A guarantor has a fiduciary obligation to account to the decree-holder under S.51 of the Code of Civil Procedure.

1. What is the position of a guarantor (or even a surety) vis-a-vis the creditor-has he any obligation is a fiduciary capacity to account to the creditor? If he has, he is not entitled to advance a plea of "no means", when the decree-holder takes out execution proceedings for his arrest and detention. The petitioner is one of the judgment-debtors. The court below spurned down his plea that he has no means to pay the decree debt on the reasoning that he, being the guarantor, is in a fiduciary capacity to account to the decree-holder.

2. The State Bank of India ('the Bank' for short) advanced a loan to one Krishnan on a guarantee given by the petitioner for the due repayment of the loan. The bank filed a suit and obtained a decree against Krishnan as well as the petitioner. Krishnan died in the meanwhile and the bank proceeded against the petitioner in execution. The decree-holder prayed for issuance of a warrant of arrest against the petitioner. It was resisted by the petitioner contending that he has no means to pay the decree debt. The court below, by the impugned order, held that such a plea is not available to him. The short order of the lower court is extracted below:

"Petition filed under 0.21 R.38 for arrest of the respondent to realise the decree debt. The respondent being a guarantor by virtue of Clause (c) of the proviso to S.51 of the Code of Civil Procedure, the plea of no means is not available to the respondent. Hence arrest respondent by 12-4-1984".

3. Learned counsel contended that the Sub Judge was obviously wrong since a guarantor (or even a surety) has no fiduciary obligation. The liability of such person is not different from any other judgment-debtor and hence execution of the decree by arrest and detention in prison cannot be ordered unless the court is satisfied that he has the means to pay atleast some substantial portion of the decree debt, according to counsel. It was confessed, during the time of arguments, that despite best efforts a decision or authority could not be traced in support of the view that a guarantor has no obligation in a fiduciary capacity. So, the question has to be considered unaided by any case-law as such.

4. S.51 of the Code of Civil Procedure enumerates the different modes for executing a decree. The proviso to the Section contains some limitations in execution of a money decree by arrest and detention of the judgment-debtor. The proviso together with the relevant clause (c) is extracted below:

"Provided that where the decree is for the payment of money execution by detention In prison shall not be ordered unless, after giving the judgment-debtor an opportunity of showing cause why be should not be committed to prison, the Court, for reasons recorded in writing, is satisfied.

(c) that the decree is for a sum for which the judgment-debtor was bound in a fiduciary capacity to account."

5. Obligation to account to the decree-holder is the first requirement of the clause, and every judgment-debtor whether be is a principal debtor or a mere guarantor or a surety has the laid obligation to the decree-holder in accordance with the nature or circumstance in each case. Learned counsel cited the decision in Prem Bailabh v. Mathura Dutt (AIR. 1967 SC. 1342), wherein a partner in a firm was found to be having no obligation in a fiduciary capacity to account to the other partners. In that case, a decree was passed in favour of one of the partners in a firm against some ether partners including the Managing Partner. It was held that in the absence of special circumstances, a partner cannot be regarded as a trustee for the other partners. On the facts, and in principle, the observations in the said decision have no bearing on the question involved in this case.

6. A guarantor's liability is based on an undertaking or promise to perform the thing or the act in the evert of non-performance by the principal obligor. A guaranty itself is an undertaking by one person that if another person fai