BANKIM BIHARI ROY Vs. HALIMA BIBI

JUDGEMENT

(1.) THE two principal questions to be decided in this appeal are (1) The applicability of Section 135 of the Indian Contract Act (Act IX of 1872) to a case of surety within the meaning of Section 145 of the Code of Civil Procedure; and (2) Whether the subsequent objection in the same Misc. case is hit by the principles of res judicata on the ground that the second objection was not included in the 1st objection.

(2.) THEY arise under the following circumstances; Respondent 1 Halima Bibi, grandmother of respondent 2 Md. Yusuf Ahamad who was the original defendant in Title suit No. 52/50 stood surety for the performance of any decree that may eventually be passed in the aforesaid suit. The plaintiff, Bankim Bihari Roy filed the aforementioned suit for ejectment and damage in lieu of shop rent. In the said suit, the plaintiff filed an application for attachment before judgment of movables belonging to the defendant under Order 38, Rule 5 of the Code of Civil Procedure. Respondent No. 1 in that proceeding furnished security to the extent of Rs. 2000/for the satisfaction of the decree that might be passed in the suit. Accordingly halim Bibi executed a registered security-bond (Ex. A) in favour of the Court for a sum of Rs. 2000/- on 21st February, 1951. Subsequently on 19th February 1952, the suit was compromised between the plaintiff and the defendant without any notice to the Surety (Halim Bibi ). In the compromise the defendant agreed to pay the entire decretal dues and was granted time for one year. He did not pay. The decree-holder consequently started execution of the decree against the properties of the surety (Ex. Case No. 225 of 1953) in the Court of the second Munsif of cuttack. The surety filed a petition under Section 47 of the Code of Civil Procedure on 25-757 first on the ground that she did not execute the document, and accordingly she was not liable. A Misc. case was registered being Misc. Case No. 215 of 1957. In the same Misc. Case another set of objections were taken on 28-1-58 on the ground that she was released of the liability under the surety bond on account of the compromise entered into between the plaintiff and the defendant under which one year's time was allowed to the defendant to pay up the decretal dues without her consent and without any notice to her. Both the Courts below negatived the first objection and upheld the second objection. While coming to these conclusions, both the Courts below relied upon a decision of this Court reported in nanagaram v. Nirmal Prasad, ILR (1957) Cut 152. It is against this decision that the present appeal is directed. I heard this appeal at the first instance and referred the matter for decision by a Division Bench of this Court by order No. 9 dated 161-61 and that is how the matter has come up before this Bench.

(3.) THE self-same contentions as raised before the Courts below and as noticed at the beginning of this judgment were raised by Mr. M. S. Rao before this Court. His contention, in essence, was that Section 135 of the Contract Act does not apply to the surety-bond and the second objection raised by the surety on 28-1-58 is barred by the principles of constructive res judicata. He further contended that althpough section 135 of the Contract Act does not apply to the facts of the present case, he is entitled to enforce the decree under Section 145 of the Code of civil Procedure. Section 145 lays down that Where any person has become liable as surety (a) for the purpose of any decree or any part thereof, or (b) for the restitution of any property taken in eicecution of a decree, or (c) for the payment of any moffey, or for the fulfilment of any condition imposed on any person, under an order of the Court in any suit or in any proceeding consequent thereon, the decree or order may be executed against huik to the extent to which he has rendered himself personally liable in the manner provided for execution of the decree and such person shall, for the purpose of appeal, be deemed to be a party within the meaning of Section 47, provided that such notice as the Court may in each case think sufficient has, been given to the surety. The liability of the surety under this section depends upon the terras of the bond. The terms of the bond, in the present case are that, the surety will be liable for the sum of Rs. 2000/- for, the amount that may be found due by the Court and will be realised from the properties given security hereunder. There are cases to show where under a surety-bond the surety agreed that if the decision was given against the defendant, he would pay whatever amount was found due and the surety would stand discharged if the suit was compromised. Thus, the obligation which a surety incurs under a bond which he gives to Court under Section 145 of the Code of Civil Procedura is deemed to be discharged of the liability if he suffers some injury by virtue of the suit having been compromised. Both the Courts appear to have taken the view that Section 135 of the Contract act applies to the facts of the present case and accordingly the surety stands discharged when the creditor and the principal debtor entered into a composition; the former promising, to give the latter time for performance of the decree. Thus, the surety stands discharged unless ha assents to such a contract. For this purpose, both the Courts below as stated earlier, had relied upon a decision of this court in ILR (1957) Cut ,152, to which I will advert sometime later.