NARYAN SINGH VS CHATTAR SINGH AND ANOTHER

AIR 1973 RAJ 347

FACTS OF THE CASE:

Chattar singh advances some amount to Jeetmal an agriculturist and Naryan singh was the
surety to the whole transaction who promises to pay the amount on behalf of jeetmal
(principal debtor)incase he default it. Later, a decree from the civil court was obtained by
the (respondent 1) chattar singh against Jeetmal (respo-2) and Narayan singh (appellate)
who stood surety for the debt advanced by the decree holder to the principal Debtor
(Jeetmal). After the decree was put in execution principal debtor jeetmal made an
application under section 6 of the Rajasthan relief of agricultural indebtedness act 1957
for the redetermination of his decretal amount as he was an agriculturist. Notice of that
application of jeetmal was issued to the executing court. However, the court upheld that
surety (appellate) should pay the original sum as he was not an agriculturist whereas the
proceeding against the principal debtor was abated by the court. Later, on 15 th of Feb
1971 against the judgment of the district court Narayan Singh (Appellate) filed the present
appeal inter alia on the ground that the liability of a surety –judgement debtor is co-
extensive with that of the principal Debtor and therefore, unless the debt is re-
determined by the debt relief court, the amount of the decree cannot be executed against
the judgement debtor who stood surety for the principal debtor to pay off the debt in-
case the principal debtor fails to discharge his liability.

Issue:
Whether the liability of a surety even after the decree is passed by a competent court is
co-extensive with that of the principal debtor and if any relief is granted to the principal
debtor by the debt relief court, can the surety also take advantage of that relief.

Rule:

The rule of that applies in the case is the section 128 of the Indian contract act of 1872
that defines the liability of the surety. Section 128 says that- The liability of the surety is
co-extensive with that of the principal debtor, unless it is otherwise provided by the
contract. — Illustration A guarantees to B the payment of a bill of exchange by C, the
acceptor. The bill is dishonoured by C. A is liable, not only for the amount of the bill, but
also for any interest and charges which may have become due on it.

Analysis:
On the basis of the section 128 of Indian contract act of 1872 the counsel on behalf of the
appellate argued that though his client was not an agriculturist and may not claim any
benefits under the provision of the debt relief act, but if the principal debtor gets any
benefit under the provision of the act, then those benefit would automatically reduce the
liability of the appellate under the contract because the liability of the surety cannot be
more than that of the principal debtor. Even in the case of Suleman v. Shivram Bikaji it
was observed that if an amount recoverable by a plaintiff from the defendant debtor is
diminished in an appeal, the surety’s engagement, being one of indemnity would diminish
in like proportion. So, if the sum recoverable became zero, owing to the decree being
reversed the surety’s liability would also be reduced to zero. Thus in this case the liability
of the surety reduces with re-determination of the decretal amount. However, the co-
extensive point of view can also be answered from a different angle that is if the surety
who has a right to be reimbursed by the principal debtor for the amount paid by him on
his behalf, if allowed to realize the entire decretal amount from the agriculturist principal
debtor (respo 2) after the decree holder (respo 1) is permitted to get the entire decretal
amount from the surety then it would mean that whatever benefit the principal debtor is
entitled to get under the provision of the Debt relief act will be ultimately denied because
even if he gets the benefit he will be required to pay the original sum to surety as a
reimbursement . Thus if the decree is allowed by the court it would deny the benefit given
to the principal debtor by the act.

Conclusion:

It was held that the learned district judge fell in error in correctly applying the ratio of the
judgement. The case that the learned district judged used for giving the judgement on behalf
of the respondent 1 was different than the case lying under this appeal. The case cited by the
district just was about the mortgagors. In that case all the judgement debtors against whom
the decree was passed were mortgagors and out of those only one of the mortgagors was an
agriculturist who made an application under sec 6 of the act for the determination of the debt.
Under mortgage debt the liability of the mortgagors are not co-extensive with each other.
Thus those mortgagors who were not agriculturist could not claim any benefit under the act if
any benefit were to be given to the agriculturist mortgagors. However the court held that the
case of surety stands on different footings and therefore, judgement of the district court was
set aside and the current appeal by the appellate was allowed.