HON'BLE SRI JUSTICE M. GANGA RAO

CIVIL REVISION PETITION No.297 of 2012

ORDER:

This is a civil revision petition under Section 115 of the Code of Civil Procedure by the unsuccessful decree holder/plaintiff assailing the order dated 20.03.2009 of the III Additional Junior Civil Judge, Visakhapatnam, whereby and whereunder EP.No.63 of 2007 in OS.No.4104 of 1999, filed by the petitioner-decree holder under Order XXI, Rules 22 & 48 and Section 60 CPC to order attachment of salaries of 3 rd and 4th Judgment Debtors from their garnishee by issuing attachment warrant for realization of the decretal amount was dismissed.

Heard Sri P. Durga Prasad, learned counsel for the revision petitioner-DHr-plaintiff and Sri K.V.Satya Ramchandra Rao, learned counsel appearing for the 3rd respondent-3rd JDr.

The facts leading to the filing of this Civil Revision Petition, in brief, are that the petitioner herein filed OS.No.4104 of 1999 on the file of III Additional Junior Civil Judge's Court, Visakhapatnam, for recovery of Rs.76,716/- based on the statement of account under a chit transaction against the defendants 1 to 4 among whom 1st defendant is the principal borrower-prized subscriber and the defendants 2 to 4 stood as guarantors in the event of non payment of the amount by the principal subscriber. The suit was decreed against the defendants 2 to 4 on 06.12.2000 whereas the suit against 1st defendant was abated as per orders dated 16.11.2000. Inspite of the decree suffered by defendants 2 to 4, as they failed to repay the amount the petitioner-decree holder filed EP.No.63 of 2007. The JDrs 3 & 4 filed counters mainly contending that the EP is not maintainable as the decree is not an executable

against them since the first defendant is the principal borrower and the suit claim against him was dismissed and the DHr has not taken any steps to set aside the dismissal order by bringing the legal representatives of the 1st defendant on record and thereby waived the claim against the 1st defendant. The JDrs 3 & 4 are only sureties and their liability is coextensive with that of the principal debtor. Therefore, the decree obtained against only the sureties is non-est in the eye of law. Hence, the EP is not maintainable. On merits, the executing Court having considered the facts and circumstances of the case and submissions of learned counsel for the DHr and JDrs 3 & 4, having relied on the decision reported in Kurnool Chit Funds (P) Ltd., v. P. Narasimha & others [2008(1) ALT 795] cited on behalf of JDr.No.3, dismissed the EP. Aggrieved by the same, the present civil revision petition is filed.

Learned counsel for the revision petitioner-DHr submits that the suit is filed for recovery of money against the principal debtor/prized chit subscriber along with others who stood as sureties. No doubt the suit against 1st defendant – principal debtor was abated as the petitioner failed to bring the legal representatives of the 1st defendant on record. However the suit was decreed against the other defendants 2 to 4, who are sureties, and the same has become final. As per the provisions of Section 128 of the Indian Contract Act the liability of the surety is coextensive with that of the principal borrower and the suit is maintainable against co-defendants as per the provisions of Order XX Rule 2 CPC. Therefore, the cause of action does not come to an end because there is a liability on the part of the sureties to pay the amount. In support of his contentions, he relied on unreported decisions of the

erstwhile High Court of Andhra Pradesh in CRP.No.50 of 2014 dated 07.02.2014 and CRP.No.2980 of 2009 dated 15.06.2010.

On the other hand, learned counsel for the 3rd respondent would contend that though the petitioner-DHr obtained a decree against the respondents-JDrs, on account of the fact that the suit against principal debtor-1st defendant stood abated as his LRs were not brought on record by the petitioner-DHr, such act of the creditor in not bringing the legal representatives of the 1st defendant on record is inconsistent with the right of the surety. As per the provisions of Section 139 of the Contract Act, if the creditor does any act, which is inconsistent with the right of the surety or omits to do any act which his duty to the surety requires him to do and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged. In support of his contentions he placed his reliance on decision in Kurnool Chit Funds (P) Ltd., v. P. Narasimha & Others (supra) wherein it is held as follows:

"In the event of a decree in favour of the creditor against the principal borrower, the wings of the decree can also be extended against the sureties as their liability is co-extensive with the principal debtor. When once there is a decree, the creditor is at liberty to proceed either against the principal borrower or sureties provided that the remedy of the surety is available for recovery of the amount against the principal debtor after payment of the amount to the creditor. But in the present case, the suit against the principal debtor is dismissed for default and the decision became final. Therefore, under law, there is no liability surviving against D1 for realization of the amount due to the creditor. When once the liability of the principal debtor is extinguished, the sureties' liability gets automatically terminated. Therefore, without making the principal debtor liable for payment of the amount to the creditor, the sureties cannot be made liable for recovery of the amount. When once the suit is decreed against the principal debtor and the sureties with joint and several liability, it is the option of the decree holder to go against any one of them irrespective of the fact whether he is principal debtor or a surety."

Having considered the facts and circumstances of the case, submissions of the learned counsel and on perusal of the material record, this Court found that the petitioner-DHr filed the suit for recovery of the amount against the defendants among whom 1st defendant is the principal borrower/prized subscriber and defendants 2 to 4 are the sureties. The trial court decreed the suit against the defendants 2 to 4 with costs. It was recorded in the decree that the suit against 1st defendant abated as per the orders dated 16.11.2000 as the petitioner-DHR has not taken any steps to bring the legal representatives of the deceased 1st defendant on record who died during the pendency of the suit proceedings. Therefore, it clearly establishes the fact that DHr voluntarily waived/extinguished the claim against principal debtor, even though the DHr could maintain the suit against the surviving defendants as per the provisions of Order XXIIRule 2 CPC, which reads thus:

"Procedure where one of several plaintiffs or defendants dies and right to sue survives: - Where there are more plaintiffs or defendants than one, and any of them dies, and where the right to sue survives to the surviving plaintiff or plaintiffs alone, or against the surviving defendant or defendants alone, the Court shall cause an entry to the effect to be made on the record, and the suit shall proceed at the instance of the surviving plaintiff or plaintiffs or against the surviving defendant or defendants."

