Judgment:
P.K. Bahri, J.
(1) He short but interesting legal point has been raised in this appeal as to whether the fact that after the money decree had been passed against the principal debtor and a surety and the decree holder enters into a settlement with the principal, debtor and agree to accept some less amount from the principal debtor and decides not to proceed for recovering remaining amount from the principal debtor has the effect of discharging the surety judgment debtor or not
(2) The facts, in brief, are that the decree holder-M/s. Security Finance Private Limited had obtained a decree for recovery of Rs. 30,155.00, against Bhiku Ram, Attar Singh and Charan Singh. Admittedly, Bhiku Ram and Attar Singh were the principal debtors while Charan Singh, the appellant before me, was a surety. Attar Singh had died during the pendency of the execution proceedings and the decree holder did not pursue the execution against any legal heirs of Attar Singh as the decree holder could not find out the legal heirs of said Attar Singh, judgment debtor. During the execution proceedings a compromise was made by decree holder with the other principal debtor-judgment debtor, namely, Bhiku Ram agreed to pay a sum of Rs. 10,000.00, in Installments and in case the said amount was to be paid, the decree holder was not to proceed against Bhiku Ram for recovering the balance amount of decree. The decree holder pressed for executing the decree against Charan Singh for recovering the balance amount of decree. Admittedly, Bhiku Ram had paid Rs. 10,000.00, to the decree holder. The appellant filed objections before the executing court pleading that as the decree holder had entered into a compromise with the principal debtor-judgment debtor, namely, Bhiku Ram and had given facility of Installments to said judgment debtor without the consent of the surety/judgment debtor/appellant, hence, the appellant's liability in the decree stood discharged. This objection petition was 20 strongly opposed by the decree holder pleading that the liability of the appellant, who is a co-judgment debtor, has not ceased in any manner. I may mention, the other pleas taken were that the execution application was barred by time and with the death of one of the judgment debtors the execution application could not further proceed. The following issues arose from the pleas : 1. Whether execution petition is time barred 2. Whether the execution petition is inexecutable because of death of Attar Singh 3. Whether the court has no jurisdiction to execute the decree 4. Whether the execution petition is not maintainable against the judgment debtor No. 3 because amount has to be realised first from Bhiku Ram and compromise has been arrived at with Bhiku Ram An additional issue was also framed as follows : Additional Issue 'Whether the decree is based upon fraud or is unexecutable ?'
(3) The objections were dismissed by Shri Bharat Bhushan, Sub Judge, vide his order dated November 18, 1978. Undisputably the decree holder- company had gone into liquidation and by virtue of Section 454-A of the Companies Act, the period of limitation for filing the execution application stood extended. Decree was passed on October 25, 1973 and the execution application was filed on September 30, 1975. The winding up order was made by the court on July 17, 1969 in a winding up petition dated February 19, 1968. So, keeping in view the said period, the execution application was rightly held to be within time. Counsel for the appellant could not advance any arguments on this point. In respect of issue No. 2 also counsel for the appellant has nothing to say because there is no law that if one judgment debtor had died the execution application cannot proceed against other co-judgment debtors. So, the finding of the Sub Judge on issue No. 2 is also correct. As this issue No. 3 was not pressed before the lower Court, the same also has not been referred to by the learned counsel for the appellant in his arguments. Even no arguments have been advanced by the learned counsel for the appellant in respect of additional issue. The only contention raised before me by the learned counsel for the appellant is with regard to the finding of the learned Sub Judge in respect of issue No. 4 that the appellant's liability has not ceased even though the decree holder has effected a compromise with one of the judgment debtors, namely, Bhiku Ram.
