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TMI Blog2017 (6) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst sureties alone. However when both the principal debtor and guarantors are impleaded in one and same suit and the suit abates against principal debtor, then in view of the law laid down in the above said case of Hon ble Supreme Court Sri Chand and others V/s M/s Jagdish Pershad Kishan Chand and other judgments [ 1966 (2) TMI 104 - SUPREME COURT] , it has to be held that the suit stands abated or dismissed against sureties also otherwise there would be a conflicting decree of dismissal/abatement passed against defendant no.1 and would further lead to the court passing the decree which is even otherwise become final to the same subject matter between appellant and deceased defendant no.1. In the instant case, therefore, as evidence on record shows that defendant no.1 has died leaving behind him some legal heirs and that was the reason why defendant no.4, employer of defendant no.1, was impleaded in the suit so that, his legal heirs cannot claim the terminal dues of defendant no.1 from the defendant no.4, and as those legal heirs were not brought on record, on account of failure of the plaintiff to do so, the suit had abated against the defendant no.1 principal debtor. Hence the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder against the defendant no.1 principal debtor and against defendant no.2 and 3 who were the sureties of defendant no.1, for recovery of the amount of the Chit Fund. In the said suit, though the defendant no.2 and 3 had appeared, they were proceeded without written statement. 4. In the course of the proceedings of the suit, it was pointed out to the court that defendant no.1 had died on 19.12.1999 itself. Purshis exhibit 12 was filed by the plaintiff stating that as defendant no.1 was unmarried, his name be deleted from the suit and order to that effect accordingly came to be passed. However, on the application of plaintiff, respondent No.3 herein the New India Assurance Company came to be joined as defendant No.4 on the count that defendant No.1 was working in the said company and hence the amount recoverable from Defendant No.1 be recovered from his service benefits and dues to be payable by New India Assurance Company. Defendant no.4 resisted the suit, contending inter alia that it is not in any way concerned with the personal loan transaction of deceased Defendant No.1 and the salary and terminal benefits or even the pension and gratuity of the deceased cannot be liable for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f defendant no.1 on the record, the remedy available to the sureties under the Indian Contract Act is also lost. In this respect reliance was placed on the decision of Syndicate Bank V/s Pamidi Somaiah (died) and another reported at AIR 2002 ANDHRA PRADESH 12 to submit that, once the suit is abated against principal debtor, it is equally abated/dismissed against the sureties also. Thus, it was contended that the impugned decree passed against the sureties is illegal and unenforceable against them. 8. This application came to be resisted by the Decreeholder plaintiff by contending that in the execution proceedings this issue can not be raised, as already it was considered by the court in the suit. It was submitted that this specific issue was dealt with by the Trial Court decreeing the suit against the defendant no. 2 to 4 and the said issue was whether the plaintiff proves that the defendant no.1 was having no legal heirs at the time of his death i.e.19/12/1999? . That issue was answered in affirmative. Hence the remedy, if any, available to defendant no. 2 and 3 was to challenge the finding on that issue, by preferring an appeal. However, none of the defendants had preferred any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation v Venkata Seshaya 1983 (1) ALT 344, the executing court therein held that as the debt had abated against the principal debtor, the debt against surety also stands discharged. Accordingly, the executing court dismissed the execution petition. The petitioner/decree holder had preferred a revision against this order and while deciding the revision, the Andhra Pradesh High Court held that issue to be considered was, whether the plaintiff decree holder can proceed only against the surety when the principal debtor s liability stands discharged because of the omission on the part of plaintiff and the suit had abated against principal debtor for his failure to bring legal representative of the principal debtor on record. After considering the various provisions like Section 126, 128, 134, 139 and 140 of the Indian Contract Act, then in para 9 of its judgment, the Andhra Pradesh High Court was pleased to hold as follows : 9. A perusal of the above provisions clearly shows that the person, who gives guarantee to discharge the liability of a third person in case of his default, is called surety and the person in respect of whose favour the guarantee is given is called the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal debtor. In the present case, as a result of an act of omission on the part of the creditor, the liability of the principal debtor stands discharged, as the creditor s suit against him had abated. Therefore, in terms of S.134, it should be inferred that the liability against the surety also stands discharged, as a result of the abatement of the suit against the principal debtor . (emphasis supplied) After considering various other decisions cited before it, it was further held in this case that as a result of the omission on the part of the creditor in bringing legal heirs on record, the right of the surety that was provided under section 140 of the Contract Act to proceed against the principal debtor had been lost. It was further held that, in terms of Section 134 of the Contract Act the surety is discharged by the ommission of the creditor in allowing the suit to abate against principal debtor and consequently the liability was discharged against principal debtor. 12. In para 15 of its order the Andhra Pradesh High Court further held that, 'due to the death, as the suit abated against the principal debtor, the liability stands discharged against principal debtor. More so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly the name of defendant no.1 also appears to be deleted by passing an order to that effect was passed on 10/10/2004. 