Even as per the provisions of Section 128 of the Indian Contract Act, 1872, the liability of the surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract. Therefore, without making the principal debtor liable for payment of the amount to the creditor, the sureties cannot be made liable for recovery of the

amount. Once the suit is decreed against the principal debtor and the sureties with joint and several liability then it is the option of the decree holder to go against any one of them irrespective of the fact whether he is principal debtor or a surety. In the instant case, the petitioner-DHr voluntarily, without the knowledge of the sureties, by his acts, waived the liability of the principal debtor by not pursuing the suit properly against the principal debtor by not bringing the LRs of the deceased 1st defendant-principal debtor on record, which is inconsistent with the right of the surety and omission to do such act which his duty to the surety requires him to do and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is also discharged, as per the provisions of Section 139 of the Contract Act, which reads as follows:

"139. Discharge of surety by creditor's act or omission impairing surety's eventual remedy.—If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged. —If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged."

The contentions of learned counsel for the petitioner-DHr that suit was decreed against the defendants 2 to 4-JDrs 2 to 4, who are sureties, and the same has become final and as per the provisions of Section 128 of the Indian Contract Act the liability of the surety is co-extensive with that of the principal borrower and the suit is maintainable against co-

defendants as per the provisions of Order XXIIRule 2 CPC and as the cause of action does not come to an end by the death of the principal borrower, there is a liability on the part of the sureties to pay the amount are unsustainable and cannot be countenanced.

Further, insofar as the decisions relied on by learned counsel for the petitioner are concerned, the erstwhile High Court of Andhra Pradesh considering the fact situation in CRP.No.50 of 2014 wherein the contention of the petitioner therein – JDR.No.4 was that the original borrower died even prior to the filing of the suit and the suit filed against the dead person and the decree obtained against such person is a nullity and that when the suit was abated against the principal debtor if a decree is passed against surety, the same would be inexecutable, having referred to Order XXII Rule 2 of CPC and Section 128 of the Contract Act held that if one of the defendants died, the entire suit does not abate and if the cause of action is surviving, then the suit can be proceeded against other defendants the suit is maintainable against codefendants and the liability of the surety is co-extensive with that of principal borrower.

In CRP.No.2980 of 2009 the Division Bench of the erstwhile High Court of Andhra Pradesh while dealing with the reference made on the question as to whether it is open for a decree holder to proceed against one or few of the judgment debtors and execute a decree, having referred to the decisions in M. Venkataramaiah v. M/s.Margadarsi Chit Fund Limited and Others [2009(1) L.S.25(AP)]; Bethia Venkanna v. Sait Chunilal Moolchand [ AIR 1961 AP 63]; The Bank of Bihar v. Dr.Damodar Prasad and another [AIR 1969 SC 297]; State Bank of India v. M/s.Index Port Registered and others [AIR 1992 SC 1740];

& MG Brothers Finance Limited, Yemmiganuru v. J. Badarinath and others [2007(1) ALD 451]; and the relevant Sections of the Indian Contract Act i.e., 126, 128, 134, 137, 138, 139 and 140, while overruling the decision in Venkataramanaiah's case (supra) and upholding the decision in M.G.Brothers Finance (supra) held that when the judgment debtors have suffered a joint and several decree, the decree holder is entitled to recover the money against all or any of the judgment debtors and therefore it cannot be said that the decree holder is not entitled to file execution proceedings against one or few judgment debtors and it is open to the decree holder to proceed against one or few of the judgment debtors under the decree.

There is no dispute with regard to the proposition of law laid in the afore-cited decisions. However, in view of the peculiar fact situation of the present case where the principal debtor died during the pendency of the suit and the suit against him was abated for the act of the creditor-DHr in not bringing the legal heirs on record, the said decisions are not applicable to the facts of the present case.

In view of the above discussion, this Court found that the voluntary acts of the petitioner-DHr having knowledge that the 1st defendant – principal borrower expired and failed to bring the legal heirs on record amounts to waiver of the debt against the 1st defendant. There is no dispute that the liability of the surety is co-extensive with that of the principal debtor. But in the present case the liability of the 1 st defendant – principal debtor does not exist on account of the fact that the DHr failed to get any decree against the principal debtor by waiver and allowed the suit to be abated insofar as the 1st defendant is concerned. In such a situation, the decree suffered by the sureties

alone is in-executable against them as their remedy for recovery of the amount against the principal debtor after payment of the amount to the creditor is impaired by application of provision of Section 139 of the Indian Contract Act and consequently the sureties stand discharged. Therefore, the executing Court has rightly dismissed the EP and this Court does not find any reason to interfere with the same.

Accordingly, the Civil Revision Petition is dismissed. No costs.

As a sequel, miscellaneous applications pending, if any, in this CRP shall stand closed.

__________________________ JUSTICE M. GANGA RAO

04.03.2022 Vjl

MGR,J CRP_297_12

HON'BLE SRI JUSTICE M. GANGA RAO

CIVIL REVISION PETITION No.297 of 2012

04.03.2022