P L D 1958 (W (PLP)

This is a revision application against the order of Mr. Allah Nawaz Khan, Fourth Sub‑Judge First Class, Karachi dated the 8th of October 1957 in Suit No. 1001 of 1956 and Execution Application No. 16 of 1957 whereby he discharged the surety. The respondent Syed Masood Ali Naqvi was arrested in execution of the decree passed against him in Suit No. 1001 of 1956. He was brought to the Court under arrest and made an application under section 55 (4) of the Civil Procedure Code for his release as he intended to move an application for insolvency within one month. His application was granted on condition that he furnished security in terms of section 55 (4), C. P. C. Respon dent No. 2 Muhammad Ali Hemani on the 10th of September 1957 stood surety for respondent No. 1 and executed a bond in favour of the Court in the following terms :‑ "Therefore I Muhammad Ali Hemani son of Ahmed Ali Hemani have voluntarily become surety and do hereby bind myself, heirs and executors to the Judge of the said Court or his successors in office that the said defendant will apply in the manner and within the time hereinbefore set forth and will appear at any time when called upon by the Judge of said Court or his successors in office, in any proceedings upon the appli cation or upon the decree in execution of which he was arrested and in default of such application or such appearance, I bind myself, my heirs and executors to pay to the Judge of the said Court or his successors in office, at its order the sum of Rs. 4,287 only." The judgment‑debtor moved for insolvency on the Original Side of the High Court and obtained an interim protection order. The surety, however, later on produced the judgment‑debtor in Court in the above mentioned suit and prayed that he may be discharged from his obligations and the surety bond may be cancelled. The learned Subordinate Judge, after considering the matter, discharged the surety and observed as under:‑ "The surely has applied for discharge and cancellation of his surety bond. Since the surety was required for the purposes of taking a guarantee from the judgment‑debtor that he will institute insolvency proceedings and that he has done, therefore, the purpose of surety is over and the surety is consequently discharged." The decree‑holder being aggrieved from this order, has come to this Court in revision and has challenged the finding of the learned Judge in discharging respondent No. 2 from his obligations and responsibilities arising out of the surety bond executed on 10th September 1957 in favour of the Court as described above. Mr. Haji Motiur Rehman, the learned counsel for the appli cant, has attacked the order of the learned Subordinate Judge on two‑fold grounds : firstly, that the learned Judge's observations that the object of furnishing surety was to file an application for insolvency and that having been done, the purpose of the surety is over and the surety is entitled to discharge, is not correct and cannot be upheld in view of the provisions of section 55 (4) of the C. P. C., and secondly, that a surety bond executed under section 55 (4), C. P. C. is not in the nature of a continuing guarantee as contemplated in section 129 of the Contract Act, and therefore the surety is not entitled to revoke his guarantee by mere notice to the Court. The learned counsel for the petitioner has relied in support of his contention on a judgment of the Madras High Court reported in S. Sankaranarayana lyer v. Paramasivam Pillai and others (A I R 1942 Mad. 101). In that case the observation of Pantajate Shashtri, an eminent Judge of the Madras High Court, supports the contention of the petitioner in this case. The learned Judge in that case had disagreed with a decision of the Lahore High Court reported in Siraj‑ud‑Din v. Guranditta Mal and others (A I R 1934 Lah. 962 (1)), and held that the provisions of section 129 of the Contract Act does not apply to surety bond executed under section 55 (4), C. P. C. as there is only a single transaction under which the surety undertakes responsibility for certain things to be done in future though on different occasions, and that there is no series of transactions, giving rise to distinct liabilities which the guarantee undertakes in terms of the said bond. The learned Judge in that case relied on a decision in Subroya Chetty v. Ragammall (28 I L R Mad. 161) and observed : "I can see no distinction between a security bond of the kind dealt with in that decision and the one now before me so far as the applicability of S. 130, Contract Act, or its principles is concerned." I have given my serious consideration to the observations of the learned Judge in the Madras case but with all respect I am unable to agree with the view expressed in that case. In my opinion the crucial point for determining the question whether a surety bond