JUDGMENT
Ratnam, J.
1. These appeals have been preferred by two sureties against the common order dismissing Application Nos. 4334 and 4333 of 1989 in C.S. No. 473 of 1977 praying for cancellation of the security furnished under a security bond dated 16-9-1978 executed by the appellants and some others and registered as Document No. 1584 of 1980 pursuant to the clauses in the decree dated 6.2.1978 in C.S. No. 473 of 1977 and to discharge the sureties from further liabilities either with or without the payment of Rs.59,683/-. 2. The Union Bank of India (hereinafter referred to as ‘the Bank’, for short), the first respondent in these appeals, instituted C.S. No. 473 of 1977 against a partnership firm of the name of Vummidiars Agencies, represented by its three partners, who were defendants 1 to 4 in the suit, for the recovery of a sum of Rs.21,85,191-65 with interest at 16% per annum from the date of suit till payment or realisation. On 6.2.1978, a compromise was entered into between the parties to the suit, under the terms of which the defendants in CS.No.473 of 1977 submitted to a decree in favour of the Bank for Rs.22,20,112-65 inclusive of costs with interest at the rate of 15% per annum from 21.12.1977 with monthly rests. Provision was also made under Clause 2 of the compromise for the payment of the amount in certain instalments and the consequences that would follow in the event of default being committed in such instalment payments. Under Clause 3 of the compromise, a charge was created on three items of properties shown as items (i) to (iii) thereunder for the payment of the decreetal amount and costs and those items of properties did not form the subject-matter of the suit and liberty was given to the bank to enforce the charge in default of payment of the instalments. Clause 4 of the compromise made a further provision to the effect that the defendants will continue to be liable for the balance of the decreetal amount, if the sale proceeds of the charged properties are found to be insufficient. An undertaking to register the decree bond along with other owners of the charged properties was also one of the terms of the compromise under Clause 8 thereof. Pursuant to the memorandum of compromise containing the aforesaid terms filed before Court, a compromise decree was also passed, the relevant clauses of which are as follows:
(1) That the Defendants herein do pay to the plaintiff herein, the sum of Rs.22,61,720-75 (Rupees twenty two lakhs, sixty one thousand, seven hundred and twenty and paise seventy five only), inclusive of costs, with interest thereon at the rate of 15 per cent per annum from this date with monthly rests;
(8) That there shall be a charge for the amount decreed in Clause (1) supra, and for payment of all costs, charges and expenses, on all their rights, title and interest including the reversionary right, in the immovable properties more particularly described in the schedule ‘A’ hereundce,
(9) That in default of any payment as mentioned in Clauses (3) to (7), the plaintiff herein shall forthwith be at liberty to enforce the charges created herein, in its favour including the right of sale of all the interest of the defendants, in the said immovable properties and to appropriate the net sale proceeds towards the satisfaction of the amount decreed herein;
(14) That the defendants herein do on or before 6-3-1978 register this decree and the security bond they shall furnish along with the owners of the properties set out in the schedule hereunder with the Sub Registrar of Assurances at Madras.
In fulfillment of the terms of the compromise and also the decree passed thereon, a security bond dated 16.9.1978 was executed by the appellants and others and presented for registration on 27.9.1978 and was later registered as Document No. 1584 of 1980, with reference to the properties in the ‘A’ Schedule agreed to be charged for the realisation of the amounts due to the bank under the decree. In the security bond, the executants had slated that they furnished their entire right, title and interest in the immovable properties detailed in the schedule as security for the due performance of the decree for Rs.22,00,000/-, based on the clauses in the memorandum of Compromise filed in C.S.No.473 of 1977. It is with reference to this security bond that in Application Nos.4333 and 4334 of 1989, the appellants prayed for the relief of cancellation of the security in toto and to discharge them from further liabilities, principally on two grounds. According to the appellants, the enforceable upper limit of liability on the security is limited to 22 lakhs of rupees and since that amount and other amounts of Rs.59,683/- offered to be paid by the appellants had been paid, no further liability could be enforced on the secured properties. It was also their further plea that since the compromise decree in C.S. No. 473 of 1977 created a charge over properties not forming the subject-matter of the suit, the decree should have been registered and its non-registration was fetal. Both these grounds were not countenanced and the applications were dismissed and that is how these appeals have arisen.
