Case: Pandit Sri Chand And Ors Vs. M/S. Jagdish Parshad Kishan Chand

1. Messrs Jagdish Pershad Kishan Chand hereinafter called the fist respondent commenced suit No. 265 of 1962 in the Court of the Senior Subordinate Judge, Delhi, against the second respondent for a decree for possession of goods hypothecated to them by Messrs. Mudgal Motors Ltd. - Second respondent in this appeal. The first respondent filed another suit No. 43 of 1952 for a decree for Rs. 42,914/10/- being the amount due at the foot of the hypothecation account, and for sale of the goods in satisfaction of the amount due. The two suits were consolidated for trial. In suit No. 43 of 1952 the first respondent applied for appointment of a receiver and the Court directed the second respondent to furnish security in the sum of Rs. 50,000. Pursuant to this order five persons stood sureties for satisfaction of the decree. It was recited in the surety bond dated April 21, 1953, that the five sureties mortgaged the properties specified in the Schedule annexed thereto and jointly and severally agreed that if any decree was passed against the second respondent they shall comply with the same and in default the amount payable under the decree but not exceeding Rs. 50,000 shall be realised from he properties mortgaged. This surety bond was not registered. Out of the five sureties, Sri Chand, Basant Lal and Debi Ram are appellants in this appeal.2. On January 14, 1955, the second respondent was ordered to be wound up in a petition presented by the first respondent to the District Court, Delhi. Suit No. 265 of 1952 was thereafter withdrawn and in suit No. 43 of 1952 a decree was passed against the second respondent for Rs. 42,914/10/- with costs and future interest at six per cent per annum. The first respondent then applied to execute the decree against the sureties. The sureties objected to the execution of the decree against them on the grounds, inter alia, that the surety bond not being registered as required by law, the application for execution must fail, and that since the first respondent had committed acts by which the remedy of the sureties against the second respondent had been impaired the sureties stood discharged. The Commercial Subordinate Judge First Class, Delhi, rejected the objections raised by the sureties, and the order of the Subordinate Judge was confirmed by Grover, J., in appeal to the High Court of Judicature, Punjab, Appeals against the order of Grover, J., under the Letters Patent of the High Court was dismissed in limine. With special leave granted on August 12, 1962, Sri Chand Basant Lal and Debi Ram - three of the sureties - have appealed to this Court.3. Basant Lal one of the appellants died on October 18, 1962. As he died before the record of the appeal was transmitted to this Court his heirs and legal representatives applied on July 24, 1963, to the High Court for an order under O. 16 R. 12 of the Supreme Court Rules 1950, certifying that they were proper parties to be impleaded as legal representatives on the record of the appeal. They also applied for condonation of delay in moving the application. The High Court held that there was no adequate explanation justifying an order condoning the delay in making the application for bringing the heirs on record and accordingly the application for condonation of delay and the application for certifying the heirs were dismissed. A petition submitted to this Court for impleading the heirs and legal representatives in the appeal was also dismissed by an order made in chamber on February 9, 1965. Thereafter a petition was filed on May 7, 1965 for special leave to appeal against the order passed by the High Court refusing to bring on record the legal representatives of Basant Lal. By order dated January 20, 1966 we have rejected this petition.

Reasoning: In our view this objection must be upheld. The appeal of Basant Lal has abated since the legal representatives to his estate have not been impleaded, and the record of the appeal is defective. That is not denied by the appellants. But it is urged that this Court is competent to set aside an order of the High Court in its entirety on the ground that it is not sustainable in law and in any event to set aside the order in so far as it affects the claim of appellants 1 and 3 and the third respondent. Support was sought to be derived for the first contention from O. 41 R. 4 of the Code of Civil Procedure and it was urged that even if the decree be assumed to have proceeded on a ground common to all the sureties, it is open to any one or more of the sureties to appeal from the order and the appellate Court may reverse or vary the decree in favour of all the sureties.sureties.6. Basant Lal died after the order of the High Court under appeal. he had preferred an appeal, but since the legal representatives to his estate have not been brought on record, his appeal has abated. The order of the High Court holding that the sureties are liable to satisfy the claim notwithstanding the objections raised by Basant Lal has become final. In the appeal filed by the appellates 1 and 3 if this Court holds that the High Court was in error in deciding that the surety bond was not enforceable because it was not registered, or that the first respondent has done some act which has discharged the sureties from liability under the bond, there would unquestionably be two inconsistent orders - one passed by the High Court holding that the surety bond was enforceable, and the other, the view of this Court that it is not22 R. 12 of the Code of Civil Procedure provides that nothing in rules 3, 4 and 8 shall apply to proceedings in execution of a decree or order. On the true interpretation of this rule there is conflict of opinion in the High Courts. In some cases the view has prevalied that appeals from order in execution proceedings are not subject to rules 3, 4 and 8 of O. 22 Code of Civil Procedure and failure to implead heirs and legal representatives of a deceased party in such an appeal will not be visited by an order of abatement. In other cases it has been held that an appeal against an order in execution is not "a proceeding in execution of a decree" and that such a appeal will abate if the heirs are not brought on record within the period of limitation, and that Rs. 12 has no application to appeals. In this appeal it is not necessary to resolve this conflict, for appeals to this Court are governed by the rules contained in O. 16 of the Supreme Court Rules. 1950, and by R.Liability of the sureties is under the law joint and several. If a creditor seeks to enforce the surety bond against some only of the joint sureties, the other sureties will not on that account be discharged: nor will release by the creditor of one of them discharge the other: vide Sections 137 and 138 of the Contract Act. But the fact that the surety bond is enforceable against each surety severally, and that it is open to the creditor to release one or more of the joint sureties, does not alter the true character of an adjudication of the Court when proceedings are commenced to enforce the covenants of the bond against all the sureties. We are not concerned in this appeal with the privilege which a creditor may exercise, but with the effect of an adjudication which the Court has made in a proceeding to enforce the covenant of the Bond. The mere fact that the obligation arising under a covenant may be enforced severally against all the covenantors does not make the liability of each covenantor distinct. It is true that in enforcement of the claim of the decree holder the properties belonging to the sureties individually may be sold separately. But that is because the liability arises under distinct transactions.10. It must, therefore be held that the appeal has abated, because the representatives of the second appellant Basant Lal have not been brought on record within the time permitted by R. 14 of O. 16. of the Supreme Court Rules, 1950, and the delay in filing the petition to bring the representatives on record has not been condoned.