16. However record of the suit shows that there was one more application which was filed at Exhibit 15 by the plaintiff which is produced in this revision application at page 32. The said application was for grant of permission to make New India Assurance Company as party to the suit. In para 1 of the said application, it was stated that defendant no.1 had died; he was employee of New India Assurance Company Ltd. and after his death the amount of gratuity, Insurance, Provident fund is due to his successors from the said Insurance Company. However as the plaintiff has charge over the said dues and the employer of the deceased, namely the Insurance Company, may disburse this amount to his successors as per the Schedule II of Hindu Succession Act, plaintiff prayed to add the employer insurance company as party to the suit so as to restrain it from disbursing the said dues of defendant no.1 to his successors. 17. This application came to be allowed by the Trial Court and the insurance company was arrayed as defednant no.4 in the suit. 18. The insurance company has file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sureties stood discharged? While answering this question, in para 7 of the judgment, the Apex Court has relied upon its earlier decision in the case of State of Punjab V/s Nathu Ram (1962) 2 SCR 636, explaining the tests applicable, in considering whether an appeal abates in its entirety when it has abated qua one of the respondents ? In that context it was held that, abatement of an appeal against the deceased respondent means not only that the decree between appellant and the deceased respondent has become final, but also as a necessary corollary that the appelate court cannot in any way modify that decree directly or indirectly . It was further held that, when the decree in favour of the respondents is joint and indivisible, the appeal against the respondents, other than deceased respondent, cannot be proceeded with if the appeal against deceased respondent has abated. 23. Here, in this case, the suit is filed against the defendants jointly and severally and therefore if the suit is abated against the principal debtor, then the suit abates against the sureties also. This position is also further clarified by the Apex Court in para 9 of the judgment in Sri Chand and others v/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntor was not divisible . 25. In this judgment of the Delhi High Court, reliance was also placed on the said decision of Apex Court in the case of Sri Chand and others v/s M/s Jagdish Pershad Kishan Chand (supra) and others and it was held that, once the suit had abated against the defendant no.1 result would be that the suit is dismissed against him and if the claim is decreed against the defendant no. 2, there would be conflict between the decree of dismissal passed against the defendant no.1 and, therefore, it would lead to the court passing a decree which has even otherwise become final with respect to the same subject matter between the appellant and deceased defendant no.1 . 26. The Karnataka High Court has also in the case of T. Raju Shetty v Bank of Baroda AIR 1992 Karnataka 108, when faced with similar question, after placing reliance on the above said judgment Sri Chand v/s M/s Jagdish Pershad Kishan Chand, held that when creditor chose to proceed against Pricipal debtor and the surety jointly and severally and the suit abates against the principal debtor, the same cannot be decreed against surety because in respect of same subject matter of the suit there will be conflict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oextensive with that of the principal debtor and therefore the suit for recovery of the amount can be filed by the creditor only against the guarantor also. The liability can be as against guarantor even without initiating any proceedings as against principal debtor. There can also be no dispute about the principles of law laid down in the judgment of Industrial Investment Bank of India Ltd., V/s Biswanath Jhunjhunwala (2009) 9 SCC 478 relied upon the learned counsel that liability of surety being coextensive with that of the principal debtor, the decree holder can execute the decree against the guarantor without proceeding against principal debtor. 31. However the question here is, when a composite and joint suit is filed against, both the principal debtor and the guarantor and the suit is abated against the principal debtor on account of the failure on the part of the plaintiff to bring the legal heirs on record, whether the suit can survive against the sureties? This issue is not considered in the authorities relied upon by learned counsel for respondents. There can no be dispute that separate suit can be filed against the guarantor even without initiating action against the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence as per plaintiff s own statement on oath, were not brought on record during pendency of the suit. In such situation, when the decree is passed against the sureties, then such decree can be challenged in the execution proceeding, it being unexecutable. 35. One additional submission advanced by learned counsel for applicant is to the effect that the decree passed in the present matter is obtained by playing fraud on the court as the application Exhibit 15 filed by plaintiff for impleadment of defendant no.4 in the suit and written statement filed by defendant no. 4 were not brought to the notice of the trial court while deciding the said suit. It is submitted that, while answering issue no.2 learned Trial Court has not considered both these documents, as they were not brought to the notice of Court by the plaintiff. It is submitted that, learned trial court relied only upon pursis Exhibit 12 and ignored the application Exhibit 15, as also the affidavit filed in support of written statement of defendant no.4. Hence it is urged that when the decree was obtained by fraud, then such decree cannot be enforced by executing court and such issue can be raised even in executing court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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