3. Learned Counsel for the appellants, referring to the relevant clauses in the memorandum of compromise as well as the decree based thereon, contended that the appellants had agreed to create security over the properties comprised in the security bond only to the tune of 22 lakhs of rupees and as that amount had admittedly been paid, the security was rendered unenforceable. Reference in this connection was also made to the decisions reported in Maharaja of Benares v. Har Narain Singh ILR 28 Allahabad 25 and E. Chacko v. K. Chandy AIR 1957 Travancore – Cochin 233. On the other hand, learned Counsel for the Bank submitted that a careful consideration of the terms of the compromise, the decree based thereon and the provisions in the security bond, would clearly show that the security offered was not only to cover the liability under the decree in respect of the sum of 22 lakhs of rupees, but the whole of the amount due under the decree. It was also pointed out that the decisions relied on by learned Counsel for the appellants did not have any application at all on the facts and circumstances of this case.
4. There is no dispute that if the liability of the appellants under the terms of the security bond was limited to 22 lakhs of rupees as claimed by them, when as that amount had since been realised the security could not be enforced any further for the realisation of the balance of the amount. Therefore the question that now arises for consideration is, whether the security bond was limited to cover the liability only upto the limit of 22 lakhs of rupees as claimed by the appellants. It is seen from the terms of the compromise set out in schedule ‘B’ to the compromise decree in C.S. No. 473 of 1977 that under Clause 1, the defendants in that suit had submitted to a decree for Rs.22,20,112-65 inclusive of costs, with interest at 15% per annum from 21.12.1977 and under Clause 3, they had agreed for the creation of a charge on three items of properties for the payment of the decreetal amount mentioned in Clause 1 and for payment of costs, charges and expenses, etc. It had also been further agreed that in the event of default of payment as per Clause 2 of the Memorandum of Compromise, the Bank could enforce the charge created and appropriate the sale proceeds towards the satisfaction of the decreetal amount. Under Clause 8, the defendants in C.S. No. 473 of 1977 has also undertaken to register the security bond, which had been done as adverted to earlier. In the decree also, under Clause 1, the defendants had been made liable for the sum of Rs.22,61,720-75 inclusive of costs and subsequent interest and after referring to the clauses relating to the payment of amounts in instalments and the consequences of default in such payments, Clause 8 of the decree stated that there shall be a charge for the amount decreed in Clause 1 and for payment of all costs, charges and expenses on the immovable properties in schedule ‘A’. Even in the security bond executed by the appellants and others, it has been clearly stated that the security was offered for the due performance of the decree for 22 lakhs of rupees based on the clauses in the memorandum of compromise in C.S. No. 473 of 1977. Therefore, when the terms of the compromise, the decree based thereon as well as the provision in the security bond are all considered together, it follows that the mention of 22 lakhs of rupees in the security bond was not with the idea of limiting the enforceability of such security to 22 lakhs of rupees, for, such security had been offered for the due performance of the decree based on the clauses in the memorandum of compromise. The reference to the figure for 22 lakhs of rupees at best can be taken to refer to the amount of 22 lakhs of rupees and odd in respect of which the defendants to the suit submitted to a decree on the day when the compromise was entered into between the Bank and the defendants in the suit If the intention was to limit the enforceability of the security to 22 lakhs of rupees then, a different phraseology would have been adopted and incorporated in the security bond and not what is found therein. Apart from this, under Clause 3 of the memorandum of compromise, in and by which the charge had been created, it is seen that the enforceability of the charge is not restricted to any particular amount, but extends to the entire decreetal amount. It may be that the appellants were not parties either to the Memorandum of Compromise or even to the compromise decree. Though there has been an erroneous assumption to the contra in the course of the order appealed against, that would not really affect the liability of the appellants under the terms of the security bond, which, in turn, makes a reference to the provisions in the Memorandum of Compromise and affirms that the security had been furnished for the due performance of the decree for 22 lakhs of rupees based on the clauses in the Memorandum of Compromise in C.S. No. 473 of 1977. The reference to 22 lakhs of rupees could at best be taken as merely descriptive of the decree for 22 lakhs of rupees in C.S. No. 473 of 1977 and not as limitation on the extent of the enforceability of the security. Under Section 145, Code of Civil Procedure, security can be furnished either for the performance of any decree or any part thereof. Considering the words found in the Memorandum of Compromise, the compromise decree and the security bond, the liability of the sureties cannot be construed to be limited to part of the decree only amounting to 22 lakhs of rupees. In Maharaja of Benares v. Har Narain Singh ILR 28 All. 25, relied upon by learned Counsel for the appellants, the security offered covered only the arrears of rent and did not expressly refer to the interest and, therefore, it was held that the liability under the bond cannot be extended to interest. In E. Chacko v. K. Chandy AIR 1957 Travancore-Cochin 233, the surety undertook to discharge the decree liability to the extent of Rs.3,000. There was no mention of any undertaking regarding the discharge of the interest liability. These decisions have therefore, to be confined to the terms of the security bond, which came up for consideration in those cases, and cannot be applied without regard to the terms of the bond and other circumstances in any particular case. We have carefully considered the terms of the Memorandum of Compromise, the decree based thereon as well as the provision in the security bond and we are unable to accept the contention of learned Counsel for the appellants that enforceability of the security had been limited only to 22 lakhs of rupees.
