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Issues Involved:
1. Liability of the surety under the award. 2. Effect of the statutory discharge of the principal debtor's debt on the surety's liability. 3. Applicability of Section 134 of the Indian Contract Act. 4. Competency of the Civil Court to entertain the suit. Detailed Analysis: 1. Liability of the Surety under the Award The award imposed an unconditional liability on both the principal debtor and the respondent (surety) to pay the amount due. The respondent's liability was established due to the default of the principal debtor, and the award directed both parties to pay the sum found due. The bank attempted to recover the amount from the respondent through attachment and sale of his property, as provided under Section 57-A of the Co-operative Societies Act and relevant rules. The respondent objected, claiming his liability was extinguished due to the principal debtor's discharge under the Debt Conciliation Act. 2. Effect of the Statutory Discharge of the Principal Debtor's Debt on the Surety's Liability Section 10(2) of the Debt Conciliation Act states that a debt not submitted to the board shall be deemed discharged. The respondent argued that this statutory discharge of the principal debtor's debt also discharged his liability as a surety. The District Judge supported this view, relying on the principle that the surety's liability is contingent on the principal debtor's liability. However, the judgment clarified that the discharge of a debt under Section 10(2) due to the creditor's omission does not affect the creditor's remedy against the surety by virtue of Section 134 of the Indian Contract Act. The court held that once a decree is passed against both the principal debtor and the surety, the surety's liability under the decree remains unaffected by the statutory discharge of the principal debtor's debt. 3. Applicability of Section 134 of the Indian Contract Act Section 134 of the Indian Contract Act, which discharges a surety if the creditor releases the principal debtor, does not apply once a decree has been passed against both parties. The court emphasized that the rights and liabilities determined by the decree cannot be altered except by legal procedures such as appeal or review. The judgment referenced In re A Debtor (1913) and Meenakshi Sundaram Chetti v. Velambal Ammal, asserting that post-decree, the parties are treated as joint judgment-debtors, not as principal and surety. Thus, Section 134 does not discharge the surety's liability under the award. 4. Competency of the Civil Court to Entertain the Suit The respondent contended that the bank's claim should be referred to the Registrar under Section 51 of the Madras Co-operative Societies Act, arguing that the Civil Court lacked jurisdiction. The court rejected this contention, noting that the award was passed under the Co-operative Societies Act and was being executed under the prescribed rules. The court held that the respondent's objection to the execution before the sale officer was within the scope of Rule XXII, Sub-rule 17(a), and the bank's suit in the Civil Court was valid under Rule XXII, Sub-rule 17(c). The objection regarding jurisdiction was overruled. Conclusion The appeal was allowed, the decree of the lower appellate court was set aside, and the trial court's decree was restored. The court ruled that the statutory discharge of the principal debtor's debt did not affect the surety's liability under the award, and the Civil Court had the jurisdiction to entertain the suit. The bank was entitled to recover the amount due under the award from the respondent.
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