BALKRISHNA Vs. ATMARAM

JUDGEMENT

(1.) THIS appeal arises out of an execution proceeding started by the decree-holder whose application for execution was dismissed by the executing Court as not tenable but allowed by the lower appellate Court as tenable and within time. The decree-holder obtained a decree in 1930 against one Diwakar. When execution of the decree was sought for against the judgment-debtor he asked for time and time was granted on his furnishing security. Accordingly he produced Balkrishna, who is the appellant before me, as surety. Balkrishna executed a bond a copy of which is on the record as Ex. A-1. By this bond Balkrishna undertook to pay the decretal amount due if the judgment-debtor did not satisfy the decree by 31st March 1932. There ' was no payment made by 31st March 1932, and under Section 145, Civil P.C., Balkrishna could be proceeded against and the decretal amount recovered from him. It appears from the record of the case that the decree-holder did take out execution against the principal debtor and also against Balkrishna after 1932 till 1937. It is admitted before me that after 26th June 1937, to the date on which the present application for execution was filed, namely, 28th December 1940, no execution application was filed by the decree-holder against the surety or the judgment-debtor. When this application was filed the surety Balkrishna objected to the application being granted on the ground that the application was barred by time and also on the ground that the principal debtor's debt had been determined by the Debt Relief Court and that therefore his liability as surety was discharged. He further contended that the decree-holder had granted time to the judgment-debtor after he became a surety without his consent and that, therefore, also he was discharged. The executing Court was of the opinion that the application was within time but was not tenable in view of the fact that the decree of the Court that was to be executed was merged in the order of the Debt Relief Court and that in view of the order of the Debt Relief Court no action could be taken against the surety and that the only remedy open to the decree-holder was to try to realise the amount in the manner laid down by the Debt Relief Court. Inasmuch as that contingency had not arisen it was held that the application was not tenable. The learned District Judge who heard the appeal against this order came to the conclusion that the surety under the terms of the bond was bound to pay the entire decretal debt as soon as there was failure on the part of the judgment-debtor to pay up by 31st March 1932, and that the liability was not in any way affected by the proceedings taken either before the Debt Conciliation Board or the Debt Relief Court. He held that the surety was not discharged by the grant of time; nor could he say that he should be held liable only to the extent of the order passed by the Debt Relief Court. On the question of limitation he further held that the application was within time. The execution application having been held to be tenable and within time, the order of the trial Court was reversed and the execution application was ordered to be proceeded with. Against that decision this miscellaneous appeal has been filed.

