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1953 DIGILAW 343 (MAD)

Uthandi Vanniar v. Thiruvoimur Sri Thiagarajaswami Devasthanam represented by its Executive Officer having his office at Thiruvoimur, Nagapattinam Taluk

1953-10-23

BALAKRISHNA AYYAR, SATYANARAYANA RAO

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Satyanarayana Rao, J.- The question that arises in this appeal is the amount in which the surety, Uthandi Vanniar, the appellant, should be made liable under the security bond, Exhibit B-1, executed by him along with two others. The first defendant in the suit O.S. No. 18 of 1948 took a lease of the properties of the temple and his father, Kumaraswami Vanniar, executed a security bond in respect of the property described in Schedule B attached to the decree, making himself answerable for the liabilities under the lease in a sum of Rs. 4,000. A similar bond was executed by Rajagopala in a sum of Rs. 1,000. When the suit was filed, there was an application for the appointment of a Receiver, and there was the direction by the District Court in that application that the defendant should deposit a sum of nearly Rs. 9,000. Against that order there was an appeal to this Court and the amount was reduced to Rs. 5,000. The matter was carried in L.P. Appeal, and the learned Judges who disposed of that L.P. Appeal directed that if the appellant, that is, the first defendant, Chidambara, should furnish security for a sum of Rs. 9,000 to the satisfaction of the District Judge, within six weeks from the date of the receipt of the order by the lower Court,‘there was no necessity to deposit any amount into Court as per the order made in the suit and in appeal. This order of the High Court is dated 16th August, 1948. In fulfilment of that order, the security bond was executed by three persons, Chidambara, the first defendant Subramania, and Uthandi Vanniar, that is, the appellant. All of them made themselves answerable up to a limit of Rs. 9,000 for the arrears of profits due to the plaintiff. The property described in Schedule A attached to the bond, belonging to Chidambara and the B Schedule property belonging to Subramania and the C Schedule property belonging to the appellant, were given as security, the total value of the properties being Rs. 22,000. The liability was joint and several. The suit was decreed on 14th April, 1949 and the decree provided among other things that the plaintiff should recover from the first defendant personally and a charge on the plaint B Schedule property set out in the decree a sum of Rs. 8,369-3-10, with interest on Rs. 22,000. The liability was joint and several. The suit was decreed on 14th April, 1949 and the decree provided among other things that the plaintiff should recover from the first defendant personally and a charge on the plaint B Schedule property set out in the decree a sum of Rs. 8,369-3-10, with interest on Rs. 8,083-7-4 at the rate of 5½ per cent. per annum from 16th June, 1948, till date of realisation and do also likewise realise a sum of Rs. 2,396-8-0 on account of the proportionate costs of the suit, and that out of the amount decreed, the 2nd defendant, Rajagopala, personally and the properties in the plaint C Schedule set out in that decree and given by him as security, be liable as a charge to the extent of Rs. 1,000. The future profits were not determined but the decree directed that there should be an enquiry regarding them under Order 20, rule 12 Civil Procedure Code. In pursuance of the last direction, in I.A. No. 67 of 1950 the future profits were determined. The amount arrived at was Rs. 3,949, which was made a charge on the properties of Chidambara. After the decree was passed, as appears from the E.P. filed in the case a sum of Rs. 2,163-7-0 was realised by the decree-holder from properties other than those subject to the charge. The liability, therefore, of the first defendant for the future profits that remained was only Rs. 1,785-9-0. The decree-holder brought to sale the properties of Chidambara described in lot No. 3 in E.P. No. 67 of 1950 and the lot realised a sum of Rs. 5,950. In E.P. No. 65 of 1951, lot No. 4 of Kumaraswami Vanniar, the father of the first defendant, was sold and a sum of Rs. 5,460 was realised. Thus in all by the Court sale of these two lots a sum of Rs. 11,410 was realised, out of which poundage of Rs. 230 had to be deducted, leaving available a sum of Rs. 11,180 for appropriation towards the amount due under the two decrees, that is, the decree for past profits and the decree for future profits. The surety, Uthandi Vanniar, filed the application out of which this appeal arises under section 47 of the Code, requesting the Court to enter full satisfaction of the decree. 11,180 for appropriation towards the amount due under the two decrees, that is, the decree for past profits and the decree for future profits. The surety, Uthandi Vanniar, filed the application out of which this appeal arises under section 47 of the Code, requesting the Court to enter full satisfaction of the decree. His contention was that by the sale of the two lots an amount more than sufficient to cover the liability of Rs. 9,000 for past profits for which he along with two others became surety was discharged. This application was dismissed by the lower Court. Hence this appeal. The only question that requires consideration is the manner in which this sum of Rs. 11,180 should be appropriated. The contention urged on behalf of the respondent is that out of this sum the balance of the future profits of Rs. 1,785-9-0 and costs of the first decree Rs. 2,396-8-0, for which also a charge was provided over the B Schedule properties of Kumaraswami, should be deducted and the balance alone should be treated as available for past profits for which this surety was answerable. On the other hand, it was contended on behalf of the appellant that the charge being available to the decree-holder even prior to the date of the suit against the properties in the hands of Kumaraswami and Rajagopala under section 141 of the, Contract Act he was entitled to the advantage of that security and that his dues on account of past profits should be deducted out of the amount of Rs. 11,180 leaving the balance alone for appropriation by the decree-holder towards costs and the balance of future profits. We think that the two extreme contentions are untenable. In our opinion the proper mode of appropriating the amount is to deduct the amount of costs of Rs. 2,396-8-0 from Rs. 11,180 leaving the balance of Rs. 8,783-8-0 to be appropriated towards the past profits, in order to reduce the liability of this surety. When there is a charge on the property which the surety is entitled to take advantage of the appropriation must be made so as not to jeopardise his interests and throw on him a greater burden than the law permits. 8,783-8-0 to be appropriated towards the past profits, in order to reduce the liability of this surety. When there is a charge on the property which the surety is entitled to take advantage of the appropriation must be made so as not to jeopardise his interests and throw on him a greater burden than the law permits. For the future profits, the charge was created only by the later decree in the proceedings under Order 20, rule 12, Civil Procedure Code In fact, where the property is sold free of encumbrance in the case of mortgages the usual rule is that the amount after deducting the expenses of execution should first be appropriated towards the first mortgage and the balance if any, should be made available for discharging the next mortgage on the property. We think that the same principle should be applied here also. The charge is for arrears on both the properties and in regard to Kumaraswami’s properties the charge is also for costs The entirety of the amount which the sale fetched in respect of the properties under lot 3 of Chidambara should be made available for the arrears for which the surety is answerable. From the sale proceeds realised by the sale of Kumaraswami’s properties, the costs must first be deducted and the balance alone will be available for appropriation towards the liability of the surety. On this basis, the amount of Rs. 8,783-8-0 must be applied to reduce the liability of this surety and the surety will be liable only for the difference between this sum and Rs. 9,000. Therefore, satisfaction as against this surety will be entered for Rs. 8,873-8-0 and it will be open to the decree-holder to realise the balance alone, Rs. 9,000 minus Rs. 8,783 from the sureties. The order of lower Court is set aside and instead an order on the above lines will be substituted. There will be no order as to costs. K.C. ----- Appeal allowed.