NARAYAN RAMCHANDRA BHAGWAT Vs. MARKANDYA TUKARAM

JUDGEMENT

(1.) THIS second appeal arises out of execution proceedings. The appellant had executed a surety bond in favour of the Court agreeing to pay Rs. 2,400/- to the decree-holder in case the judgment-debtor who is respondent No. 2 here, failed to prefer an appeal from the decree of the trial Court and obtain a stay order from that Court. This was on 3-12-1952. The respondent No. . 2 did not prefer an appeal nor did he bring any stay orders The decree-holder, i. e. , the respondent No. 1, then sought to execute the decree. In the execution proceedings the parties arrived at a compromise the terms of which are as follows :

(2.) IT would appear that the respondent No. 2 failed to furnish a fresh solvent security as contemplated in the compromise. He did not pay any money either and eventually the respondent No. 1 took out execution against the respondent No. 2 for the entire amount due under the decree together with interest as agreed to in the compromise between the respondents Nos. 1 and 2. Various objections were raised on behalf of the appellant to the execution but only one of those objections is pressed before me and it is only that which has to be considered. The objection is that by reason of the arrangement arrived at on 14-1-1953, there was a variation in the original contract and that consequently the appellant who was a surety was discharged on the principle underlying S. 133 of the Contract Act. This contention was negatived by both the Courts below.

(3.) NO doubt as has beer, held in Madanlal Motilal v. Radhakishan Laxminarain, 31 Nag LR (Sup) 83: (AIR 1935 Nag 258), the provisions of Ss. 126 and 135 to 139 of the Contract Act (and a portion of S. 133) do not apply where the bond has been executed by the surety in favour of the Court, However, as has been held in Parvatibai v. Vinayak Balvant. AIR 1939 Bom 23, the principles underlying those sections do certainly apply. This decision is binding upon me. In Jagjivandas v. King Hamilton and Co. , 33 Bom LR 709: (AIR 1931 Bom 337), it has been held that the general principle is that the rights of surety are not to be interfered with without his consent, and that giving time to the principal debtor does prejudice the rights of the surety by preventing him from paying off the creditor and then enforcing the creditors original rights against the principal debtor. In the instant case, by making the decree payable by instalments time was given to the respondent No. 2. In addition, there was a substantial variation in the original contract by reason of the fact that the judgment-debor. that is the respondent No. 2, was required to pay interest at 6 per cent per annum on the decretal amount. This was casting an additional burden on the appellant. Where such a variation takes place, it must be held that the surety is discharged. This is what has been held in T. N. and O. Bank Ltd. v Official Assignee, Madras, AIR 1944 Mad 396. It is said that the surety's burden would not be increased as he could not be liable to the interest agreed to between the respondents 1 and 2. A complete answer is to be found in the following observations in Keshavlal Harilal Setalvad v. Pratapsing Mobolalbhai Sheth, 34 Bom LR 167: (AIR 1932 Bom 168 ). "if there is a substantial alteration in a contract by the principal, without the consent of the surety, even if there is do extra prejudice to the surety which can be shown to exist, the surety will be discharged, because the Court will not go into the question whether there has been any actual prejudice or not. The surety is to be the judge whether he will continue to remain liable on the new contract or not. "