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1983 DIGILAW 47 (ALL)

Raj Kumar Jain v. Ram Gopal

1983-01-12

P.N.BAKSHI

body1983
JUDGMENT P.N. Bakshi, J. - The Plaintiff instituted a suit on 31-5-76 under Order 37 Code of Civil Procedure, on the basis of two promissory notes dated 1st June, 1975 for a sum of Rs. 10000/- each executed by the Defendant No. 1 in his favour. Both these promissory notes contained the signature of Defendant No. 2 as a surety. Defendant No. 1 did not contest the suit but Defendant No. 2 filed an application for rejecting the plaint on the ground that the suit does not lie under Order 37 Code of Civil Procedure, inasmuch as on the date of the institution of the suit, Order 37 CPC as amended did not apply to a guarantee on the basis of which the present suit has been filed. This contention has been repelled by the Civil Judge, Dehradun vide its order dated 6th February, 1979. Hence this revision. 2. I have heard learned Counsel for the parties and have also perused the impugned orders and the annexure which have been filed in this Court by both the parties. 3. It appears that after the suit had been instituted, Defendant No. 2 had filed an application on 20th June, 1976 in which he prayed for permission for leave to defend the suit. The Court below allowed this application and permitted the Defendant to defend the suit subject to his filing security for the amount in suit, or getting property covering the amount in suit attached within a month. This order was passed on 2nd March, 1977. Aggrieved thereby Revision No. 776 of 1977 was filed by the surety, Ramesh Chandra Jain in this Court, challenging the order of the Civil Judge, Dehradun. This revision was dismissed on 20th April, 1977 by Hon'ble Chief Justice K.B. Asthana, who was of the view that the Court below had jurisdiction to put the Defendant to terms under the provisions of Order 37 Rule 3(5) Code of Civil Procedure. It may be mentioned that the directions of the Court below regarding furnishing of the security by Defendant No. 2, have not been complied with to this date. However, after the rejection of his revision by the High Court, the instant objection has been filed on the ground that the applicant was a guarantor and that he could not be impleaded as a Defendant in the suit. However, after the rejection of his revision by the High Court, the instant objection has been filed on the ground that the applicant was a guarantor and that he could not be impleaded as a Defendant in the suit. Under Order 37 CPC as amended as such the suit is liable to be dismissed. 4. The argument of the applicant's Counsel is that Order 37 CPC was amended on 1st February, 1977 by CPC Amendment Act-76. Section 97(2)(x) of the Amending Act runs as follows: The provisions of Order XXXII of the First Schedule, as amended by Section 84 of this Act, shall not apply to any suit pending before the commencement of the said Section 84, and every such suit shall be dealt with and disposed of as if the said Section 84 had not come into force. 5. This makes it quite clear that the amendment of Order 37 CPC is not retrospective in its operation. The instant suit had been filed on 31st May, 1976, i.e. prior to the amendment and therefore, the amended section would prima facie not apply to the applicant. Order 37 Rule 2 runs as follows : Subject to the provisions of Sub-rule (1), the Order applies to the following classes of suits, namely: (a) Suits upon bills of exchange, hundies and promissory notes: (b) Suits in which the Plaintiff seeks only to recover a debt or liquidated demand in money payable by the Defendant, with or without interest, arising- (i) On a written contract; or (ii) On an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or (iii) On a guarantee where the claim against the principal is in respect of a debt or liquidated demand only. 6. The aforesaid section contemplates two categories of cases-the first category is that where suits are filed on the basis of bills of exchange, hundies and promissory notes; the second category cases refers to those suits where the Plaintiff seeks to recover a debt or liquidated demand in money arising on a written contract, or an enactment where the sum sought to be recovered is a fixed sum of money or on a guarantee, where the claim against the Plaintiff is in respect of a debt. It may be also mentioned here that so far as the first category of cases is concerned, that was also covered by the unamended Rule 2 of Order 37 Code of Civil Procedure. The present suit was filed under the provisions of the unamended Order 37 Code of Civil Procedure. 