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2008 Supreme(AP) 973

High Court of Andhra Pradesh
THE HONOURABLE MR. JUSTICE L. NARASIMHA REDDY
M. Venkataramanaiah
Versus
M/s. Margadarsi Chit Fund Limited & Others
Civil Revision Petition No.5357 of 2007
Decided on : 15-11-2008

Advocates appeared:
For the Petitioner:N. Ranga Reddy, Advocate.
For the Respondents:R1, P. Raja Rao, Advocate.

Headnote:

Indian Contract Act, 1872 - Sections 43 , 44 37 to 39 , 40 to 45 - Civil Procedure Code, 1908 - Rule 37 of Order XXI – Execution Petition – Contempt – Provides the platform to discuss certain important aspects - Prized subscriber - Chit Fund Company - Surety was obtained from as many as 6 persons - Ensuring payment of instalments of the chit - Default being committed - Suit was decreed - Decree transferred - Against judgment debtors - Remained ex parte - Executing Court came to the conclusion that though the petitioner is possessed of sufficient means to pay the decretal amount, he did not honour the decree and accordingly, directed his arrest - Choosing to proceed only against three judgment debtors that too selectively against the petitioner alone, leaving aside the principal debtor and the other sureties. He contends that the liability of the sureties is co-extensive with that of the principal debtor and unless steps are taken against the principal debtor also, it would become untenable for the executing Court to enforce the decree. – He further contends that even otherwise, the liability of a surety is proportionate and there is no legal basis for placing the entire burden upon the petitioner alone relied upon certain precedents - Held, If those eventualities take place, the consequences provided for under Section 135 of the Act must ensue. – The failure of the 1st respondent to effectively implead the 2nd respondent or to proceed against her in the circumstances of the case would therefore attract Section 135 of the Act – Another facet is that even if the execution proceedings were otherwise tenable and legal, the obligation on the part of the petitioner, as a cosurety, was guided by Sections 146 and 147 of the Act, which have already been extracted in the preceding paragraphs. – Admittedly, there is no contract to the contrary and at the most, the petitioner was liable to share the whole debt equally along with other five sureties – There was absolutely no basis for the 1st respondent to proceed only against the petitioner, for the entire amount - The civil revision petition is accordingly allowed.

Judgment :

The subject matter of this revision is comparatively simple, but it provides the platform to discuss certain important aspects.

One G. Nagasuvarnamani, 2nd respondent herein, is a prized subscriber of the 1st respondent-Chit Fund Company. Surety was obtained from as many as 6 persons viz., the petitioner and respondents 3 to 7, for ensuring payment of instalments of the chit. On default being committed by the 2nd respondent, the 1st respondent filed O.S.No.54 of 2002 in the Court of Senior Civil Judge, Kadapa. The suit was decreed on 02.01.2003 for a sum of Rs.1,14,889/-. The 1st respondent got the decree transferred to the Court of Senior Civil Judge, Proddatur and filed E.P. No.129 of 2004, under Rule 37 of Order XXI C.P.C., against judgment debtors 4, 6 and 7 viz., respondents 5,7 and the petitioner herein, for their arrest. Respondents 5 and 7 remained ex parte. Therefore, the petitioner alone contested the matter. Through its order, dated 22.10.2007, the executing Court came to the conclusion that though the petitioner is possessed of sufficient means to pay the decretal amount, he did not honour the decree and accordingly, directed his arrest. This Civil Revision Petition is filed against the order in E.P.No.129 of 2004. Learned counsel for the petitioner submits that there was absolutely no basis for the 1st respondent in choosing to proceed only against three judgment debtors that too selectively against the petitioner alone, leaving aside the principal debtor and the other sureties. He contends that the liability of the sureties is co-extensive with that of the principal debtor and unless steps are taken against the principal debtor also, it would become untenable for the executing Court to enforce the decree. He further contends that even otherwise, the liability of a surety is proportionate and there is no legal basis for placing the entire burden upon the petitioner alone. He has relied upon certain precedents.

Learned counsel for the 1st respondent, on the other hand, submits that being a surety, the petitioner is equally liable to pay the entire decretal amount and it is always competent for his client to choose either the principal debtor, or all or any of the sureties, to recover the decretal amount. Learned counsel further submits that as long as the principal debtor or other sureties did not discharge the debt, it becomes competent for the creditor to proceed against all or any of them and that the order under revision does not suffer from any illegality or infirmity. He too placed reliance upon certain authorities.

That the petitioner is one of the sureties for repayment of the amount by the 2nd respondent to the 1st respondent, is a matter of record. It is also not in dispute that the suit filed by the 1st respondent was decreed and that the decree became final. In paragraph 3 of the affidavit filed in support of the E.P., the 1st respondent stated as under:

"I submit that the suit filed by the company was decreed on 2/1/03 for Rs.1,14,889/-against all the defendants. After decree, even after repeated demands, the respondents Judgment debtors did not pay the amount due by them. Hence, I have filed this execution petition against the judgment debtors No.4,6,7 for recovery of the E.P. amount of Rs.1,33,790/-."

(emphasis supplied)

This was followed by the facts, relating to the solvency of judgment debtors 4, 6 and 7 and the ultimate prayer for steps against them. Nothing is stated as to why he has picked up judgment debtors 4, 6 and 7, and left aside the principal debtor, and other sureties. The learned counsel for the petitioner submits that such a course is impermissible in law and places reliance upon the Judgment of this Court in G. Lakshmaiah vs. State Bank of Hyderabad (2005(3) ALD 407). That was a case, where the decree holder proceeded against the principal debtor, and after recovering certain amount, proceedings were initiated against the surety. Such a course was sought to be justified o




































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