 Channappa Basappa Uppin v. Yellappa Venkappa Anegundi .

Bombay High Court,

March 11, 1931

1. Respondent 1 Yellappa obtained a money decree against respondent 2

Fakirappa in June 1926. In execution of this decree Fakirappa was arrested on
7th February 1927. He expressed his intention to apply to be declared an
insolvent and the appellant Channappa stood surety for him and executed a
security bond in accordance with the terms of section 55, clause (4) of the
cpc, engaging that the judgment-debtor would apply to be declared an
insolvent within fifteen days and that he would appear when called upon in
any proceedings upon the application or upon the decree under execution.
Within fifteen days that is to say on 21st February 1927, Fakirappa did make
an application, but it appears that it did not contain all the particulars required
by Section 13 of the Provincial Insolvenoy Act, and it was ultimately
rejected on that ground on 23rd July 1927. The order passed on that occasion
was:

“Mr. Pirzade for the applicant admits that this application is not in the proper
form and states that he will put in another application in insolvency. So reject
this application. Arrest the debtor for the present.”

2. The judgment-debtor was accordingly re-arrested, but was again released

on furnishing security. The judgment-creditor then, on 27th July, presented
an application under section 143 of the cpc, for realization of the security.
Channappa opposed the application on two grounds, viz., that the judgment-
debtor had made an application under the Provincial Insolvency Act as he
had undertaken to do, and that as the judgment-debtor had been arrested after
his insolvency application was dismissed, the liability of the surety thereby
came to an end.

3. On both these points the lower Courts have decided against the surety, who
has come to this Court in second appeal.

4. The same two points arise for decision here. On the first point the view
taken by the lower Courts is that as the application made by Fakirappa to be
declared an insolvent was not an application in accordance with law there had
been no sufficient compliance with the terms of the surety bond. The learned
District Judge has referred to a case on this point, but it is not reported in any
authorized report and is not available here. We do not know what the facts of
that case were nor even the Court which decided it. No other authority has
been cited. I am not prepared to hold that the application referred to in Cl.
(4), S. 55, for being declared an insolvent must necessarily be an application
which contains all the particulars required by Section 13 of the Provincial
Insolvency Act. When the legislature has intended that an application which
has to be made within a certain time must necessarily be one in accordance
with law, it has been so stated, as for instance in Article 182, Col. 3, Cl. (5),
Lim. Act. I can see no good reason for implying those words or similar
words here. The position might be different, no doubt, if the application was
so defective as to make it appear that the application was not a bona fide one.
In that case it might be argued that there was no substantial compliance with
the terms of the bond. It is not shown however that was the position in the
present case. For some reason the Court took until 23rd July 1927 to discover
that the application was not in the proper form. It then rejected the
application as above stated, and on 3rd August 1927 Fakirappa made a fresh
application which was pending at the time of the proceedings with which we
are concerned. As the result of the insolvency proceedings Fakirappa was
ultimately adjudicated insolvent. I hold therefore that the application which
was made on 21st February 1927 may fairly be regarded as the first step
towards getting the adjudication order. The insolvency proceedings are not
before me, but on the face of it one does not see why it was necessary to
dismiss the application at all. It would seem that the applicant might have
been called upon to supply the particulars which were missing from his
application. It can hardly be denied that the fulfilment of the purpose for
which the guarantee was given must have the effect of discharging the surety,
and I think it may be said that in this case the purpose was substantially
fulfilled. An application to be declared insolvent was made within the time
fixed, and it has not been shown that there was any failure on Fakirappa's part
to appear when called upon. On this point therefore I find that the decision of
the lower Courts is wrong.

5. For the proposition that the judgment-creditor was not entitled to proceed
against the surety after the re-arrest of the judgment-debtor, Mr. Desai cited
Makanji Mavji v. Bhukandas Nagardas (1). It was held there that Cl. (4),
S. 55, of the Code does not mean that the Court may proceed both against the
surety and against the debtor. For that proposition authority was hardly
necessary since the language of the clause itself suggests that the judgment-
creditor is given alternative and not concurrent remedies against the debtor
and the surety. I do not think however that this case decides that the
judgment-creditor cannot proceed against the surety when once the judgment-
debtor has been arrested. The words of Cl. (4) are:

“The Court may either direct the security to be realized or commit him (that
is the judgment-debtor) to the civil prison in execution of the decree.”

6. Mr. Desai really relied upon one sentence in the judgment of Macleod, C.J,
at p. 503:

“It is only when the judgment-debtor has been brought back before the Court,
so that the Court can commit him to the civil prison, that the surety is
released.”

7. On the strength of these words he argued that it is not necessary that the
Court should actually have committed the judgment-debtor to prison, but it is
sufficient if the debtor has been brought before the Court under arrest so that
the-Court can commit him if it chooses so to do. There, are however other
passages in the judgment which appear to ma to be inconsistent with that
argument. Thus at p. 502 (of 48 Bom.) the learned Judge says:

“Obviously if the surety is proceeded against and the amount is recovered

from him under the conditions of the bond, then the judgment-debtor cannot
be committed to jail in execution, and also if the judgment-debtor is
committed to the civil prison, the state of affairs is just the sima as if the
surety had never come forward, so that the Court cannot concurrently
proceed against the surety.”

8. And again:

“Clearly if that warrant had been executed and the judgment-debtor hid been
committed to the civil prison, then with regard to that condition in the bond,
the surety would have been released. But it is contended that the issue of the
warrant is not sufficient by itself to bar the Court from proceeding against the
surety, if the warrant is unfruitful, and that seems to me to be the right
construction of the section.”

9. It does not appear to me therefore that the learned Judge intended to lay
down that the arrest of a judgment-debtor was in any respect equivalent to his
committal to prison, and the actual decision in that case was that in spite of
the fact that the judgment-debtor had been arrested the liability of the surety
remained. I agree with the lower Courts that the-arrest of the judgment-debtor
did not have the effect of discharging the surety. But, as I have found in the
appellant's favour on the first point, the result is that the appeal succeeds, the
orders of the lower Courts must be sat aside and the application dismissed
with costs throughout.

S.N/R.K

10. Appeal allowed.