7. The point, therefore, for determination would be whether the instant suit falls within the first category of cases or the second category of cases, as contemplated under Order 37 Code of Civil Procedure. If it falls in the first category, then there is no defect in the framing of the suit and it can be continued against the surety, but if it falls in the second category of cases covered by Order 37 CPC then the suit as framed would not be maintainable for the simple reason that the amended Order 37 CPC is not retrospective in its operation. 8. I have carefully perused the allegations in the plaint of the instant suit No. 160 of 1976, filed under Order 37 Code of Civil Procedure. I have also scrutinized the terms of the promissory notes. The present suit is a claim for the recovery of Rs. 24235/- along with pendent elite interest, and costs from the Defendant No. 1 on the basis of two promissory notes, executed by Defendant No. 1 in favour of the Plaintiff on 1st June, 75. The Defendant No. 2 has stood surety for the repayment of the said amount which had been borrowed by the Defendant No. 1 from the Plaintiff on the basis of these promissory notes. The liability of Defendant No. 2 was joint and co-extensive with Defendant No. 1. The Defendant No. 1 did not make any payment towards the principal or the interest payable on demand under the pronote. The liability of the Defendant No. 2 being co-extensive, the Plaintiff, claimed that the decree be passed for a sum of Rs. 24235/- against the Defendants together with interest and costs. 9. The Defendant No. 1 did not make any payment towards the principal or the interest payable on demand under the pronote. The liability of the Defendant No. 2 being co-extensive, the Plaintiff, claimed that the decree be passed for a sum of Rs. 24235/- against the Defendants together with interest and costs. 9. Counsel for the Defendant No. 2 has very strenuously argued that since Defendant No. 2 stood guarantee for the repayment of the sum borrowed by Defendant No. 1 from the Plaintiff, therefore, he would be covered by Order 37 Rule 2(3) CPC and since this amended Rule is not retrospective in its operation therefore, the suit is not maintainable and the remedy of the Plaintiff is to file a regular suit for the recovery of the amount in question. 10. Relying upon a decision of the Gauhati High Court reported in Surjeet Singh v. Ram Ratan Sharma AIR 1975 Gau 14 the Court below was of the view that the contention of the applicant (Defendant No. 2) should be repelled. It has been decided therein that mere endorsement by a person guaranteeing repayment of money on the pro-note does not change the nature of the instrument and the document still falls within the category of a promissory note. The liability of the surety is co-extensive with that of the principal debtor. The essential ingredients of the promissory note are: (i) That the promise to pay must be unconditional; (ii) That the Note must be in writing and signed by the maker; (iii) That the promise to pay must be of a certain sum of money; and (iv) That the promise to pay must be to, or to the order of a person or to the bearer of the instrument. These essential ingredients are to be found clearly in the promissory notes, in question, which have been executed by Defendant No. 1 and signed as surety by Defendant No. 2. In my opinion, therefore, the instant case falls within the first category and can be filed under the unamended Order 37 Rule 2 Code of Civil Procedure. The question of retrospective application of the amended Order 37 Rule 2, therefore, does not arise. 11. Before concluding, I would like to observe that in the instant case, Defendant No. 2 wanted to contest the suit and he prayed for leave to defend the same. The question of retrospective application of the amended Order 37 Rule 2, therefore, does not arise. 11. Before concluding, I would like to observe that in the instant case, Defendant No. 2 wanted to contest the suit and he prayed for leave to defend the same. He was granted permission to defend the suit subject to certain conditions regarding the deposit of security. He challenged that order and came up to the High Court in revision, but failed. He has not yet complied with the order. It is thus clear that the applicant had yielded to the jurisdiction of the Court and was granted leave to defend the same. It does not lie in his mouth to urge now that the suit is not maintainable. Thus the conduct of the applicant also disentitles him to any relief. 12. For the reasons given above, I do not find any merit in this revision, which is hereby dismissed with costs.