ANAND SINGH Vs. COLLECTOR OF BIJNOR

JUDGEMENT

(1.) This is a first appeal by defendant 1, Kunwar Anand Singh with whom his son Kunwar Sundar Singh has been joined as an appellant. The lower appellate Court has granted a decree in favour of the plaintiff, the Collector of Bijnor in charge of the Kashipur Estate under the Court of Wards, the estate being owned at present by the Raj Kumar Hari Chand Raj Singh, minor. The transactions out of which this suit has arisen areas follows:

(2.) On 14 June 1911 the appellant Kunwar Anand Singh borrowed Rs. 20,000, on a simple bond payable on demand from Bisheshwar Nath and Gauri Shankar, the rate of interest being annas 0-12-0 per cent per mensem with six-monthly rests. On the same date defendant 2 the brother of Kunwar Anand Singh, Raja Udai Raj Singh, who was at that time the Raja of Kashipur, executed a surety bond by which he mortgaged certain property in Naini Tal called Strawberry Hall and Kashipur house. The deed set forth that he stood surety for the appellant and if the appellant failed to pay the sum of Rs. 20,000, the Raja would pay the amount with interest and that he hypothecated the property for that purpose. Now on 22 July, 1916, the appellant applied to be declared an insolvent and he was adjudicated an insolvent apparently in that year, although the exact date is not given. The limitation on the bond would have expired on 14 June 1917. On the day previous to that, on 18 June 1917, the creditors brought a suit against the Raja of Kashipur, defendant 2. They did not sue the principal debtor apparently because he had been declared an insolvent. A decree was obtained on a compromise on 1 October 1917 which was to the effect that the parties had agreed that the plaintiffs claim be decreed with costs and contractual interest including compound interest up to the date of payment and interest pendente lite with the provision that the defendant be not liable to pay anything under the decree until after the expiry of seven years and that he be liable to pay them only such amount as may not have been paid in the interval by Kunwar Anand Singh, his heirs or receivers of his estate. Nothing was paid by Kunwar Anand Singh appellant and that as a result of this transaction the interest has very largely increased and the sum now claimed is Rs. 66,000, odd. On 22 October, 1924, the creditors made an application for a final decree against the surety and the decree was passed on 6 May 1925. The claim had then increased to Rs. 52,369- 12-0. Subsequent to this decree on 4 June 1925 defendant 2, the Raja of Kashipur, executed a deed of relinquishment of his estate in favour of the minor plaintiff his son. This document is printed at p. 71. In this document he stated that he transferred the estate to the transferee for ever subject to and charged with the payment of all the lawful debts, liabilities and obligations (except such as are now barred by any rule or law of limitation) of the transfer or and existing at the date of these presents the estimated amount of which is Rs. 3 lakhs or thereabouts and the transferee hereby covenants with the transferor that the transferee will duly pay and discharge all such debts, liabilities and etc.

(3.) Accordingly the plaintiff assumed the liability to pay the decree which had been passed on 6 May 1925 against the Raja. Eventually payments were made on 7 May 1926and 18 October 1926 by the Court of Wards of a total amount of Rs. 57,664-12-0 and interest. The plaintiff now sues to recover this amount from defendant 1 on the ground that the plaintiff has succeeded to the rights of the surety and that defendant 1 is the principal debtor. The first point with which we may deal is the question of whether the plaintiff has the right of a surety to obtain a decree against the principal debtor. It is true that the Raja of Kashipur defendant 2, did transfer his liabilities to the plaintiff, but he did not transfer the right which would accrue to him as surety on paying the amount due from the principal debtor. Accordingly we are of opinion that any decree which can be granted should be granted to defendant 2 the Raja and not to the plaintiff. The next point which we may deal with is the question of the amount of interest which would be due to the decree-holder if his claim is valid. Learned Counsel for the appellant argued that the compromise of 1917 should not affect the liabilities of the appellant. By that compromise the surety undertook to pay after a period of seven years and the claim has now been swollen by the accumulated compound interest during this period of seven years.