1928 (8) TMI 1 - HC - Indian Laws

Summary

Issues Involved:
1. Entitlement of the plaintiff to a decree against defendant 2 as a surety.
2. Breach of contract and responsibility for such breach.
3. Specific performance of the contract versus surety's liability.
4. Applicability of Section 128 and Section 141 of the Contract Act.
5. Remedies available to the plaintiff against defendant 2.

Issue-wise Detailed Analysis:

1. Entitlement of the plaintiff to a decree against defendant 2 as a surety:
The primary issue was whether the plaintiff-appellant was entitled to a decree for the suit amount against defendant 2 along with defendant 1. The plaintiff's suit was for the recovery of money due under a promissory note executed by defendant 1, with defendant 2 guaranteeing the payment of this debt under Ex. B-1. The District Munsif's Court of Tiruthuraipundi granted a decree against both defendants, but the Subordinate Judge of Tanjore set aside the decree against defendant 2. Wallace, J. confirmed this decision. However, upon appeal, it was argued that under Section 128 of the Contract Act, the liability of the surety (defendant 2) is co-extensive with that of the principal debtor unless otherwise provided by the contract. The court concluded that defendant 2 was equally liable with defendant 1 for the suit amount.

2. Breach of contract and responsibility for such breach:
The court examined whether there was a breach of the contract set out between the plaintiff and defendant 2 in Ex. B-1 and who was responsible for it. The lower appellate court found that defendant 2 was called upon by the plaintiff to pay the amount under Ex. B and to take over the promissory note, but he failed to do so. This finding was not challenged, and it was determined that defendant 2 was solely responsible for the breach of the contract in Ex. B-1.

3. Specific performance of the contract versus surety's liability:
The argument presented by the respondent was that the plaintiff's suit was for the specific performance of the contract contained in Ex. B-1, and by suing defendant 1, the plaintiff disabled himself from performing his part of the contract, i.e., assigning the note to defendant 2. However, the court found this argument to be based on a misconstruction of the terms of Ex. B-1. It was clarified that the terms made defendant 2 a "surety" for the payment of the promissory note debt, and his liability arose when defendant 1 did not pay the debt within three months.

4. Applicability of Section 128 and Section 141 of the Contract Act:
The court emphasized that under Section 128 of the Contract Act, the liability of the surety is co-extensive with that of the principal debtor unless otherwise provided by the contract. The provision in Ex. B-1 regarding the assignment of the promissory note on payment of the money was seen as a statement of the rights and obligations of a creditor and surety implied under Section 141 of the Contract Act. Since the default was on the part of defendant 2, he could not escape the surety's liability of paying the debt.

5. Remedies available to the plaintiff against defendant 2:
The court discussed the remedies available to the plaintiff. It was argued that the plaintiff could not seek specific performance as the promissory note had become time-barred. However, the court clarified that the suit against defendant 2 was for the enforcement of his liability as a surety and not for specific performance of a special contract. The court concluded that defendant 2 was liable for the suit amount, and upon payment, he would have his remedy against defendant 1 under Section 140 of the Contract Act.

Conclusion:
The court set aside the decree passed by the learned Judge and restored the decree of the District Munsif, holding that defendant 2 was equally liable with defendant 1 for the suit amount. The plaintiff was entitled to a decree against both defendants, with the costs of the appeal awarded to the plaintiff.