executed in pursuance of section 55 (4), C. P. C. is in the nature of a continuing guarantee or not, is the term of the surety bond executed in a particular case. A perusal of the terms of the surety bond in this case clearly shows that opponent No. 2 undertook to produce opponent No. 1 the judgment‑debtor in Court, both in the insolvency court and the execution proceedings whenever he was called upon to do so. This means that he stood guarantee to produce the judgment‑debtor in Court, on successive occasions whenever the judgment‑debtor is required to attend the) Court. This guarantee is clearly in the nature of a continuing guarantee and is definitely covered by the principles laid down in S. 129 of the Contract Act. This view is supported by a decision of the Allahabad High Court in Wali Muhammad v. Ganpot and another (132 I C 813). In that case Sen, J. was considering an agreement executed by a surety for the production of a judgment‑debtor whenever required by Court. The surety in that case stipulated as follows:‑ "I, the executant agree to become surety for the judgment debtor and covenant that I shall produce the judgment‑debtor in Court on each and every occasion when his attendance is called for by the order of the Court." This surety bond was executed in favour of the Court and the judgment‑debtor was allowed time to pay the decretal amount within a month's time of the execution of the surety bond. The judgment‑debtor, however, did not pay the amount in full within the time stipulated and therefore the surety produced the judgment- debtor in Court and applied to be released from his contract of guarantee and objected to any further time being granted to the judgment‑debtor for the payment of the decretal amount. The Subordinate Judge in that case refused the prayer of the surety and did not discharge him. The matter came up before the learned Judge and he held the aforesaid stipulation to be of the nature of continuing guarantee. He observed :‑ "It is contended that the contract entered into by the surety was of the nature of a continuing guarantee within the meaning of S. 129 of the Indian Contract Act. The guarantee was evidently given for the performance of a series of acts whenever they might happen. It extended to each and every occasion when the presence of the judgment‑debtor was to be directed for fulfillment of his obligation to pay the decretal amount in whole or in part. Under S. 130 of the Indian Contract Act a conti nuing guarantee may at any time be revoked by the surety as to future transactions by notice to the creditor. The Court below is of opinion that in the absence of a special stipulation in the contract of guarantee reserving to the guarantor a right of revocation, the said right cannot be exercised. If the contract be one of continuing guarantee as I hold it to be, in the present case, it can be revoked by the guarantor as to future transactions by notice to the creditor. The fact that the revocation took place a day before the date which had been fixed for the appear ance of the judgment‑debtor in Court does not in any way militate against the right of the guarantor to revoke the guaran tee as to future transactions. The surety under the contract was bound to produce the judgment‑debtor in Court on the 3rd of September 1929. The surety was not prepared to be responsible for the appearance of the judgment‑debtor in Court after the last mentioned date. He was quite within his rights to give a notice of a revocation of his contract with reference to any future date of attendance which might be fixed by the Court. The Court below has not considered the scope and effect of Ss. 129 and 130 of the Indian Contract Act, and has erred in holding that the surety was not competent to revoke the contract of guarantee with reference to future transactions. I am clearly of opinion, that the order passed by the Court below directing detention of the applicant in jail for a period of six months by reason of the non‑appearance or in default of appearance of the judgment‑debtor on the 21st of August 1929 is illegal and unjustified. I accordingly allow this appli cation." This view also finds support by two decisions of the Lahore High Court, one reported in Mst. Aishan Bi v. Mahabir Parshad and another (A I R 1929 Lah. 262) a decision of a Single Judge in which Bhide, J. held a surety bond under section 55 to be in the nature of a continuing guarantee, and another decision of the same Court reported in Siraj‑ud‑Din v. Guranditta Mal and others (A I R 1934 Lah. 962). In both these decisions it was held that a surety bond given under section

