MOHAN LAL Vs. SURAJ MANI

JUDGEMENT

(1.) This appeal raises an important question relating to the extent of the liability of the surety for the performance of the decree passed on the basis of compromise between the plaintiff and the defendant.

(2.) MOHAN Lal the plaintiff appellant brought a suit against Suraj Mani the defendant respondent for the recovery of Rs. 6126.00 in the Court of District Judge, Udhampur. During the pendency of the suit. Nitya Nand in the course of attachment proceedings executed a surety bond and engaged himself to pay Rs. 6126.00 if the Court eventually passed a decree against the defendant. While the trial of the suit was in progress the plaintiff entered into a compromise with the defendant respondent as a result of which the Court passed a decree for Rs. 6126.00 in favour of the appellant. According to the terms of compromise the decretal amount was to be paid in instalments at the rate of Rs. 200.00 per month. The compromise was effected without the knowledge of the surety. Afterwards execution proceedings were taken out by the decree holder and he sought to proceed against the surety. This was contested by the surety on the footing that his obligation under the surety bond had ceased to exist as the decree proceeded on the basis of compromise of which the surety had no knowledge. Negotiations between the decree holder and the judgment debtor regarding the mode of payment which had resulted in the passing of the consent decree discharges the surety under the law of contract. On a consideration of the matter the Court of the District Judge came to the conclusion that the surety was not liable to the decree holder and that he stood discharged under the terms of the bond. Aggrieved by this the decree holder has come up in appeal before this Court.

(3.) THE appeal was originally heard by a Division Bench of this Court. During the course of arguments it was found that this Court had expressed divergent views on the matter by enunciating two conflicting principles one in A. I. R. 1962 J&K 72 and the other in A. I. R. 1968 J & K 93. The authorities not being unanimous it was felt that the matter required further consideration by a larger Bench. It is in these circumstances that the case has been referred to the Full Bench.