Bireswar Chatterjee v. Saidpur Commercial Bank, Ltd.
1937-06-11
body1937
DigiLaw.ai
JUDGMENT 1. This is an appeal from the decision of the District Judge of Rangpur, dated the 29th May, 1935, reversing a decision of the second Court of the Munsif at Nilphamari, dated the 29th August, 1934. The suit out of which this appeal arises was for recovery of Rs. 913-2-6 on the basis of a promissory note executed by the Appellant-Defendant No. 2 and one Abu Torab Azahar Ali, Defendant No. 1. The suit against Defendant No. 1 was dismissed for non-service of summons under Or. 9, r. 5 of the Code of Civil Procedure. Defendant No. 2 alone contested the suit. His defence is that he is not liable on the promissory note as there was a separate oral agreement to the effect that until some conditions precedent were fulfilled, there would be no liability on his part and that those conditions were not fulfilled. The trial Court came to the conclusion that there was a separate oral agreement as alleged by the Defendant under which certain conditions precedent had to be fulfilled and the Plaintiff did not fulfil those conditions. It also found that Defendant No. 2 was persuaded by Defendant No. 1 and Tarapada, the then managing Director of the Plaintiff Bank, to execute the pro-note as a surety for the purpose of helping Defendant No. 1 to raise money for saving his properties from revenue sales. On these findings the trial Court dismissed the suit. An appeal was taken by the Plaintiff to the lower Appellate Court. The findings of the learned District Judge who heard the appeal are that Defendant No. 2 was a surety for Defendant No. 1, that he had failed to prove that there was a separate oral agreement as alleged by the Defendant and that though the suit against Defendant No. 1 was dismissed, the Plaintiff was entitled to get a decree for the whole amount against Defendant No. 2. He accordingly allowed the appeal, set aside the judgment and decree of the trial Court and decreed the suit against Defendant No. 2. Hence this second appeal by Defendant No. 2.
He accordingly allowed the appeal, set aside the judgment and decree of the trial Court and decreed the suit against Defendant No. 2. Hence this second appeal by Defendant No. 2. The first point urged by the learned Advocate appearing on behalf of the Appellant is that the learned District Judge was in error in decreeing the suit against Defendant No. 2, inasmuch as the Plaintiff did not bring any suit against Defendant No. 1 within the period of limitation after the suit was dismissed against him under the provisions of Or. 9, r. 5. The learned Advocate placed reliance on a decision of the Allahabad High Court and contended that after the period of limitation to institute a suit against the principal debtor (Defendant No. 1) had expired, under sec. 134 of the Indian Contract Act, he was discharged from the liability as the failure to bring a fresh suit within the prescribed period of limitation is an omission of the creditor within the meaning of that section and consequently the liability of the surety, that is the Appellant, also had come to an end. Sec. 137 of the Indian Contract Act however lays down that. mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety. 2. The contention of the learned Advocate for the Appellant however was that this forbearance must be within the period of limitation. The language of the section however is very general. There are no limitations mentioned in the section. In Sir F. Pollock's Commentary on the Indian Contract Act this is stated:- The question whether a surety is discharged when a creditor allows his remedy against the principal debtor to become barred by limitation may be considered at this stage. On this point there are two opposite views taken by the Indian High Courts. On the one hand, it has been held by the High Court of Bombay, Calcutta and Madras that the surety is not under such circumstances discharged from liability to the creditor; the High Court of Allahabad, on the other hand, has held that the surety is discharged. The conflict arises in great part from the provisions of sec. 137 and especially the words 'mere forbearance' occurring in that section.
The conflict arises in great part from the provisions of sec. 137 and especially the words 'mere forbearance' occurring in that section. It is conceded by the Bombay and Calcutta High Courts, that, if sec. 134 stood alone, the omission of a creditor to sue the principal debtor within the period of limitation would discharge the surety under that section, as having the legal consequence of discharging the principal debtor; but the Madras High Court relies on the well-known distinction between the barring of the remedy by action (which is consistent with the debtor not being discharged for other purposes), and the complete extinction of a debt. It is also thought in England that omission of the creditor to sue within the period of limitation does not discharge a surety for another and more substantial reason that 'the surety can himself set the law in operation against the debtor.' It seems that the opinion of the majority of the High Courts fortified by a judicial dictum of great weight in the English Court of Appeal, must be accepted as correct. 3. We cannot usefully add anything to the above statement of the law. In the present case when the suit was brought against the principal debtor as veil as the surety it was within time. It was open to Defendant No. 2 to make the payment and to institute a suit for recovery of that amount from the principal debtor-See sec. 140 of the Indian Contract Act. Defendant No. 2 however did not do so. It is not therefore open to him to contend that there is no liability on his part, as his right to recover the money from the principal debtor has now been barred by limitation. Whether his right has been actually barred or not is a matter on which we express no opinion in the present case. It was certainly open to him at the time when the suit was filed or even before to pay the amount due to the creditor and to take steps against the principal debtor for recovery of that amount. For the aforesaid reasons we are of opinion that Defendant No. 2 is liable to pay the amount claimed by the Plaintiff in the present suit. 4.
For the aforesaid reasons we are of opinion that Defendant No. 2 is liable to pay the amount claimed by the Plaintiff in the present suit. 4. It was next contended by the learned Advocate that the finding of the lower Appellate Court that there had been no oral agreement under which some conditions precedent were attached to the liability of the Defendant No. 2 under the pro-note is not a proper finding at all, inasmuch as the learned District Judge has wholly overlooked the fact that the evidence of Hemendra Nath Mukherjee on which the Defendant relied to establish this oral agreement was not challenged in cross-examination. It however appears from the record that the witness was examined on interrogatories and the cross-interrogatories clearly show that his statement that there was an oral agreement was challenged in cross examination by the Plaintiff. This contention has therefore no substance. 5. The last point urged by the learned Advocate is that the suit is not maintainable as the plaint was not in proper form, as a certain affidavit was not filed. The learned Advocate for the Appellant could not point out any provision in the CPC under which the Plaintiff was bound to file such affidavit. This contention also therefore fails. The result therefore is that this appeal is dismissed with costs.