Bombay High Court
Haji Ahmed Karim vs Maruti Ravji Bhongle on 27 June, 1930
Equivalent citations: AIR 1931 BOMBAY 55
JUDGMENT Madgavkar, J.
1. The defendant No. 2 appellant became surety for defendant No. 1 judgment-debtor, to the plaintiff-respondent Secree-holder. The plaintiff and defendant No. 1 compromised the suit, the decree-holder sought to enforce the decree against the surety, who resisted on the ground that the decree was not obtained after contest, and he was, therefore, released. The trial Court upheld the plea, the lower appellate Court rejected it, the surety appeals.
2. It is argued for the appellant that the terms of the surety-bond particularly the words that the surety "will fulfil the terms of the decree or order that may be passed in the said suit by the Kopergaon Court or by the appellate Court or by the High Court and binding against the said defendant," implicitly, if not explicitly, exclude a compromise and postulate a contest. Further, the judgment-debtor in his written statement had set up a payment of Rs. 1,400, which he did not seek to prove in the compromise. There is, therefore, a variation from the terms of the surety-bond, which, whether prejudicial or not, would entitle the surety to be discharged.
3. For the respondent-decree-holder it is contended that the bond including these terms did not exclude a compromise. The appellant failed to go into the witness-box, or prove collusion, which he had set up, and on the contrary, according to the respondent, had taken away crops, which were the subject of an interim injunction, and the surety is not, therefore, discharged.
4. For the appellant reliance is placed on decisions such as National Coal Co. v. Kshitish Bom & Co. (1926) 30 C. W. N. 540 and Muhammad Yusaf v. Ram Gobinda Ojha (1927) I.L.R. 53 Cal. 91. The respondents rely on decisions such as Shivapa bin Gurlingapa v. Nagapa bin Shivapa Kudrimoti (1894) P. J. 25 and Appunni Nair v. Isack Mackadan (1919) I.L.R. 43 Mad. 272, 277.
5. The first question in these cases, in our opinion, is whether a compromise as such is or is not excluded under the terms of the surety-bond. That must be a question of fact in each case. In the present case, we are unable to accept the argument for the ' appellant that the mention of the three Courts in the surety-bond necessarily implies a contest in the Courts and excludes a compromise. It would be impossible to argue, for instance, that the mention of these three Courts necessarily placed the judgment-debtor under an obligation to carry the matter right up to this Court, and to incur the costs that they involve merely by reason of such mention. The Courts are mentioned pro majors cautela instead of the simple phrase, "the ultimate decree of the Court," In terms, therefore, a compromise is not excluded. There is no reliable evidence on the record to show that it was implicitly excluded. There was, it is true, in the written statement the allegation of part satisfaction, but no receipt or documentary evidence was produced, accounts were gone into before the compromise, and the appellant has never gone into the witness-box and stated that the judgment-debtor assured him that he would be able to substantiate such payments, or that it was in reliance upon such an assurance that he entered into such a bond.
6. It follows on this view that a compromise as such is not explicitly or implicitly outside the terms of the surety-bond in this case.
7. The collusion alleged is not supported by the evidence, the trial Court does not find it proved, the lower appellate Court found it not proved. For the purpose of this appeal, therefore, we must hold that no collusion is established.
8. On these facts the law is, in our opinion, clear that the surety cannot resist enforcement of the bond on a compromise on the face of it bona fide. The bond itself does not stipulate that even such a compromise should not be entered into without his knowledge and consent. We adopt the reasoning and almost the language of this Court in Shivapa bin Gurlingapa v. Nagapa bin Shivapa Kudrimoti (1894) P. J. 25 and hold that the surety is liable. The same view has been adopted by the Madras High Court in Appunni Naif v. Isack Mackadan. The decision in National Coal Go. v. Kshitish Bose & Co. is the decision of a single Judge, based on the English case of Tatum v. Evans (1885) 54 L. T. 336. A reference to that case shows that the learned Judges expressly held that the surety had been induced to enter into the bond on an allegation that there was a very good defence to the suit and had expressly made himself liable, only for such an amount " as the Court might think fit to award." That case, therefore, is no authority for the proposition that a compromise without the knowledge and consent of the surety necessarily releases the surety of his liability. We may distinguish the case of Muhammad Yusuf v. Bam Gobinda Ojha (1927) I.L.R. 53 Cal. 91 on the ground that the parties contemplated the Court as the forum to settle the amount of the liability to the defendant and the latter without the consent of the surety altered it by appealing to arbitration, thus varying the form of the bond and releasing the surety.
9. For these reasons we are of opinion that on the terms of the present bond and the facts of the present case the surety is liable.
10. The appeal fails and is dismissed with costs.