DURGA PRIYA CHOWDHURY Vs. DURGA PADA ROY

JUDGEMENT

(1.) This is an appeal by the plaintiff. The suit was for accounts against the principal defendant 1 for the period of his service under the plaintiff as gomasta. The other defendants were made parties as they are the representatives of one Mahendra Nath Eoy who was the surety for defendant 1. A preliminary decree was made on 11 March 1922. The final decree was made by the Subordinate Judge on 25 April 1923. In making the final decree the Subordinate Judge found that the plaintiff was entitled to get from defendant 1, Rs. 2,000 odd for not accounting for moneys received on behalf of the plaintiff. The final decree was made by him against defendants 1 to 8. It was directed that if the money was not paid by defendant 1 within a month of the date of the decree the plaintiff would be entitled to realize the money by the sale of the property hypothecated by the surety bond and if the entire sum was not realized by that, the balance was to be recovered from any property left by Mahendra Nath Roy in the hands of defendants 2 to 8. Defendants 2 to 8 appealed against that decree. The District Judge on appeal reversed the decision of the Subordinate Judge holding that under the provisions of Section 131, Contract Act, the death of the surety operated as a revocation of the contract of guarantee so far as regards all future transactions. I ought here to state that the surety bond entered into by defendant 1 and Mahendra Nath Roy was dated 27 March 1914. Mahendra Nath Roy died on 10 August 1914. The learned Judge found that defendant 1 had not committed any act of default during the lifetime of Mahendra Nath Roy. He held that, if there had been any default by defendant 1 during the life time of Mahendra Nath Roy, the other defendants would be liable for the amount; but, inasmuch as it had been found that defendant 1 was not guilty of any default during the life time of the surety, defendants 2 to 8 were not at all liable. Against that decree the plaintiff appeals, to this Court.

(2.) The contention on behalf of the plaintiff-appellant is, first, that the contract of guarantee in this case is a continuing, guarantee. Reliance has been placed in support of this contention on the case of Sen V/s. Bank of Bengal A.I.R. 1920 P.C. 35. In that case their Lordships doubted whether there was any contract of guarantee at all. They, however, expressed the opinion that in that case there was only one transaction, that is, the appointment of the principal to a place of trust and the pledging of the security deposited with the bank. That seems to take the present case out of the ruling in that case as there was no continuing; guarantee. The present case, however, comes within the purview of Section 129, Contract Act. Ill. (a) to that section is exactly like the transaction in the present case. Here defendant 1 was appointed for the purpose of collecting rents of the plaintiff's zamindari and Mahendra Nath Roy held himself responsible for the due collection and payment by defendant 1 of those rents to the extent of Rs. 600 by a security, bond executed by him.

(3.) This illustration I may refer to for the purpose of construing the section. It was held by their Lordships in the case of Mahomed Syedol Ariffin V/s. Yeoh Ooi Gark A.I.R. 1916 P.C. 242 that it is the duty of the Court to accept, if that can be done, illustrations given under the section as being of value in the construction of the text; it would require a special case to warrant their rejection on the ground of repugnancy with the section. In my opinion, therefore, the present contract of the surety is a continuing guarantee. That being so, the relationship between the parties after the death of the surety must be governed by the provisions of Section 131, Contract Act. The learned vakil for the appellant has relied upon two-English cases in support of his contention that the death of the surety did not amount to a revocation of the contract of surety. The eases referred to were Lloyds V/s. Harper [1880] 16 Ch. D. 290 and In re Silvester [1895] 1 Ch. 573. The rule in England, however, is quite different from the provisions of the Indian Contract Act. The law in England has been thus summarized in De Colyar on Guarantees, 3 edn., p. 392: With respect to subsequent transactions and liabilities, whether a guarantee is revoked by the death of the surety depends, it would seem, upon the nature of the guarantee given. If it be a guarantee which the surety could himself have determined by notice, then it appears that the notice of his death will operate as a re-evocation. But if, on the other hand, the surety could not himself have put an end to the guarantee by notice, then his death does not revoke the instrument, nor does it extinguish his liability thereunder.