P L D 1966 (W (PLP)

WAHIDUDDIN AHMED, J.‑

This is an appeal filed on behalf of the Government of West Pakistan and arises out of Civil Suit No. 6 of 1957 filed in the District Court Dadu. By agreement dated 22nd March 1950, Musa Khan respondent No. 2 took lease of Changrio forest for three years, viz. 1950‑51, 1951‑52 and 1952‑53 from the Divisional Forest Officer, Larkana. Besides other terms it was agreed between the parties that the lessee would pay the lease amount in the sum of Rs. 25,000 each year and he had to pay for three years a total lease amount of Rs. 75,

000. Shamsuddln Respondent No. 1 stood surety for the performance of this contract and executed a surety bond on 13th April 1950. On 11th December 1951, Shamsuddin respondent No. 1 informed the Forest Authorities that he was no longer prepared to continue as surety of respondent No. 2, Musa Khan. The Forest Department did not accept this Position and by two letters dated 18th December 1951, and 23rd October 1952 informed Shamsuddin that his surety bond still holds good and cannot be cancelled now as the lease period was about to expire. It, however, appears that the Department cancelled the lease of Musa Khan and decided to auction the lease of the land in dispute for the year 1952‑53 by a public auction to be held on 15th February 1952. The evidence of the parties shows that nobody offered any bid and nothing came out of the public auction held on 15th February 1952. The Forest Department, however, demanded the balance of the lease money from Shamsuddin.

2. Shamsuddin respondent No. 1 challenged this demand in Civil Suit No. 6 of 1957. He contended that the surety bond being a continuing guarantee came to an end after he had withdrawn it by letter dated 11th December 1951. In the alternative he contended that the Forest Department had accepted the withdrawal of the surety bond and, therefore, his liability as surety for the year 1952‑53 ceased to exist. He further pleaded that since the Forest Department had cancelled the lease of Musa Khan for the year 1952‑53 and put the forest land to public auction, his liability for the lease amount for that period stood discharged.

3. The suit was resisted on behalf of the Government. The Government pleaded that the surety bond executed by respondent Shamsuddin was not in the nature of a continuing guarantee but in respect of a single transaction and he was liable to pay the entire lease money. They denied that by their conduct they had accepted the withdrawal of the surety bond or that the cancellation of the lease deed had resulted in the discharge of the surety for the lease amount for the year 1952‑

53. On the pleadings of the parties the learned District Judge struck the following issues: "(1) Whether the plaintiff' and the defendant No. 4 are agriculturists? (2) Whether the plaintiff's unilateral withdrawal from surety ship by merely informing the forest authorities that he ceased to be the surety of Musa Khan defendant No. 4, is legal and binding on the defendant Nos. 1 to 3 and whether this amounts to revocation of the agreement between the defendant No. 2 and the plaintiff'? (3) Whether any cause of action arose to the plaintiff for bringing the suit? (4) Whether the suit is time barred? (5) Whether the plaintiff' and defendant No. 4 are not in collusion with each other? (6) What should the decree be?" The learned District Judge by judgment dated 31st October 1958, held that the surety bond was in the nature of a continuing guarantee and the notice dated 11th December 1951, sufficiently revoked the surety ship under section 130 of the Contract Act. He further held that the auction of the land in dispute was tantamount to the acceptance of withdrawal of the suretyship but the surety was bound by law up to the expiry of the lease of the second year namely 1951‑

52. On this finding the learned District Judge held that Shamsuddin was liable for the two instalments each consisting of Rs. 25,

000. He further came to the conclusion that Musa Khan had admittedly paid Rs. 23,447 and, therefore, the surety was only liable to pay the balance i.e., Rs. 26,

553. He gave a clear finding that beyond this amount he is not legally bound to pay anything more. The Government of West Pakistan being aggrieved by this judgment has challenged it in this appeal.