55. P. C. is in the nature of a continuing guarantee and when the surety produces the judgment‑debtor before the Court and requests for being absolved from further liability under the bond, there is 46 justification for the Court for refusing to grant the prayer. Iii my opinion the principles of law enunciated in the above mentioned cases is also applicable to the facts of the present case. It is true that the provisions of sections 129 and 130. of the Contract Ac; do not apply to the surety bond executed in favour of the Court in the same way as they apply to a guarantee given in favour of a private party because the creditor in the case of surety bond executed in pursuance of section 55 is the Court and C the obligations of the surety cannot come to an end merely by giving Act notice of revocation as contemplated in section 130 of the Contract Act. This was the view expressed in a decision of the Calcutta High Court reported in Mahomed Ali Mamoojee v. Hosveson Brothers (A I R 1926 P C 32). The learned Judges of the Calcutta High Court in that case observed :‑ "The question, however, remains whether when a surety has been accepted as such by the Court, he can free himself from liability without the consent of the Court. We are of opinion that the answer must be in the negative." Their Lordships of the Privy Council in that decision saw no reason for differing from the observations of the Calcutta High Court and approved of the above‑mentioned observations. But that does nor mean that the principle laid down in sections 129 and 130 of the Contract Act does not apply to the surety bond executed in favour of the Court. In my opinion the principle does apply, but the surety can only be discharged if the Court is E pf. opinion that his case falls within the principle laid down in section 129 of the Contract Act and consent to his discharge for that reason. The same view is expressed by a Division Bench of the Allahabad High Court in a decision reported in In the goods of Dr. Abinash Chandra Banerji (A I R 1932 All. 262). In that case a bond was executed by a person as a guarantor for the due performance of the duty of an administrator of the estate of a deceased person. An objection was raised that the case of such a surety whose bond has been accepted by a Court cannot be treated as one falling under sections 129 and 130 of the Contract Act and does not entitle him to put an end to his guarantee at his will. The learned Judges accepted this view but further observed " It seems to us that when the guarantee or undertaking is given to the Court itself, there is nothing to prevent the Court, if, satisfied, when good cause is shown, from canceling that undertaking. In the present case the letters of administration were subsequently revoked because it was found that the administrator had omitted to bring to the knowledge of the Court certain facts relating to a will of the deceased which had been said to remain to his possession at the moment of revocation, and the administrator ceased to be liable from the administration of the estate. We think that this is a sufficient ground for the surety to be relieved from all further liability from a date when full accounts are rendered and the assets duly accounted for. In ordinary cases of surety for appearance of the parties there is express provision in the Civil Procedure Code for release. Similarly the surety can under certain circumstances be relieved from further liability under the Contract Act. On the same analogy it would seem that we have full power to grant release if satisfied and that there is ground for it, after providing safeguards for the heirs of the deceased. Such release however will only be operative after the date of the release and the surety will continue to be liable for any maladministration that might hereafter be discovered and which was committed prior to the date of release. We accordingly overrule the preli minary objection." There is thus no doubt left in, my mind that although the case may not fall literally within the provisions of sections 129 and 130 of the Contract Act, but a surety bond executed in pursuance of section 55 (4) of the Civil Procedure Code is in the nature of al continuing guarantee and if a surety comes forward and produces; the judgment‑debtor in Court and prays that he may be discharged' from his further obligation to produce the judgment‑debtor in Court as and when he is required to attend, there is riot the slightest doubt that the Court will be acting according to law in accepting such prayer and in discharging the surety from his obli gations. In my opinion, therefore, although the observations of the learned Judge below that the moment the judgment‑debtor in the case under consideration made an application for insolvency in the High Court his responsibility ended, is not a correct view, still on the whole he was Perfectly justified in discharging the surety from his obligations under the surety bond executed in favour of the Court. For the reasons given above, I dismiss the application and make no order as to costs. K. M. A. Petition dismissed