UNION OF INDIA Vs. ABDUL HAFIZ

JUDGEMENT

(1.) Union of India is the appellant in this second appeal, for setting aside the judgment and decree passed by the learned Munsif, dismissing the suit of the appellant holding it to be not maintainable, which was affirmed in appeal by the learned Additional Subordinate Judge, Arrab.

(2.) The plaintiff-appellant filed the aforesaid suit for a decree for Rs, 2,785.94 against defendant-respondent Nos. 1 and 2 on the allegation that defendant No. 1 was a licensee under the Excise Act, and defendant No. 2 was his surety. It was further stated in the plaint that the Collector of Central Excise. Patna, by his order dated 30th July, 1954, had held that defendant No. 1 was liable to pay the aforesaid amount of Rs. 2,785-94, but he did not pay the said amount inspite of certificate cases having been filed against him. According to the plaintiff, it had the right to realise the said amount jointly and severally against the two defendants.

(3.) This case has a long history. From judgments of the two courts below, it appears that some inspection was made at the premises of defendant No. 1 who was a licensee under the Excise Act and certain irregularities were discovered in the year 1953. On the 30th July, 1954, the Collector of Central Excise, as already stated above, adjudicated the liability of defendant No. 1 and directed him to pay the aforesaid amount of Rs. 2,785.94. When defendant No. 1 did not pay, a certificate case was filed in accordance with the provisions of the Bihar & Orissa Public Demand Recovery Act, 1914 (hereinafter referred to as the Recovery Act), giving rise to certificate case no 329 Misc./B of 1954-55. In the said certificate proceeding one house of defendant No. 1 was attached for sale. Later an objection was filed on behalf of one M/s. Khuda Bhai Patel, claiming interest in the house in question. That claim was rejected by the Certificate Officer and the property was declared as exclusively belonging to defendant No. 1. The aforesaid M/s. Khuda Bhai Patel thereafter filed a title suit for declaration that the attached house really belonged to him. It was numbered as Title Suit No. 4 of 1959. This title suit was however, decreed ex parte some time in the year 1960-61. Although the Union of India was a party to the said suit, but none appeared to contest the same and it was held that the house which had been attached in the certificate proceeding really belonged to the firm, M/s. Khuda Bhai Patel. It appears that nothing could be realised in the certificate case. After the aforesaid ex-parte decree in the title suit, another certificate case was filed against defendant No. 2 the surety showing him as the certificate debtor for that very amount, which was numbered as Miscellaneous case No. 144 of 1961-62. Defendant No. 2 filed an objection in the said certificate proceeding and the main objection on his behalf was that the amount couldn'the realised from him. The main objection raised on behalf of defendant No. 2 was that because of the acts and omissions of the certificate holder in the earlier suit, the remedy of defendant No. 2, as the surety against defendant no 1 has been impaired and as such he has been discharged under Section 139 of Contract Act, 1872. In other words, according to defendant No. 2, as the certificate holder did not contest Title Suit No. 4 of 1959 and allowed an ex parte decree to be passed, holding that the house belonged to M/s. Khuda Bhai Patel, it impaired the right of defendant No. 2 against defendant No. 1. In that connection it was also pointed out that the house had been transferred in favour of M/s. Khuda Bhai Patel by defendant no 1 after more than two years of the service of notice under Section 7 of the Recovery Act, but all these aspects were not brought to the notice of the civil court due to non-appearance of the certificate holder. The Certificate Officer accepted the objection of defendant No. 2 and by order dated 1st April, 1963 dropped the proceedings against him holding that the conduct of the certificate holder had impaired the right of defendant No. 2 as surety. The present suit was filed on 2nd of December, 1963 for a decree of the aforesaid amount jointly and severally against the defendant No. 2, as stated above.