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2002 Supreme(AP) 1440

Andhra Pradesh High Court
Judges : C.Y.SOMAYAJULU
Medisetti Ravi Babu - Appellant
Versus
Pramida Chit Fund Pvt.Ltd. - Respondent
Decided On : 12-16-02

Headnote:

Contract Act - Section 132 - Civil Procedure Code - Rule 3 and 1 - Order 41 - Money - Obtained - Execution - Realize - Condition - Counsel for revision petitioners is that since decree against respondent became final for reason of his not filing an appeal against decree passed against him - Respondent could as well proceed against respondent and realize decreetal amount from him and his not filing an against respondent for realization decreetal amount and trying to realize decreetal amount only from revision petitioners who are only sureties respondent shows lack of bona fides on part of 1st respondent - Who are only sureties to transaction and in view thereof first appellant Court directing revision petitioners to pay half decreetal amount as a condition precedent for granting stay is unsustainable - Held, Therefore in view of section 132 of Contract Act first respondent has a right to proceed against revision petitioners also as if they are principal debtors though in fact they are sureties respondent - Even as per rule in rouse s case surety can exercise his right to ask the creditor to proceed against the principal debtor in the first instance Before he is Asked to pay same subject to his undertaking to indemnify creditor for loss etc - But not after the creditor obtained a decree against both principal debtor and surety therefore respondent has a right to enforce decree against revision petitioners also as if they also are principal debtors - petition dismissed

( 1 ) 1st respondent filed the suit against the revision petitioners and 2nd respondent who are sureties and principal debtor respectively and obtained a money decree against them. Revision Petitioners filed an appeal against the decree and sought stay of execution of the decree passed against them. They were directed to deposit half of the decreetal amount and costs as a condition precedent for granting stay of execution of the decree passed against them. That order is being questioned in this revision.

( 2 ) THE contention of the learned counsel for the revision petitioners is that since decree against the 2nd respondent (principal debtor) became final for the reason of his not filing an appeal against decree passed against him. 1st respondent could as well proceed against 2nd respondent and realize the decreetal amount from him, and his not filing an E. P. against the 2nd respondent for realization of the decreetal amount and trying to realize the decreetal amount only from the revision petitioners who are only sureties of 2nd respondent shows the lack of bona fides on the part of 1st respondent. It is his contention that 1st respondent should first proceed against the 2nd respondent, who is the principal debtor, and in case of his not being able to realize the decreetal amount from 2nd respondent only can the 1st respondent proceed against the revision petitioners, who are only sureties to the transaction and in view thereof the first appellant Court directing the revision petitioners to pay half the decreetal amount as a condition precedent for granting stay is unsustainable.

( 3 ) I do not find any force in the contention of the learned counsel for the revision petitioners, because both revision petitioners and 2nd respondent are the joint promissors and so revision petitioners, as sureties of 2nd respondent, have no legal right to require the 1st respondent to enforce the decree against the 2nd respondent in the 1st instance, in view of Section 132 of Contract Act. Here I feel it relevant to mention that in relation to the right of surety against the credit or there is a difference in English Law and Indian law. In England, as per Rouse v. Bradford banking Company, after the guaranteed debt has become due, and before he has been asked to pay the same, the surety may require the creditor to call upon the principal debtor to pay off the debt, subject to his undertaking to indemnify the creditor for any risk, delay or expense resulting there-from, and the surety cannot compel the creditor to sue the principal debtor before suing him. But as per section 132 of Contract Act which is in force from 1-9-1872, i. e. , long prior to the said decision, knowledge per se of the creditor that one out of the joint promissors is a principal debtor and the other is surety is not enough, to enforce such a right unless there is a specific agreement between the surety and the creditor that principal debtor only would be made liable in the first instance, before proceeding against the surety. If no such agreement is in existence, the creditor can proceed against the surety as if he is a principal debtor, without trying to realize the debt from the principal debtor. In this case it is not the case of the revision petitioners that there is an agreement between them and 1st respondent. Therefore, in view of section 132 of Contract Act first respondent has a right to proceed against the revision petitioners also, as if they are principal debtors, though in fact they are the sureties of the 2nd respondent. Even as per the rule in rouse s case (1 supra) the surety can exercise his right to ask the creditor to proceed against the principal debtor in the first instance Before he is Asked to pay the same, subject to his undertaking to indemnify the creditor for the loss, etc. , but not after the creditor obtained a decree against both the principal debtor and surety, therefore, 1st respondent has a right to enforce the decree against revision petiti



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