reliance for this submission was placed upon the provisions of section 74 of the Indian Contract Act and to a Bench decision of the Calcutta High Court in Kunja Moyee Dassi Vs. Akshoy Kumar Das,

This objection also, in my opinion, is pointless. No authority was cited by the Learned Counsel to prove that the provisions of section 74 of the Indian Contract Act would apply to the surety bonds executed in favour of courts. In the instant case, Prabash Chander had given an undertaking to the court that he would see that Maksoodan Lal complied with the ultimate decree that was passed against him and if the latter did not do so, the former would pay Rs. 2500/- in court. If the said amount could be called as damages for breach of a contract, then the same was fixed by the court itself and that being so, no further determination by the court regarding the exact amount of damages suffered by the decree-holders was necessary. It was not the case of the surety that he agreed to the payment of the said amount under coercion or pressure of the court. He had voluntarily undertaken to deposit that amount in court if Maksoodan Lal did not comply with the decree. He cannot now be heard to say that the said amount was excessive. The facts in the Calcutta decision in Smt. Kunja Moyee Dasi''s case are distinguishable and have no application to the instant case.

In view of what I have said above, this appeal is accepted, the order of the lower appellate court is set aside and that of the trial court restored. In the circumstances of the case, however, the parties are left to bear their own costs in this Court as well.