Case: State of Uttar Pradesh Vs. Jayanand Lakhera

however that the liability of Jayanand Lakhera was restricted to Rs. 10, 000/-. He accordingly issued an injunction restraining the State of U.P. from recovering an amount exceeding Rs. 10, 000/- from Jayanand Lakhera. In appeal the High Court of Allahabad decreed the suit and restrained the state from recovering any amount from Jayanand Lakhera. The present appeal has been preferred by the state with special leave.3. It is necessary to consider whether the amount embezzled by Tungeshwar Prasad was Government money. Both the courts have held that it was Government money and on the view we take, even if the amount embezzled was Government money, the respondent. Jayanand is not liable to be proceeded against for recovery of the amount of Rs. 10, 000/- which the State now seeks to recover.4. The plaintiff - Jayanand Lakhera in his plaint expressly averred that his security bond was not accepted. In the written statement it was stated that the allegation of the plaintiff that he stood the security for Rs. 10, 000/- only is wrong. It is further stated that the financial status of the plaintiff was fully enquired into and the bond was accepted. An issue was raised on the plea raised by Jayanand Lakhera, Issue No. 1, read :"Whether the security bond, dated June 10, 1944, was accepted by the defendant ?"Jayanand examined one Jit Singh Bhatia who deposed that since 1944, he was Reader of S.D.M., Pratapnagar, and that he had to deal with the security bond Ex. A-1 produced in the case. He identified the attestation of Sheo Prasad, and deposed that the Ruler of the State used to accept the security bond at the recommendation of the Chief Secretary. There is no cross-examination on this part of the case nor was any evidence led by the State of U.P. to prove that the practice deposed to by the witness was not the true practice. Witness Sarat Chand who was the only witness examined on behalf of the State says nothing in that behalf. There was therefore an averment in the plaint that there was no acceptance of the security bond and a denial of that averment by the state. There was evidence by the plaintiff Jayanand that it was practice in the State that Ruler of the State on the recommendation of the Chief Secretary accepted on the bond. There was no evidence to the contrary on behalf of the State of U.P.5. On the record there is no evidence of any express acceptance of the bond by the Durbar. But Dr. Singhvi for the State contends that Tungeshwar Prasad was appointed by order, dated September 15, 1944, and that the appointment amounts to acceptance by the Ruler of Tehri Garhwal of the bond submitted by Jayanand Lakhera. It is recited in the bond that Tungeshwar Prasad was posted at Tehri Garhwal by the Ruler, but there is no clear evidence as to whether the appointment was made on June 10, 1944, or after that date. On the bond submitted by Jayanand, there are several endorsements, the first being that it was forwarded to the A/C Sahib for information and necessary action. It is then endorsed that the bond sent to the S.D.O., Mohal Kirtinagar, requesting him to make full enquiry about the actual status of the surety and to intimate the same. Then there is the endorsement, presumably of the S.D.O., Mohai Kirtinagar that "the Patwari of Barjula is ordered to write as to what area of land of what particular sort and of what valuation" Jayanand Lakhera possesses and "what other properties he possesses". There is then an endorsement of the S.D.O. that the bond be sent to the Chief Accountant and that a report has been prepared by the Patwari of Jakhand to the effect that the status of the surety is good. Relying upon the Section 8 of the Indian Contract Act, Dr. Singhvi contends that Jayanand Lakhera offered to stand surety for making good any amount embezzled by Tungeshwar Prasad if he was appointed Tahwildar and since Tungeshwar Prasad was in fact appointed, there was a completed contract and the appointment of Tungeshwar Prasad must be regarded a acceptance. But the state has to overcome several difficulties before this argument may be accepted. There is nothing on the record that to prove that the Indian Contract Act or a statute analogous thereof was in force at the relevant time in the Tehri Garhwal State. Again, it cannot be stated with certainty that Tungeshwar Prasad had not been appointed prior to June 10, 1944. The evidence led on behalf of Jayanand Lakhera that the Durbar used to accept the surety bond was not challenged in cross-examination, and was not controverted by any evidence on behalf of the State. No rules relating to the appointment of Tahsildars and submission of the surety bonds, and delegating the authority of the Durbar or the Ruler have been produced. The record is completely silent on these points. Since there is nothing to prove