4. Mr. Wahid Faruqui, the learned counsel for the Government has contended that the surety bond executed by Shamsuddin respondent cannot be considered to be a continuing guarantee. He contended that it was in respect of a single transaction and the finding of the learned District Judge on this point should not be upheld. In support of his contention the learned counsel has relied on Hasan Ali v. Wali Ullah (1930 I L R 52 All. 997), a decision of a Division Bench of the Allahabad High Court. In that case a lease was granted for a fixed period of five years in consideration of the payment of a certain sum of money as annual rent and the surety executed a contract of guarantee for the due fulfillment of the terms and conditions of the lease. During the continuance of the lease the guarantor gave a notice to the lessor revoking his contract of guarantee. After the death of the lessor his heirs filed a suit for recovery of the arrears of the entire period of the lease both against the lessee and the surety. The guarantor defended the suit on the ground that having revoked his contract of guarantee he was not liable for the rent due after the notice of revocation. This plea prevailed with the Court of first instance, which dismissed the suit of the lessor for the period subsequent to the notice. On appeal the learned Judges of the Allahabad High Court came to the conclusion that the lease given for a definite period was a single transaction and a guarantee for the due payment during the currency of the lease on the security of which the lease was given was also a single transaction and was not a continuing guarantee. In this connection their Lordships further observed: "Where a guarantee has been given for the performance of a definite engagement which has already come into existence and is not contingent and the consideration for which is not variable as the result of future dealings between the parties, the guarantee is not a continuing guarantee." On these observations it was held that such a guarantee cannot be revoked during the continuance of the lease. 4‑A. It seems to us that whether or not a particular transaction is a continuing guarantee, depends on the terms of the instrument. In the present case the surety bond was executed in the following terms: "I, Shamsuddin, son of Sardar Bahadur Md. Parial Khan Kalhoro inhabitant of Balishal in the Mehar Taluka of the Dadu District hereby declare myself surety for the above said Wadero Moosa Khan Muhammad Ismail Khalhoro that they shall do and perform all that they have above undertaken to do and perform and in any case of their making any default therein, I, the said Shamsuddin Khan, son of Sardar Bahadur Md. Parial Khalhoro hereby bind myself, heirs, and legal representatives (jointly and each of us binds himself his heirs and legal representatives severally) to forfeit to the Governor of Sind the sum of rupees seventy‑five thousand (Rs. 75,000) in which the above said Wadero Moosa Khan Khalhoro have bound themselves, or such smaller sum as shall be the loss or damage which the Government may sustain by reason of such default. The said sum may be recovered from me as an arrear of land revenue." It will, therefore, be noticed that the surety had bound himself in the entire amount of Rs. 75,000 which was the lease amount for t the three periods for which the land was granted to Musa Khan respondent. The surety bond, therefore, was only in respect of a single transaction. It is contended that it was in respect of series of transaction for the lease related to three distinct years. It is quite true that under section 129 of the Contract Act a continuing guarantee is one which extends to a series of transactions. But on the terms of the above‑mentioned surety bond it is not possible to hold that Shamsuddin respondent gave the guarantee in respect of series of transactions. The lease was granted by the Government for a period of three years in consideration of payment of lease amount payable in three equal instalments of Rs. 25,000 each. The mere fact that the payment of the lease amount was payable by instalments cannot change the transaction in question as relating to series of transactions. In law a guarantee in order to be continuing guarantee must refer to a series of transactions, of which when the guarantee was given, some are unknown and not certain to come into existence. In the present case the terms of the surety bond are in t unambiguous language. The surety guaranteed to reimburse the appellant in the sum of Rs. 75,

000. In our view simply because this amount referred to three instalments, would not. render it as a continuing guarantee. There is little doubt that the guarantee related to a single transaction and therefore, the view of the learned subordinate Court that it is a continuing guarantee cannot be upheld and must be repelled.

5. Similarly, the view of the learned Subordinate Court that the conduct of the Department has resulted in the discharge of the surety from his responsibility under the surety bond cannot be upheld. In response to the two letters written by Shamsuddin respondent, the Department had in clear terms informed him that his surety bond subsisted and his responsibility could not cease merely on the ground that he had withdrawn his surety bond. Mr. Ghulam Hussain Abbasi, the learned counsel for the respondent has drawn our attention to the fact that after the Department received the first letter from Shamsuddin it called upon Musa Khan to furnish fresh surety. Had it been the only step taken by the Department, it might have had an important bearing on the question under consideration. But it is in evidence that the Department simultaneously had also informed the surety that on the basis of the notice sent by him he could not be absolved from his liability under the surety bond. This conduct of the Department can be explained on the ground that if Musa Khan had furnished a fresh surety it might have allowed Shamsuddin to withdraw his surety. In the same way the cancellation of the lease deed for the year 1952‑53 and putting the land in dispute to public auction by itself cannot be considered to be a conduct which could result in the discharge of the surety from his liability under the surety bond.

6. But there is another difficulty in the way of the appellant to succeed in this appeal. It will be noticed that under the surety bond the surety made himself liable to pay the lease money and damages to the Government. It is in evidence that the lease of Musa Khan was cancelled for the year 1952‑53 and the land in dispute was put to public auction on 15th February 1952. It is, therefore, quite clear that the liability of respondent Shamsuddin for the lease amount could only be for the years 1950‑51, and 1951‑

52. In these circumstances, the finding of the learned District Judge that respondent Shamsuddin is only liable to pay Rs. 26,553 (rupees twenty‑six thousand five hundred and fifty three) towards the lease amount is perfectly correct and no exception can be taken to it.

7. Further it is not disputed that under the contract entered into between the parties it was open to the Department to cancel the lease of respondent Musa Khan for non‑fulfilment of the terms of the contract. Under such circumstance the Department is only entitled to claim compensation to the extent of Rs.25,000 (rupees twenty‑five thousand) under the lease agreement. It is quite correct that the surety had also undertaken to re‑imburse the Government in this respect. Unfortunately, uptil now the Department has not assessed any compensation or damages in terms of clause 1(i) of the agreement. In the absence of any such determination the surety cannot be burdened to pay any compensation for the year 1952‑

53. In view of this the appellant cannot succeed in respect of any claim for the above‑mentioned year against the surety. If so advised, it is open to them to determine such compensation in terms of the agreement and enforce such claim by a separate suit. The contention of the respondent's counsel that such claim cannot be recovered as land revenue is fully borne out by the recent decision of the Supreme Court on this point.

8. On the view taken by us we find no force in this appeal and the cross objections filed by Shamsuddin respondent, which are dismissed. In the special circumstances of the present case the parties are ordered to bear their own costs. S. Q. Appeal dismissed.