(2.) THE first objection raised on behalf of the surety-appellant is that the decree-holder having granted time to the principal judgment-debtor behind his back and without his consent the surety was discharged under Section 135, Contract Act. I have looked into the previous execution proceedings and find that it was not the decree-holder that granted time but it was the Court that from time to time adjourned the case to enable the judgment-debtor to pay in spite of opposition from the decree-holder. Under these circumstances there can be no discharge under Section 135, Contract Act. Moreover the proceedings indicate that this surety acquiesced in the orders that were passed from time to time and in fact at times himself applied for time for making the payment. Having thus acquiesced in the orders passed by the Court granting time to the principal judgment-debtor to make the payment he cannot, therefore, be allowed to complain that time was granted without his consent. I find this contention untenable. The second contention raised is that at any rate if the application for execution be tenable it must be limited to the amount sanctioned by the Debt Relief Court. It is argued that what was agreed to be paid was the amount to the extent of which the decree is effective as against the judgment-debtor and that inasmuch as the decree as against the judgment-debtor has now been reduced it is only the reduced amount that can be claimed. On the contrary it is argued on behalf of the decree-holder that the surety is bound by his promise which he made under the surety bond. There was admittedly a failure on the part of the judgment-debtor to pay the decretal amount in 1932 and therefore the surety became liable to pay the entire decretal amount on that date and it is this liability that is being enforced against the surety. The lower appellate Court has rightly held that: "The Debt Relief Court proceedings had nothing to do with Balkrishna (the surety). They would hold good as between the principal judgment-debtor and the decree-holder by operation of law, but any orders passed therein will not operate in connexion with the surety, who was not a party to them." This view is in consonance with the view taken under the Debt Conciliation Act in Prem Lal v. Jiwan (38) 20 N.L.J. 25 and in Kesheorao v. Laxman where Pollock J. laid down that: "The liability of the surety and the liability of the principal debtor are separate liabilities although arising out of the same transaction. Hence, while the application of the principal debtor under Debt Conciliation Act is before the Board the debt of the surety cannot be said to be a matter before the Board." This is a case under the Relief of Indebtedness Act, but the principle is the same, najnely that the liability of the surety is different from that of the principal debtor, and inasmuch as the surety did not apply to the Debt Relief Court for relief anything done by the Debt Relief Court is not in any way intended to affect the liability of the surety. It appears from the order passed by the Debt Relief Court that an attempt was made on behalf of the decree-holder to have the surety Balkrishna joined as a party to the application before the Debt Relief Court but the Court by its order dated 28th November 1940 very clearly stated that Balkrishna was not a necessary party and that he could not be joined as a party to the proceedings which were started by the principal judgment-debtor. The Court also observed that it would lead to multifariousness and that if the surety did not wish to apply for relief under the Relief of Indebtedness Act he could not be forced to ask for it. This order makes the position quite clear that the surety was no party to the debt relief proceedings and that no order affecting his liability was passed by the Debt Relief Court. This contention also fails. The third contention raised on behalf of the surety, however, is that the application for execution against him is barred by time. Before dealing with this point I will dispose of another contention raised in the course of argument. It was argued that the word "debt" as used in Section 24, Relief of Indebtedness Act or in Section 23, Debt Conciliation Act not having in any way been restricted by any qualification it ought to mean debt arising out of the transaction in general and that there could be no such thing as a debt due by the person who applied to the Debt Conciliation Board or the Debt Relief Court and a debt due from the surety. Such a distinction, it was contended, could not be drawn inasmuch as the word used is "debt". But with reference to the provisions of the Debt Conciliation Act, it has been held in some cases that although the word "debt" is used it is to be construed as meaning debt owed by the debtor who made the application before the Board: see Prem Lal v. Jiwan (38) 20 N.L.J. 25 where it was held that the debt to which reference was made in Sub-section (2) of Section 8, Debt Conciliation Act has reference only to a debt owed by a debtor who made an application to the Board and cannot refer to the liability to discharge a debt which lies on a person who has made no application to the Board and with whom the Board is not concerned. Similarly in Madhao Mukund Nakhate v. Ramchandra A.I.R. 1938 Nag. 273 with reference to the word "debt" in the C.P. Debt Conciliation Act it was held at p. 108. "The word 'debt' used in Section 21 means a debt of that debtor who applies under Section 4." So the word "debt" as used in Section 23, Debt Conciliation Act, must be read as meaning the debt of the person who has applied to the Debt Conciliation Board, and as used in Section 24, Relief of Indebtedness Act, must mean the debt of the person who has made an application to the Debt Relief Court. I take up the question now that the application for execution is barred by time. This contention is based upon the reasoning adopted by the lower appellate Court in holding that the surety's liability was not in any way affected by the proceedings under the Relief of Indebtedness Act or under the Debt Conciliation Act. The lower appellate Court having held that the liability of the surety was not in any way affected by those proceedings, it is argued that the lower appellate Court was wrong in holding that the application for execution was within time by reason of the pendency of those proceedings under Section 24, Relief of Indebtedness Act or under Section 23, Debt Conciliation Act. The view taken by the lower appellate Court is that the words in Section 24, Relief of Indebtedness Act, are very wide. The words in Section 24, Relief of Indebtedness Act are as under: "In calculating the period of limitation for any suit filed in, or proceeding before, civil Court for the recovery of a debt which was the subject of any proceedings under this Act, the time during which such proceedings had continued shall he excluded." Section 23, Debt Conciliation Act, is in these very words. A similar point arose for decision before Pollock J. in Kesheorao v. Laxman with reference to Section 23, Debt Conciliation Act. The contention before Pollock J. was that inasmuch as the principal debtor had sought for relief under the Debt Conciliation Act the time during which those proceedings were pending before the Debt Conciliation Board should be excluded in computing the period of limitation for a suit instituted by the creditor against the principal debtor and his surety who had undertaken the liability to pay the amount owed on the bond. It was contended that Section 16(a)(1) provided that no civil Court shall entertain any suit in respect of any matter pending before a board, and Section 23 provided that in calculating the period of limitation for any suit filed in a civil Court for the recovery of a debt which was the subject of any proceeding under the Act, the time during which such proceedings had continued shall be excluded. Pollock J. however held that the time could be excluded so far as it related to the original debtor but the surety not being a party before the Debt Conciliation Board there could be no exclusion of time against him. The surety's liability was not a matter before the board. The contention that there was only one debt and that the creditor could not have proceeded against the surety while the application of the principal debtor was before the board was repelled by stating that the liability of the surety and the liability of the principal debtor are separate liabilities although arising out of the same transaction. In this view of the case the plaintiff's suit against the surety was held to be barred by time. The same principle applies to an execution application. There was nothing in law to prevent the decree-holder from applying for execution against the surety within time. Admittedly he did not apply for more than three years and his application must be held to be barred by time.