1957 Supreme(MP) 60

High Court Of Madhya Pradesh
Sen and Chaturvedi, JJ.
SHYAMLAL RAMKRISHNA AGARWAL - Appellant
Versus
TAKHATMAL BODHRAJ - Respondents
Letters Patent Appeal 214 Of 1956
Decided On : 03/12/1957

The proceedings pending in the executing Court against the judgment-debtor and the sureties ought to have been stayed till there was a decision on the application of the judgment-debtor made to the Tribunal at Dehradun under Section 5 of the D. P. Act.

Headnote:

LETTERS PATENT APPEAL - SURETIES - DISPLACED PERSONS (DEBTS ADJUSTMENT) ACT, 1951 (NO. LXX OF 1951) (D. P. ACT) - SECTIONS 9, 15 - CODE OF CIVIL PROCEDURE, 1908 (ACT V OF 1908) - SECTION 145 - SURETY BONDS - EXECUTION PROCEEDINGS - STAY OF PROCEEDINGS - APPEAL - CONTINUATION OF APPLICATION - LIABILITY OF SURETIES - FRUSTRATION OF CONTRACTS - TERMS OF BONDS - ENFORCEABILITY.

Fact of the Case:

The judgment-debtor, Mulkraj Malhotra, filed an insolvency petition at Calcutta and was adjudged insolvent. Thereafter, the judgment-debtor did not attend the Court, and proceedings in the suit against him were ex parte from 13th September, 1951. An ex parte final decree was ordered to be drawn up on 20th September, 1951, and was actually signed on 15th October, 1951 in favour of Takhatmal, decree-holder, and against Mulkraj (respondent No. 2) for a sum of Rs. 1,74,906/4/- plus costs Rs. 7,868-10 0. On 15th October 1951, the decree-holder Takhatmal applied for execution of this decree, on 19th October 1951, he made an application to execute the decree against the sureties under Section 145 of the Code of Civil procedure. The judgment-debtor Mulkraj Malhotra (respondent No. 2) filed an application on 28th may 1952 before the Tribunal at Dehradun under Section 5 of the Displaced persons (Debts Adjustment) Act, 1951 (No. LXX of 1951) (hereinafter referred to as 'd. P. Act') claiming that he was a displaced person and that his debts were liable to be adjudicated upon and adjusted.

Finding of the Court:

The Court held that the proceedings pending in the executing Court against the judgment-debtor and the sureties ought to have been stayed till there was a decision on the application of the judgment-debtor made to the Tribunal at Dehradun under Section 5 of the D. P. Act. It was also contended that at that time when that application had been made to the Dehradun Tribunal the judgment-debtor's application to set aside the ex parte decree in Miscellaneous Judicial Case No. 26 of 195. 1 was also pending. The civil Court took the view that the Dehradun Tribunal had no jurisdiction, because the applicant was not a "displaced person" under Section 2 (10) of the Act and that his debts did not fall within the definition of "debt" in Section 2 (6) of the act, and there-tore the Tribunal could not entertain the proceedings.

Issues: 1. Whether the proceedings pending in the executing Court against the judgment-debtor and the sureties ought to have been stayed till there was a decision on the application of the judgment-debtor made to the Tribunal at Dehradun under Section 5 of the D. P. Act? 2. Whether the Dehradun Tribunal had jurisdiction to entertain the application of the judgment-debtor? 3. Whether the liability of the sureties was coextensive with that of the principal debtor under Section 128 of the Contract Act? 4. Whether the "suretyship contract" was a collateral one and as an independent contract it could be enforced?

Ratio Decidendi: 1. The Court held that the proceedings pending in the executing Court against the judgment-debtor and the sureties ought to have been stayed till there was a decision on the application of the judgment-debtor made to the Tribunal at Dehradun under Section 5 of the D. P. Act. The Court relied on Sections 9 and 15 of the D. P. Act, which provide for a stay of proceedings in respect of any debt to which the displaced debtor is subject, once an application is made to the Tribunal under Section 5. 2. The Court held that the Dehradun Tribunal had jurisdiction to entertain the application of the judgment-debtor. The Court relied on the definition of "displaced person" and "debt" in Sections 2 (10) and 2 (6) of the D. P. Act, respectively, and held that the applicant satisfied the criteria to be considered a displaced person and that his debts fell within the definition of "debt" under the Act. 3. The Court held that the liability of the sureties was not coextensive with that of the principal debtor under Section 128 of the Contract Act. The Court held that the suretyship contract was a collateral one and as an independent contract it could be enforced. The Court relied on the fact that the bonds were executed by the sureties in order to enable the judgment-debtor to get money from the military authorities for payment to the decree-holder, and that the judgment-debtor obtained money from the authorities.

Final Decision: The Court dismissed the appeals of the sureties with costs.