5. Learned Counsel for the appellants next contended that under Section 17(2)(vi) of the Registration Act, 1908, the compromise decree in C.S. No. 473 of 1977, which dealt with immovable properties not forming the subject-matter of the suit, ought to have been registered and not having been so registered, the security could not be proceeded against under the terms of the decree in C.S. No. 473 of 1977. Reference in this connection was also made to the decision reported in Deivanai v. Kannappa . However, learned Counsel for the Bank contended that the non-registration of the decree at best may result in the non-availability of the charge over the properties to the Bank, but that the decree would still continue to be a simple money-decree, for the realisation of the moneys under which, a properly registered security bond had been executed by the appellants and others and, therefore, the non-registration of the decree, as such, is of no consequence. Reliance in this connection was placed on the decision reported in Ganeshlal v. Ramgopal AIR 1955 Rajasthan 17.
6. In order to appreciate the contention so raised, we may make a brief reference to the relevant provisions of the Registration Act, 1908. Under Section 17(1)(b), a non-testamentary instrument while purporting to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property, is compulsorily registerable. Section 17(2)(vi) excludes the applicability of Section 17(1)(b) to any decree or order of a Court, subject to the exception referred to therein, viz., a decree or order on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding. In this case, it is seen that no immovable property ever formed the subject matter of the suit or proceeding. Though learned Counsel for the Bank attempted to contend that the furnishing of security by the execution of a bond comprising of properties not forming the subject-matter of the suit, would really be in the nature of a proceeding, we are unable to accept that contention. The context in which the expression “suit or proceeding” is used indicates that there is no lis between the parties with reference to the properties in question either by way of a suit or other similar proceeding and it cannot, therefore, be construed as comprehending execution of the security bond as proceeding for purposes of Section 17(2)(vi) of the Registration Act, 1908 and we have, therefore, no hesitation in rejecting this contention. It is not in dispute that the compromise decree did include properties which did not form the subject-matter of the suit or proceeding and, therefore, under Section 17(2)(vi) of the Registration Act, 1908, the decree, in the ordinary course, should have been registered and this is also supported by the decision in Deivanai v. Kannappa AIR 1952 Madras 802. However, the effect of non-registration of the compromise decree would be to render the creation of a charge under the terms of the compromise decree ineffective, but that would not in any manner affect the validity of the decree as a decree for money, the payment of which is secured under the terms of a properly registered security bond. It is in this connection, reference may be usefully made to Ganeshlal v. Ramgopal AIR 1955 Rajasthan 17, where, Wanchoo, C.J., considered the, effect of non-registration of a decree like the one in this case. Therein, in a suit for recovery of money, based on a compromise; a decree creating a charge over certain properties was passed and under Section 17(2)(vi) of the Registration Act, 1908, that decree required registration, but was not registered. It was pointed out that even though the decree required registration, but was not registered, at best, for want of registration, the decree would be valueless for the purpose of creating a charge on the property, but the decree would remain clearly an executable decree under the provisions of the Code of Civil Procedure. We are of the view that the aforesaid principle would apply to the facts of this case as well and that though the compromise decree required to be registered its non-registration would not in any manner affect the validity of the decree as a decree for payment of money, the realisation of which had also been secured by the execution of a duly registered security bond by the appellants. We are, therefore, of the view that there is no substance in this contention as well.
7. A faint attempt was made by learned Counsel for the appellants to contend that under Clause 14 of the compromise decree and even otherwise, the decree and the security bond should have been registered and the decree not having been so registered, the security bond could not be enforced. We have already referred to the effect of the non-registration of the compromise decree and held that in spite of such non-registration, the decree would be a valid decree and for the realisation of the amounts due under such a decree, the appellants had executed a registered security bond as well and, therefore, the omission to register the compromise decree and the security bond would not enable the appellants to claim that the security should be cancelled. We, therefore, dismiss these appeals against the first respondent, as, by an endorsement on the memorandum of grounds of Appeal in O.S.A. No. 102 of 1990 made by learned Counsel for the appellants, these appeals against respondents 2 to 5 were not pressed. There will be, however, no order as to costs.