VELAPPA KUMAR Vs. KOSAMATTOM CHIT FUND

JUDGEMENT

(1.) The short point that arises for consideration in this case is whether the discharge of a decree debt under S.3 of the Kerala Debt Relief Ordinance, 1977, Ordinance No. I of 1977, for short the Ordinance, as far as the judgment debtor who was the principal debtor in the transaction which ended in a decree, will automatically end in the discharge of the liability of a cojudgment debtor who was only a surety for the principal debtor in the transaction. S.3 of the above Ordinance was in pari materia with the corresponding S.3 of the Kerala Debt Relief Act, 1977, Act 17 of 1977.

(2.) The second judgment debtor in O. S. No. 137 of 1965 on the file of the Sub Court, Kottayam pending execution before the Sub Court, Trivandrum is the petitioner in this Civil Revision Petition. His grievance is against the order of the Subordinate Court, Trivandrum in E A. No. 214 of 1977 rejecting his contentions that since the liability of the first judgment debtor stood discharged under S.3 of the Ordinance he has no further liability as he was only a surety for the first judgment debtor in the transaction which ripened into the decree The above suit was one for money and the petitioner was impleaded as the 2nd defendant because he stood as surety for the 1st defendant in the transaction which resulted in the suit. In view of S.3 of the Ordinance, the liability of the first judgment debtor stood discharged This was recognised by the execution court and admitted by the decree holders. Thereupon, the petitioner tiled the above E. A. which was dismissed by the execution court.

(3.) Shri. P. Gopalakrishnan Nair, learned counsel for the petitioner, contended that under the Indian Contract Act, 1872 any benefit claimed by the principal debtor can be claimed by his surety and hence the petitioner who was only a surety for the first judgment debtor has no further liability to pay the decree debt when once the first judgment debtor who was the principal debtor got a discharge of the debt under S.3 of the Ordinance Learned counsel referred to S.128 of the Contract Act and contended that the liability of the surety is coextensive with that of the principal debtor. Reference was also made to S.133 and 139 of the Contract Act. In support of his contentions, learned counsel relied on Mani v. Kochouseph ( 1965 KLT 1266 ). In the above case, a surety bond was executed for stay of execution of a decree whereby the liability of the surety was limited to the amount due under the decree. Thereafter, the judgment debtor was given the benefits of the Kerala Agriculturists Debt Relief Act, 31 of 1958 The question that arose in that case was whether the liability of the surety will also be reduced to the extent to which the liability of the judgment debtor was reduced under Kerala Act 31 of 1958. This Court said: