1939 Supreme(Mad) 121
IN THE HIGH COURT OF MADRAS
Alfred Henry Lionel Leach, C.J.
Chaganti Veeresalingam
Versus
Mallampalli Subbarayudu and Ors.
Decided On : 13.03.1939
The main legal point established in the judgment is that surety bonds have to be construed with strictness, and the condition of liability must be fulfilled for the surety to be held to the bond.
Headnote:
Surety Bond - Appeal - Liability of Sureties
Fact of the Case:
The appellant and his mother-in-law were sued for the recovery of jewels or damages for conversion. The appellant deposited the amount of the decree as per the condition of a security bond. The Subordinate Judge set aside the decree against the appellant but not against his mother-in-law. The appellant sought a refund of the money from the third respondent and the sureties, which was granted by the District Munsif but later set aside by the Subordinate Judge.
Finding of the Court:
The Court found that the liability of the sureties was dependent on both the defendants succeeding in the appeal, and since the mother-in-law failed in the appeal, the condition of liability was not fulfilled. The Court emphasized that surety bonds have to be construed with strictness and that the appellant must suffer for his neglect in not ensuring the security bond was properly drawn up.
Issues: The main issue was the interpretation of the security bond and the liability of the sureties in the context of the appeal outcome for the defendants.
Ratio Decidendi: The Court held that the liability of the sureties was dependent on both defendants succeeding in the appeal, and strict construction of the surety bond was necessary. The Court emphasized that the condition of liability must be fulfilled for the surety to be held to the bond.
Final Decision: The appeal was dismissed with costs in favor of the first respondent.
Alfred Henry Lionel Leach, C.J.
1. The third respondent filed a suit in the Court of the District Munsif of Tanuku against the appellant and his mother-in-law, one Brahmaramba, for the recovery of certain jewels or, in the alternative, damages for conversion, and obtained a decree against both the defendants for the payment of Rs. 1,275-1-0, including costs. The appellant and his mother-in-law filed an appeal in the Court of the Subordinate Judge of Narsapur and pending the hearing applied for an order staying execution of the decree. The application was granted on the condition that they deposited the full amount of the decree in the trial Court with liberty to the decree-holder to withdraw the amount on furnishing security. The appellant deposited the amount and it was withdrawn by the third respondent on a security bond being signed by the first and the second respondents. The second respondent has died during the pendency of the appeal and his estate is represented by the fourth respondent. The Subordinate Judge set aside the decree of the District Munsif so far as it affected the appellant, but dismissed the appeal of his mother-in-law. As the result of this decision the appellant applied to the District Munsif for an order against the third respondent and the sureties for the refund of the money. The District Munsif granted the application. The sureties challenged the correctness of this order so far as it affected them in an appeal to the Subordinate Judge. The Subordinate Judge allowed the appeal, basing his decision on the wording of the security bond. Although the third respondent had not appealed the Subordinate Judge also set aside the order as against her. The appellant then appealed to this Court. The appeal was heard by Cornish, J., who concurred in the decision of the Subordinate Judge so far the sureties were concerned, but restored the order of the District Munsif against the third respondent.
2. It is quite clear from a perusal of the security bond that the decision of Cornish, J., is correct. The bond recites that the defendants, namely, the appellant and his mother-in-law, should deposit the money in Court and the condition of the bond was this:
If the defendants should succeed in the appeal (preferred) in the Subordinate Judges Court we agree that the said amount may be recovered by means of the property given as security and also from us personally; and we have given the under mentioned property as a security for the said amount, retaining the same in our possession.
3. It will be observed that the liability of the sureties is here made dependant on both the defendants succeeding in the appeal. The appellant succeeded, but his mother-in-law failed. We are asked to read the word "defendants" as meaning the defendants or either of them. This would mean reading into the bond something which is not there. Surety bonds have to be construed with strictness. A surety can only be held to his bond if the condition of liability has been fulfilled. The condition of liability has not been fulfilled in the present case. It is unfortunate for the appellant, but no other construction is open to the Court. It is incumbent upon a party especially upon a party who is to be benefited by it, to see that the security bond is properly drawn up. The appellant did not take the precaution which he should have done and he must suffer for his neglect. The appeal will be dismissed with costs in favour of the first respondent.