The liability of a surety is not limited to cases where there has been a contest to the finish, and a compromise decree is not excluded unless fraud or collusion is proven.

JOSEPH, J. :- This appeal arises from an order dismissing objections raised by a surety to enforcement of the bond given by him when certain moveables belonging to the first defendant were attached before judgment. During the pendency of the suit the first defendant was adjudicated insolvent and the Official Receiver was impleaded as additional defendant. Thereafter the plaintiff and the defendants entered into a compromise and a decree was passed in terms of the compromise. When the decree-holder sought to enforce the bond, the surety objected contending that the bond should be deemed discharged as the suit was decreed on compromise and not on contest and as the first defendant has been adjudicated an insolvent. These objections were overruled and execution was ordered against the surety; he has therefore preferred this appeal.

2. As regards the first point, whether the appellant has become discharged on account of the compromise decree, it was contended that the parties contemplated a decree on contest and that a compromise entered into behind the back of the surety would discharge him of liability. The appellant relies on certain decisions of the Calcutta, Lahore, Patna and Allahabad Courts in support of this argument.

3. In National Coal Co. Ltd. v. Kshitish Bose and Co., AIR 1926 Cal 818, Buckland, J., held that the surety was discharged as the decree in the suit was passed on a compromise allowing payment in. instalments. This decision which is based on Tatum v. Evans, (1885) 54 LT 336, was dissented from, in Jia Bai v. Joharmull, ILR 59 Cal 1450 : (AIR 1932 Cal 858), a decision of a Bench of the same Court to which reference will be made later.

4. There is yet another decision of the Calcutta High Court, Md. Yusuf v. Ram Gobinda, AIR 1928 Cal 177 (2), relied on by the appellant. That was a case in which a surety gave a bond in connection with attachment before judgment of moveables belonging to the defendant. The parties later referred the matters in dispute to arbitration and a decree was passed on the basis of the award given by the arbitrators.

It was held that the surety was discharged. On the facts the decision, if we may say so with respect, is correct because it was held that what the surety agreed was that in the event of there being a decree in the suit after contest between the parties before the Court, he would be liable for the decree amount. The decree passed on the award was not one in the contemplation of the parties. Page J., has made this clear in his concurring judgment :

"To my mind this is a very plain case. Having regard to the terms of the bond the surety agreed, if the creditor wag unable to obtain payment of the decretal amount from the debtor, to liquidate any sum which the Court after contest should hold was payable by the debtor to the creditor. Some tribunal had to decide the issue as to the liability of the debtor.

The parties chose to have this done by some one in the confidence of both parties. But to such an arrangement the surety was no party and he never undertook that the liability of the debtor should be determined by anybody whom the debtor and creditor might choose to agree upon as the tribunal; and unless he assented to it such an arrangement as was made operated as a discharge of the surety."

This decision cannot therefore be treated as authority for the proposition contended for by the appellant.

5. The latest decision of the Calcutta High Court is ILR 59 Cal 1450 : (AIR 1932 Cal 858) to which reference has been made earlier. Rankin, C.J., pointed out that the decision in (1885) 54 LT 336 did not justify the broad proposition that a surety was discharged if a decree was passed in the suit on compromise. The following observations of Denman, J., who decided (1885) 54 LT 336 were extracted :

"I do not say that in no case where a person gives security as surety under O. XIV, he is liable where a judgment is submitted to by consent. But I am of opinion that the compromise in this cas