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1958 Supreme(MP) 236

High Court Of Madhya Pradesh
P. V. Dixit, J.
TARACHAND LAKHMICHAND CHUHAN - Appellant
Versus
GOPAL LACHIRAMKUMAR - Respondents
Small Cause Revision 121 Of 1957
Decided On : 10/07/1958

Advocates Appeared:
J.D.PATEL, R.B.Vohra

A surety cannot recover from the principal debtor the sum which he has paid to the creditor after the period of limitation as against him as well as the principal debtor.

Headnote:

CONTRACT ACT - SURETYSHIP - SECTION 145 - PAYMENT BY SURETY AFTER LIMITATION AGAINST BOTH DEBTOR AND SURETY - NOT RIGHTFUL PAYMENT - SURETY CANNOT RECOVER FROM DEBTOR.

Fact of the Case:

Plaintiff, a surety, paid Rs. 50/- to the creditor on 28-8-1956, after the claim against both the principal debtor and the surety was barred by limitation. The plaintiff sued the principal debtor to recover the amount paid.

Finding of the Court:

The payment made by the plaintiff to the creditor was not a rightful payment within the meaning of Section 145 of the Contract Act, and therefore, the plaintiff could not recover the amount from the principal debtor.

Issues: Whether the payment made by the surety to the creditor after the claim against both the debtor and the surety was barred by limitation was a rightful payment within the meaning of Section 145 of the Contract Act.

Ratio Decidendi: A payment made by a surety to a creditor after the claim against both the debtor and the surety is barred by limitation is not a rightful payment within the meaning of Section 145 of the Contract Act, and therefore, the surety cannot recover the amount from the principal debtor.

Final Decision: The petition is dismissed with costs.

P. V. DIXIT, J.

( 1 ) THIS is a petition to revise a decision of the Court of Small Causes of Ratlam dismissing the plaintiff applicant's suit for the recovery or Rs. 50/- together with interest thereon from the non-applicant Gopal.

( 2 ) THE facts of the case are that on 14-3-1950 Gopal borrowed Rs. 100/- from one nandibai. The plaintiff Tarachand stood surety on that very date for the repayment of the amount by Gopal. The defendant Gopal made a repayment of Rs, 50/- to nandibai. It is not known when this repayment was made. Thereafter Gopal did not pay anything to Nandibai, According to the plaintiff on 28-8-1956 he himself paid Rs. 50/- to Nandibai which Gopal had to pay to her and that, therefore, he was entitled to recover this amount from Gopal, the learned Judge of the lower Court dismissed the plaintiffs suit on the ground that the payment made by the plaintiff Tarachand to Nandibai on 28-8-1956 was not a rightful payment inasmuch as on that date Nandibai's claim against both the principal debtor Gopal and the surety Tarachand was barred by time. The plaintiff has now. filed this revision petition.

( 3 ) IT is common ground that on 28-8-1956 when the plaintiff was said to have made a payment of Rs. 50/- to Nandibai, the claim of Nandibai against both Gopal and Tarachand was barred by time. Mr. Vohra, learned counsel for the applicant, however, argued that the payment made by the plaintiff to Nandibai could not be said to be one not rightfully made under the contract of suretyship merely because nandibai's remedy against the principal debtor and the plaintiff-surety had become barred by limitation. Learned counsel said that though the remedy by action was barred by limitation, there was no extinction of the debt and that, therefore, the surety was justified in making the payment that he did to Nandibai. I am unable to accede to the contention advanced by the learned counsel for the petitioner. The matter is governed entirely by Section 145 of the Contract Act which says:

"in every contract of guarantee there is an implied promise by the principal debtor to indemnify the surety; and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee, but no sums which he has paid wrongfully. "

( 4 ) IT will be seen from this provision that the implied promise by the principal debtor to indemnify the surety arises only when the surety has rightfully paid any sum to the creditor under the guarantee. The real question for determination, therefore, is whether the sum paid by the plaintiff to Nandibai was rightfully paid under the contract of suretyship. It is no doubt true that the meaning of the expression "rightfully paid" as used in Section 145 of the Act is somewhat obscure. As has been remarked in Mulla's Contract Act the words "rightfully" and "wrongfully" in the second clause of Section 145 of the Contract Act do not seem felicitous. I shall not attempt to define the expression "rightfully paid". But to my mind, according to the dictionary meaning of the word "rightful", a payment in order to be a rightful payment must be one in conformity with what is right or just or fair or equitable. The question whether the payment made by thesurety was or was not rightful has, therefore, to be adjudged in the context of the circumstances, in which it was made and not by the solitary circumstance whether on the date of payment the claim against the debtor or against both the debtor and the surety was barred by time. No doubt if the claim of the cre-ditor is barred by time against both the surety and the debtor, then prima facie the payment made by the surety to the creditor would not be right or just. The argument of the learned counsel that if the creditor omits to sue the principal debtor within the period of limitation the surety is not discharged as barring of the remedy by action has not the effect of complete extinction of the debt and that, therefore, likewise the barring of re




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