Ratnaswami Goundan vs P.S.A.R.A.R. Arunachalam … on 14 December, 1942

Madras High Court
Ratnaswami Goundan vs P.S.A.R.A.R. Arunachalam … on 14 December, 1942
Equivalent citations: (1943) 1 MLJ 162


Alfred Henry Lionel Leach, C.J.

1. The appellant executed a surety bond in favour of the respondent, who obtained a money decree against one Venkatachala Goundan. The question which the Court has to decide is whether the decree-holder is entitled to execute the decree against the appellant as the surety of the judgment-debtor. The judgment-debtor was arrested in the execution of the decree on the 22nd April, 1927 and thereupon notified the Court of his intention of applying for adjudication in insolvency. The judgment-debtor was released from arrest on the condition that he furnished a security bond for his due appearance in the insolvency proceedings and when called upon in the executing Court. There were two sureties, the appellant and one Ponnambala Goundan, who is not a party to these proceedings. Within the time allowed by Section 55 (4) of the Civil Procedure Code, the judgment-debtor applied for an order under the Provincial Insolvency Act adjudicating him an insolvent. The order of adjudication was passed on the 21st November, 1927. It provided that the insolvent should apply for his discharge within one year. The insolvent did not apply for his discharge within the period fixed by the Court and on the 5th February, 1935, in an application filed by the decree-holder under Section 43 of the Provincial Insolvency Act, the adjudication was annulled. Thereupon the decree-holder instituted fresh proceedings in execution of his decree against the appellant. The District Munsiff held that the decree-holder was entitled to execute the decree against the appellant and his decision was concurred in by the Additional District Judge of Coimbatore on appeal. The present appeal is from the order of the Additional District Judge. The Case has been placed before a Bench as there are decisions of Judges of this Court, sitting alone, which are in conflict.

2. Section 55 (4), Civil Procedure Code. states that where a judgment-debtor expresses his intention to apply to be declared an insolvent and furnishes security to the satisfaction of the Court that he will within one month so apply and that he will appear when called upon in any proceedings upon the application or upon the decree in execution of which he was arrested, the Court may release him from arrest, and, if he fails so to apply or to appear, the Court may either direct the security to be realised or commit him to the civil prison in execution of the decree. It will be observed that the sub-section contemplates security for the judgment-debtor’s appearance upon the application for adjudication and before the execution Court whenever required.

3. The operative part of the surety bond in this case reads as follows:

We declare that the abovesaid defendant will file the insolvency petition within the thirty days’ time; that the said defendant will present himself at any time as the Court may direct that after filing the insolvency petition as aforesaid, he will present himself before Court for every hearing and conduct the above proceedings, regularly and properly, that in the event of failure to file the insolvency-petition within the thirty days’ time or if after filing the petition there is a failure in conducting the above proceedings, or if we fail to produce him before the Court at any time that the Court may direct or even if we fail to fulfil any of the conditions mentioned herein, we undertake to pay the entire amount determined as payable under the decree in the above suit.

4. The words ” above proceedings ” have reference to the insolvency petition and therefore the sureties guaranteed that the judgment-debtor would appear at every hearing of the petition and conduct the proceedings ” regularly and properly.” The section and the bond contemplate the due prosecution of the application for adjudication; but even when granted, the Insolvency Court could require his appearance in the application. Nothing is said in Section 55 (4) or in the bond with regard to the filing of an application for discharge. The surety bond must be construed strictly and therefore the sureties cannot be made liable for anything which does not fall within the terms of the bond.

5. The decisions which are in conflict are on the one hand the judgment of Cornish, J., in Karuppanna Goundar v. Chidambaram Chettiar (1936) 71 M.L.J. 646. and on the other the judgment of Curgenven, J., in the unreported case of Abi Bunisa Ammal v. Mohamad Kasim Rowther A.A.A.O. No. 107 of 1929 and the judgment of King, J., in another unreported case, Rangappa Naicker v. Sri Sowddmbigai Nidhi, Ltd. A.A.A.O. No. 112 of 1938 The opinion expressed by Cornish, J., which was on a bond in terms apparently analogous to the bond in this case was that the surety could not be held liable because the judgment-debtor had failed to apply for his discharge as an insolvent. In that case the surety undertook that the judgment-debtor would prosecute his petition for adjudication to ” its very end.” The learned Judge considered that this meant that the debtor was to prosecute the petition until its termination which might be its dismissal by the Court under Section 25 or adjudication by the Court under Section 27, these being the only two ends for the debtor’s insolvency petition. We have not before us the whole of the terms of the bond in that case and it may not have provided as the bond in the present case does, for the appearance of the insolvent on the petition at any time when required by the Court; but in any event we agree that it could not be construed as requiring the surety to ensure that the insolvent would apply for ,his discharge. In Abi Bunisa Ammal v. Mohamad Kasim Rowther A.A.A.O. No. 107 of 1929, Curgenven, J., considered that the expression which was used in the bond in that case–” does not properly conduct proceedings after filing the insolvency petition “–must be held to include the failure of the insolvent to apply for his discharge because that involved a failure to prosecute the case with due diligence. This opinion was shared by King, J., in Rangappa Naicker v. Sri Sowdambigai Nidhi, Ltd. A.A.A.O. No. 112 of 1938 Each case must be decided on the wording of the bond concerned, but we are unable to agree that where the bond merely requires the judgment-debtor to present the petition for insolvency and regularly and properly conduct the proceedings thereon there is any liability on the part of the surety when there happens to be a failure on the insolvent’s part to apply for his discharge. As we have pointed out, Section 55 (4) requires the due prosecution of the petition for adjudication and his appearance when required. It is not suggested in the present case that the judgment-debtor did not appear in the Insolvency Court whenever required or that he failed to appear in the executing Court when required. In the circumstances the appellant cannot be held liable on his bond.

6. The appeal will be allowed with costs here and in the Courts below.

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