(4) The learned counsel for the appellant has drawn my attention to the provisions of Sections 133 to 139 of the Indian Contract Act, 1872, in support of his contention that as soon as any composition has been made by the decree holder with the principal debtor the liability of the surety-judgment debtor stood discharged. In my view, there is no merit in this contention. After a decree has been passed the character of the principal debtor and the character of the surety change into those of co-judgment debtors. The provisions of Sections 133 to 139 of the Contract Act apply only where no decree has been 21 passed by the court. I may refer to one judgment of the Madras High Court reported as Nellore Co operative Urban Bank Limited v. Akili Mallikar junayya Air 1948 Mad 252. In the cited case, a loan due to a Co-operative Society was guaranteed by a surety and award was obtained by the Cooperative Society against the principal debtor as well as the surety. The principal debtor obtained the discharge from the debt, the decree holder sought to execute the decree based on award against the surety and the surety raised a contention that he was no more liable under the award as the liability of the principal debtor stood extinguished. The Madras High Court made reference to In re a Debtor (1913) 3 K.B. 11, which was to the following effect: 'The original debt has now become merged in the judgment and all the defendants against whom judgment has passed stand on an equal footing. Each judgment-debtor is liable to pay to the judgment-creditor the whole of the debt.........There is no question as to one judgment-debtor being liable to a greater extent than the others, as far as the judgment-creditor is concerned they are all equally liable.' A reference was also made to Jenkins v. Robertson (1854) 2 Drew 351, which was to the following effect : '' The subsequent dealing with the principal debtor does not operate to discharge the surety from a liability under which he is, no longer as a surety, but under the decree.' Certain observations in Meenakshi Sundarum Chettiar v. Velambal Ammal Air 1944 Mad 423, to the following effect were noticed : 'We are not, after a joint decree has been passed against principal and surety, any longer dealing with a principal and surety but with a joint judgment-debtor.' Thereafter, the Madras High Court went on to observe as follows : 'Under the award which had the effect of a decree, both the principal debtor and the surety were made liable for the debt and in view of Section 57A, Madras Cooperative Societies Act, and Rules l5(7)(a) and 22 of the Rules framed there under, the award could be executed against the surety. Neither Section 10(2), Madras Debt Conciliation Act, nor Section 134, Contract Act, operated to effect a valid discharge of the surety's liability under the award. Section 134, Contract Act, was not applicable to a case where the creditor had obtained a decree against both the principal debtor and the surety.' The most important observations, which are relevant, may be now quoted from the judgment : 'The effect of a decree, and the award passed by a competent authority under a special statute such as we have stands on the same footing, is to determine conclusively the rights and liabilities as between the decree holder and the judgment-debtor, and such rights and liabilities cannot be altered save by procedure known to 22 law such as appeal, review, etc., or by special statutory provisions such as Section 10(2) expressly affecting decrees. The decree must rule with regard to matters which are the subject of adjudication, but all outside the scope of the adjudication is still governed by the general law. If, for instance, the decree directs the judgment-debtors jointly and severally to pay unconditionally a certain sum of money to the decree holder, the liability as determined by the decree cannot thereafter be modified by anything which the decree holder may do or omit to do.' This judgment was followed by Kerala High Court in Velappa Kumar v. Kosamattom Chit Fund & Another 1978 Klt 10. In this judgment it was held that: 'When the creditor sues on the contract and obtains a decree against both, the principal debtor and the surety, thereafter their liability is a liability under the decree and not one under the original contract. The liability of the surety judgment-debtor under the decree cannot cease as long as the decree against him remains not satisfied. It cannot be said to be co-extensive with that of the principal debtor and hence a discharge of the judgment debtor, who was the principal debtor, for what-ever reason, cannot discharge the surety of the liability. Any variation in the contract also cannot affect his liability. As a matter of fact, no question of variation of the contract arises after the decree.' Hence, it was observed that the release of the principal debtor from the liability for whatever reason cannot effect the liability of judgment-debtor, who was the surety. It was held that Sections 128, 133, 134 and 139 of the Contract Act can have application only as long as no decree is passed against the principal debtor and the surety on the basis of the contract. The above provisions of the Contract Act which govern the rights and liabilities of the creditor, the principal debtor and surety, cease to operate after the rights and liabilities are determined and declared by a decree.
(5) However, the learned counsel for the appellant has brought to my notice Sardar Kahn Singh v. Tek Chand Nanda and Another Air 1968 J&K.; 93, where a Division Bench of that High Court has taken a different view. However, I find that this judgment has not taken into consideration the vital fact that after the decree is passed making the judgment debtor liable collectively and severally the position of the judgment debtor surety becomes different from what it was before a decree was passed. The Hon'ble Judges deciding the said case relied on number of judgments which pertain to the facts regarding the discharge of a surety before any decree had been passed. It is true that before the said High Court the case was pertaining to the facts after the decree has been passed but the High Court has not considered the reasons and the observations made in the judgment of the Madras High Court referred to above. It is quite clear that after the decree has been passed making all the judgment debtors collectively and severally liable to pay the amount to the decree holder, the decree holder has a right to recover all the amount of the decree from any of the judgment debtors and he may not pursue his remedy against one or the other judgment debtor. The provisions of the Contract Act, referred to above, apply only where the rights of the parties have not crystalised and merged in a decree 23 of the court. Those provisions would not apply to the judgment debtors. I find myself in agreement with the reasons and the ratio laid down in the judgments of the Madras and Kerala High Courts and express my inability to follow the decision given by Jammu & Kashmir High Courts. Counsel for the appellant cited Raja Pertabgeerjee v. Rasheed Shawpoorji Chenai and Another Air 1958 AP 512. The facts of the cited case are different as they pertain to a surety given for production of a judgment debtor in a pending proceedings before the court, whereas here in the present case the surety has been furnished in a contract between creditor and the principal debtor outside the court. I have no opportunity to hear any arguments on behalf of the respondent in this case because no one turned up on behalf of the respondent at the time of the final hearing. I, however, for reasons given above find no merit in this appeal which I hereby dismiss leaving the parties to bear their own costs.