AMAR CHAND

BHANO AND ANR.

DECEMBER 1, 1994

[K. RAMASWAMY AND N. VENKA TACHALA, JJ.]

Code of Civil Procedure, 1908 :

Sections 47, 145 and Order 21:

Surety for a certain sum including mesne profitsompromise between decree-holder and principal judgement debtor without reference to surety- Whether mesne profits could be recovered from the surety-Held: No.

The appellant had undertaken as a surety on behalf of the defendant for a sum of Rs.10,000 including mesne profits payable by the defendant to the decree-holder. Subsequently the decree holder compromised with the principal judgement debtor and a compromise was recorded without reference to the surety.

In this appeal, the appellant raised the question as to whether the amount undertaken by him towards mesne profits as surety could be recovered from him.

Allowing the appeal, this Court

HELD: 1.1. A conjoint reading of the clause under S.145 C. P. C. do clearly indicate that when a person has undertaken as a guarantor or a surety for the due performance of a decree or any part thereof, to the extent of the undertaking or guarantee, the guarantor or the surety is personally liable for due performance of the liability of the judgement debtor to 'the decree holder and the later is entitled to proceed against him in the Qlanner laid down in s.145~ But when the decree holder himself had comprised with the principal debtor and had discharged himself from the liability to the performance of the decree, in law it must be a full satisfaction of the decree under section 47 and the relevant rule in order 21 CPC. Thus it relieves the guarantor or surety from the obligation with the decree holder and the decree holder cannot seek any further remedy against the surety. [254 A to DJ

... -

AMAR CHAND v. BHANO 253

1.2. The liability of the guarantor or surety is co-extensive with the A judgement debtor. The compromise entered by the decree holder binds

himself by his conduct and releass the guarantor or surety from the liability undertaken in the guarantee or surety bond for due performance of the decree. In case the compromise was with the consent of the guarantor or surety compromise with the principal judgement debtor is for other liability other than the extent of the B liability undertaken by the guarantor or surety, in that event the guarantor or surety is not relieved from his liability for due performance of the decree. [254 E] . 1.3. In the instant case, the compromise was without reference to the appellant. The appellant must be deemed to be relieved from the C liability from surety bond and the decree holder no longer is entitled to proceed against the appellant to recover Rs. 10,000 from the appellant.

[254 F]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9225 of

1~4.

From the Judgment and Order dated 29-1-90 of the Punjab and Haryana High Court in C.R. No. 3040of1989.

Anant Palli and E. C. Agarwala forthe Appellant

The following Order of the Court was delivered

L~!ive granted.

Though the respondents have been served, they are not appearing either in person or through counsel. We have heard the counsel for the appellant. Admittedly, the appellant had undertaken as a surety, on behalf F of the defendant Dia Singh, for the due performance of the decree for a sum of Rs. I 0,000 including mesne profits payable by Dia Singh to the Decree holder. By the subsequent conduct, the decree holder compromised with the principal judgement-debtor and a compromise was recorded in that behalf without reference to the surety.

G The question, therefore, is whether the amount undertaken by the appellant towards mesne profits as surety could be recovered from him.

Section 145 ofC. P. C. provides thus:

"Where any person has furnished security or given a guarantee H.

SUPREME COURT REPORTS

[1994] SUPP. 6 S.C.R

(a) for the performance of any decree or any part thereof ..... . the decree or order may be executed in the manner herein provided for the execution of the decrees, namely,

(i) if he has rendered himself personally liable, against him to that extent.... and such person shall be deemed to be a party within meaning of section 4 7."

A conjoint reading these clause do clearly indicate that when a person has undertaken as a guarantor or a surety for the due performance of a decree or any part thereof, to the extent of the undertaking or guarantee, the guarantor or the surety is personally liable for due performance of the liability of the judgement debtor to the decree holder and the later is entitled to proceed against him in the manner laid down in s.145. But when the decree holder himself had compromised with the principal debtor and had discharged himself from the liability to the performance of the decree, in law it must be a full satisfaction of the decree under section 47 and the relevant rule in Order 21 CPC. Full satisfaction recorded in that behalf relieves the guarantor or surety from the obligation with the decree holder and the decree holder cannot seek any further remedy against the surety.

The liability of the guarantor or surety is co-extensive with the judgement debtor. The compromise entered by the decree holder binds himself by his conduct and releases the guarantor or surety from the liability undertaken in the guarantee or surety bound for due performance of the decree. In case the compromise was with the consent of the guarantor or surety. compromise with the principal judgement debtor is for other liability other than the extent of the liability undertaken by the guarantor or surety, in that event the guarantor or surety is not relieved from his liability for due performance of the decree. Such is not the case here. The compromise was without reference to the appellant. The appellant must be deemed to be relieved from the liability from surety bond and the decree holder, no longer is entitled to proceed against the appellant to recover Rs. 10,000 from the appellant. The High Court is clearly in error in the impugned order made in C. R N. 3040/89 dated January 29, 19.90 dismissing his revision.

The appeal is allowed. The execution petition shall stand closed as full satisfaction must be deemed to have been recorded. No Costs. ·

G.N.

Appeal allowed.