BONDRU AVASU MAHAJAN Vs. DAGADU EKOBA DHAKE

JUDGEMENT

(1.) THIS is an appeal by the plaintiff in a suit for a declaration that he was discharged from liability as surety for the fulfilment of a decree against the judgment-debtor in a previous suit, and for an injunction restraining defendant No.1 from executing the decree against him.

(2.) THE facts are shortly these :-Defendant No.1 obtained a money decree against defendant No.2 in 1925 Defendant No.2 then filed a suit in 1926 to set aside the decree and applied for stay of execution pending the disposal of his suit. THE Court granted stay on furnishing security. THE plaintiff accordingly stood surety for defendant No.2 for the fulfilment of the decree in the first suit. Defendant No.2's suit was dismissed. THEreafter on December 4, 1934, there was an adjustment of the decree in the first suit between defendants Nos. 1 and 2 by which it was settled that defendant No.2 should pay to defendant No.1 Rs. 3,000 by annual instalments of Rs. 500. It is clear that that adjustment varied the terms of the decree in the first suit inasmuch as time was granted to the judgment-debtor to pay the decretal amount in instalments. It also appears that the adjustment was made behind the back of the surety. THEreafter defendant No.1 filed a darkhast to execute his decree against defendant No.2 as we'll as the surety. Defendant No.2 applied for certifying the adjustment arrived at between him and defendant No.1. But the application was made after the period of limitation was over. In the darkhast proceedings defendant No.2 as we'll as the present plaintiff contended that the decree had been adjusted and the adjustment should be recognised even though the application for certifying the adjustment was time-barred. THE present plaintiff had further pleaded that on account of the adjustment he was discharged from his liability as surety. THE executing Court held that it was not open to defendant No.2 as well as the surety to plead adjustment after the period of limitation for certifying it had expired. On that finding the executing Court did not think it necessary to record any finding on the present plaintiff's contention that he had been discharged from his liability on account of the adjustment), THE Court held that as the adjustment cannot be looked at the darkhast should proceed further. THE present suit was thereafter filed by the plaintiff for a declaration that he had been discharged from his liability as a surety on account of the adjustment and that therefore the decree cannot be executed against him. THE material defendant was defendant No.1, the original decree-holder. He contended that the present suit was barred by Section 47 of the Civil Procedure Code, that it was also barred by the principle of res judicata and that the plaintiff was not entitled to prove the alleged adjustment in this suit.

(3.) THE plaintiff has, therefore, come to this Court in second appeal and the main contention urged by Mr. Desai on his behalf is that the lower Court was wrong in holding that the plaintiff was precluded from proving in this suit that the adjustment, even though uncertified, discharged him from liability. THE appellant's contention in short is that any adjustment between the creditor and the debtor would forthwith relieve the surety from his liability, because the original agreement was superseded by a new agreement. Whether the new agreement requires to be certified by the Court would be a question between the creditor and the debtor but not one between the creditor and the surety. It is further contended that it is open to a surety to file a suit on the ground that though the adjustment being uncertified may prevent the executing Court from recognising it, it can be pleaded by the surety in a regular suit, and it is lastly contended that even as between the judgment-creditor and the judgment-debtor although an uncertified adjustment cannot be recognised by the executing Court, it would still be open to the judgment-debtor to file a suit for damage's against the creditor if the latter had, in pursuance of the adjustment, received some benefit and had still applied for execution of the decree without recognising the adjustment, and that therefore, it was open to the Court in a regular suit to pass a decree for damages on the basis of such an uncertified adjustment. In order to appreciate this argument it is necessary to see what are the rights and liabilities governing the surety in such cases. Section 135 of the Indian Contract Act lays down that a contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue the principal debtor, discharges the surety, unless the surety assents to such contract.