K PANDURANGAM CHETTY Vs. V G PADAVATI MUDALI

JUDGEMENT

(1.) This appeal is directed against the judgment of Mack, J., setting aside the order of the learned Subordinate Judge of Chittoor in E.P. No. 61 of 1952 in O.S. No. 88 of 1949 on his file.

(2.) The facts are not in dispute and they may be briefly stated. One Pandeti Chandraju executed a promissory note in favour of the appellant for a sum of Rs. 5,301 carrying interest at 5 per cent per annum. The promisee filed a suit on the said promissory note and attached the properties of the judgment-debtor before judgment. The respondent executed a surety bond for a sum of Rs. 6,500 on behalf of the defendant undertaking to pay the decree amount to that extent. The suit was decreed on 13th March, 1950. The decree-holder filed E.P. No. 48 of 1950, for realising the amounts from the judgment-debtor by attachment of certain amounts of the judgment-debtor alleged to be in the possession of third parties. On 12th October, 1950, the judgment-debtor filed an application under Order 20, rule 11 and section 151, Civil Procedure Code, praying for an order of payment of the decree amount in instalments at the rate of Rs. 500 for every two months. Notice in that petition was served on the decree-holder and he filed a counter. The counter is not filed in the case and it is not possible to predicate the contents of that counter, but it may be assumed that the appellant opposed the application. After the counter was filed, the application was adjourned to 2nd December, 1950, and the diary shows that on that date Rs. 500 were paid to the decree-holder and thereafter both the parties were heard. The learned Judge directed the judgment-debtor to produce substantial security and adjourned the case to 16th December, 1950. On that day, it was adjourned to 30th January, 1951, for the purpose of testing the security. After some adjournments, on 9th February, 1951, the security was found good and was accepted by the learned Judge for a sum of Rs. 10,200 Both the parties asked lor an adjournment on the ground that the petition should be considered after the judgment-debtor paid another sum of Rs. 500. On the joint request the petition was adjourned to 14th March, 1951. On the 14th March, 1951, the decree-holders advocate reported that the sum of Rs. 500 was paid and the petition was adjourned to 17th March, 1951, to enable the decree-holder's advocate to consult his client. On the 17th March, 1951, both the parties agreed that the balance should be paid in two instalments once in two months, the first instalment falling on 15th May, 1951. They also agreed that in default of any one payment being made the entire amount became payable. It transpires, that notwithstanding this order the judgment-debtor did not pay either of the two instalments with the result that the decree-holder filed a fresh execution petition (E.P. No. 61 of 1952) against the surety for realising the full amount for which he stood surety. The surety i.e., the respondent in this appeal after receiving notice of the said application, filed a counter-affidavit contending that he was not liable. The decree-holder, thereupon, represented to the Court that he wanted to file a E.P. against the judgment-debtor's immovable properties, if any unencumbered. The surety gave the decree-holder the necessary information to the effect that property worth Rs. 1,000 was not encumbered. The decree-holder took some time and then represented to the Court that even that property was encumbered to the Highways Department. Thereupon, the learned Subordinate Judge held that the contentions of the surety were untenable and that he was liable to pay the debt as per the terms of the surety bond. At the request of the respondent, the learned Subordinate Judge gave him time twice for payment, but as no payment was made he was directed to be arrested. After he was arrested, he asked for further time. Meanwhile, he filed an appeal to the High Court at Madras and obtained stay of execution proceedings. As aforesaid, on appeal Mack, J., took a different view and held that the respondent was discharged from his liability under the surety bond. Hence this Letters Patent Appeal.

(3.) The learned counsel for the appellant, Mr. Narasinga Rao, contends that after the Court decided to give time to the judgment-debtor the appellant only agreed for the period and, therefore, the time was not granted with his consent, and in that view, the surety was not discharged. Before adverting to his argument in some detail, the settled law on the point may be noticed. A Division Bench of the Madras High Court in Official Liquidators T. N. and Q. Bank, Ltd. v. Official Assignee, Madras, (1944)1 M.L.J. 234 : I.L.R. (1944) Mad.708 at 711, held that the surety was discharged if time was granted by the Court with the consent of the creditor. Lionel Leach, C.J., who delivered the judgment on behalf of the Bench, observed at page 711 thus : "It is a fundamental rule of law that a surety is relieved from liability if the creditor compounds or gives time to the principal debtor without his consent ".