that the Indian Contract Act applied to this area, we must proceed on the broad ground of equity. Here is a case in which the respondent Jayanand had submitted a bond for the acceptance of the State under which he offered render himself liable for any amount that Tungeshwar Prasad may embezzle, such amount being Government money. Enquiry was made in the financial status of Jayanand Lakhera and it was found that he was good for the amount of Rs. 10, 000/- for which it appears the bond had been taken. But thereafter there is no evidence of any acceptance of the bond by the Durbar which on the evidence led by the plaintiff Jayanand Lakhera was the only authority competent to accept the bond. The High Court was in our judgment therefore right in holding that in the absence of evidence of acceptance of the bond, Jayanand Lakhera was not liable to be proceeded against for recovery of the amount of Rs.10,000/-.6.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The language used in the bond is somewhat obscure. It does not set out the authority in whose favour it was executed, but the clearest implication was that it was in favour of the Durbar of Tehri Garhwal State. It is not clear whether Tungeshwar Prasad was appointed Tahwildar before June 10, 1944, or that after that date, though it may be stated that at foot of the bond or in the correspondence accompanying it, there is an endorsement, dated September 15, 1944, that "the applicant Tungeshwar Prasad Lakhera may be appointed.On the record there is no evidence of any express acceptance of the bond by the Durbar.But Dr. Singhvi for the State contends that Tungeshwar Prasad was appointed by order, dated September 15, 1944, and that the appointment amounts to acceptance by the Ruler of Tehri Garhwal of the bond submitted by Jayanand Lakhera.It is recited in the bond that Tungeshwar Prasad was posted at Tehri Garhwal by the Ruler, but there is no clear evidence as to whether the appointment was made on June 10, 1944, or after that date. On the bond submitted by Jayanand, there are several endorsements, the first being that it was forwarded to the A/C Sahib for information and necessary action. It is then endorsed that the bond sent to the S.D.O., Mohal Kirtinagar, requesting him to make full enquiry about the actual status of the surety and to intimate the same. Then there is the endorsement, presumably of the S.D.O., Mohai Kirtinagar that "the Patwari of Barjula is ordered to write as to what area of land of what particular sort and of what valuation" Jayanand Lakhera possesses and "what other properties he possesses". There is then an endorsement of the S.D.O. that the bond be sent to the Chief Accountant and that a report has been prepared by the Patwari of Jakhand to the effect that the status of the surety is good. Relying upon the Section 8 of the Indian Contract Act, Dr. Singhvi contends that Jayanand Lakhera offered to stand surety for making good any amount embezzled by Tungeshwar Prasad if he was appointed Tahwildar and since Tungeshwar Prasad was in fact appointed, there was a completed contract and the appointment of Tungeshwar Prasad must be regarded a acceptance. But the state has to overcome several difficulties before this argument may be accepted. There is nothing on the record that to prove that the Indian Contract Act or a statute analogous thereof was in force at the relevant time in the Tehri Garhwal State. Again, it cannot be stated with certainty that Tungeshwar Prasad had not been appointed prior to June 10, 1944. The evidence led on behalf of Jayanand Lakhera that the Durbar used to accept the surety bond was not challenged inand was not controverted by any evidence on behalf of the State. No rules relating to the appointment of Tahsildars and submission of the surety bonds, and delegating the authority of the Durbar or the Ruler have been produced. The record is completely silent on these points. Since there is nothing to prove that the Indian Contract Act applied to this area, we must proceed on the broad ground of equity. Here is a case in which the respondent Jayanand had submitted a bond for the acceptance of the State under which he offered render himself liable for any amount that Tungeshwar Prasad may embezzle, such amount being Government money. Enquiry was made in the financial status of Jayanand Lakhera and it was found that he was good for the amount of Rs. 10, 000/for which it appears the bond had been taken. But thereafter there is no evidence of any acceptance of the bond by the Durbar which on the evidence led by the plaintiff Jayanand Lakhera was the only authority competent to accept the bond. The High Court was in our judgment therefore right in holding that in the absence of evidence of acceptance of the bond, Jayanand Lakhera was not liable to be proceeded against for recovery of the amount of Rs.