V SRIRANGAMMAL Vs. UNION BANK OF INDIA

JUDGEMENT

(1.) THESE appeals have been preferred by two sureties against the common order dismissing Application Nos. 4334 and 4333 of 1989 in C.S. Nos. 473 of 1977 praying for cancellation of the security furnished under a security bond, dated 16.9.1978 executed by the appellants and some others and registered as Document No. 1584 of 1980 pursuant to the clauses in the decree, dated 6.2.1978 in C.S. No. 473 of 1977 and to discharge the sureties from further liabilities either with or without the payment of Rs. 59,683/-.

(2.) THE Union Bank of India (hereinafter referred to as ?the Bank?, for short), the first respondent in these appeals, instituted C.S. No. 473 of 1977 against a partnership firm of the name of Vummidiars Agencies, represented by its three partners, who were defendants 1 to 4 in the suit, for the recovery of a sum of Rs. 21,85,191.65 with interest at 16% per annum from the date of suit till payment of realisation. On 6.2.1978, a compromise was entered into between the parties to the suit, under the terms of which the defendants in C.S. No. 473 of 1977 submitted to a decree in favour of the Bank for Rs. 22,20,112.65 inclusive of costs with interest at the rate of 15% per annum from 21.12.1977 with monthly rests. Provision was also made under clause 2 of the compromise for the payment of the amount in certain instalments and the consequences that would follow in the event of default being committed in such instalment payments. Under Clause 3 of the compromise, a charge was created on three items of properties shown as items (i) to (iii) thereunder for the payment of the decreetal amount and costs and those items of properties did not from the subject-matter or the suit and liberty was given to the bank to enforce the charge in default of payment of the instalments. Clause 4 of the compromise made a further provision to the effect that the defendants will continue to be liable for the balance of the decretal amount, if the sale proceeds of the charged properties are found to be insufficient. An undertaking to register the decree bound along with other owners of the charged properties was also one of the terms of the compromise under clause 8 thereof. Pursuant to the memorandum of compromise containing the aforesaid terms filed before court, a compromise decree was also passed, the relevant clauses of which are as follows:? ??(1) That the Defendants herein do pay to the plaintiff herein, the sum of Rs. 22,61,720.75 (Rupees twenty two lakhs, sixty one thousand, seven hundred and twenty and paise seventy five only), inclusive of costs, with interest thereon at the rate of 15 per cent per annum from this date with monthly rests; (8) That there shall be a charge for the amount decreed in clause (1) supra , and for payment of all costs, charges and expenses, on all their rights, title and interest including the reversionary right, in the immovable properties more particularly described in the schedule ?A? hereunder. (9) That in default of any payment as mentioned in clauses (3) to (7), the plaintiff herein shall forthwith be at liberty to enforce the charges created herein, in its favour including the right of sale of all the interest of the defendants, in the said immovable properties and to appropriate the net sale proceeds towards the satisfaction of the amount decreed herein; (14) That the defendants herein do on or before 6.3.1978 register this decree and the security bond they shall furnish along with the owners of the properties set out in the schedule hereunder with the Sub Registrar of Assurances at Madras.? In fulfillment of the terms of the compromise and also the decree passed thereon, a security bond dated 16.9.1978 was executed by the appellants and others and presented for registration on 27.9.1978 and was later registered as Document No. 1584 of 1980, with reference to the properties in the ?A? Schedule agreed to be charged for the realisation of the amounts due to the bank under the decree. In the security bond, the executants had stated that they furnished their entire right, title and interest in the immovable properties detailed in the schedule as security for the due performance of the decree for Rs. 22,00,000/-, based on the clauses in the Memorandum of Compromise filed in the C.S. No. 473 of 1977. It is with reference to this security bond that in Application Nos. 4333 and 4334 of 1989, the appellants prayed for the relief of cancellation of the security in toto and to discharge them from further liabilities, principally on two grounds. According to the appellants, the enforceable upper limit of liability on the security is limited to 22 lakhs of rupees and since that amount and other amounts of Rs. 59,683/offered to be paid by the appellants had been paid, no further liability could be enforced on the secured properties. It was also their further plea that since the compromise decree in C.S. No. 473 of 1977 created a charge over properties not forming the subject-matter of the suit, the decree should have been registered and its nonregistration was fatal. Both these grounds were not countenanced and the applications were dismissed and that is how these appeals have arisen.

(3.) A faint attempt was made by learned counsel for the appellants to contend that under clause 14 of the compromise decree and even otherwise, the decree and the security bond should have been registered and the decree not having been so registered, the security bond could not be enforced. We have already referred to the effect of the non-registration of the compromise decree and held that in spite of such non-registration, the decree would be a valid decree ad for the realisation of the amounts due under such a decree, the appellants had executed a registered security bond as well and, therefore, the omission to register the compromise decree and the security bond would not enable the appellants to claim that the security should be cancelled. We, therefore, dismiss these appeals against the first respondent, as by an endorsement on the Memorandum of Grounds of Appeal in O.S.A. No. 102 of 1990 made by learned counsel for the appellants, these appeals against respondents 2 to 5 were not pressed. There will be however, no order as to costs.