Mst. FAYYAZI BEGUM and 6 others vs ALI HASSAN and anothers

' SYED HAMID ALI SHAH, J.---Respondent No,1 filed a suit for recovery of Rs,20,00,000 on the basis of pro note dated 26-4-2002 against respondent No,2. Respondent No,2 was granted conditional leave to defend and Abdul Sattar predecessor of the appellants stood surety. Abdul Sattar died on 7-5-2005, leaving behind the appellants as his legal heirs. The suit was decreed vide judgment and decree dated 16-1-2007. Learned Court in the course of execution of the decree, attached house of the predecessor-in-interest of the appellants bearing No,274 Block No,11 Ward No,14 Mohallah Sultanawala, Jhang Sadar. The appellants filed objection petition under Order XXI, rule 58, C.P.C.

Which the learned Court dismissed, vide order dated 1-8-2007. Learned Court while passing the impugned order observed that the deceased furnished his property i,e, House No,273 block No,11, Saleemi Street, Ward No,14, Mohallah Sultanawala, Jhang Sadar, therefore, the property of the surety can be sold for the satisfaction of the decree.

2. Learned counsel for the appellants has contended that the suit was decreed on 16-1-2007, after the death of their predecessor Abdul Sattar, the predecessor of the appellants, stood surety and his personal liability comes to an end with his death. His legal heirs were not made party when the impugned judgment was passed. The property was attached without notice to the legal heirs. The liability of the surety was reduced by the Court itself to Rs,1,000,000 from Rs,2,000,000, therefore, the decretal amount over and above the sum guaranteed is not legal. Learned counsel submitted that by making this submission, the appellants do not admit the liability of their predecessor to the extent of Rs,1,000,000. The Court has not applied it's conscious mind to the controversy in hand and has held the appellant liable for an amount, more than the one for which their predecessor stood surety.

3. Learned counsel for the respondents, on the other hand, stood behind the impugned judgment and submitted that the Court observed in the impugned order that the decree was not adjusted under Order XXI, rule 2, C.P.C. The surety had offered, it's property and the property which has been offered as security, can be sold for execution of the decree, even after the death of the surety.

Learned counsel has vehemently contended that liability of the surety is co-extensive with that one of the principle debtor.

4. Heard learned counsel for the parties and record perused.

5. The defendant Amjad Pervaiz is son of late Abdul Sattar (surety). Leave to defend the suit was granted to the defendant on 16-11-2002, who in the leave grant order was .Directed to furnish surety bond for a sum of Rs,2,000,000. Learned trial Court on the application of the defendant accepted the surety bond of deceased Abdul Sattar for a sum of Rs,1,000,000. Abdul Sattar submitted surety bond in the Court on 31-12-2002. The surety bond is the paramount document and right and obligations of the surety, can be determined on the' basis of this document alone. The surety bond reads as under:-- {{URDU TEXT}}

6. It is evident from the above that the surety bond had been furnished for the payment of the amount, which the Court will determine against the defendant. No amount was determined against the defendant during the life time of the surety. The surety died before any direction or a decree was passed for the recovery of the amount from the defendant. ,A surety bond has to be construed strictly, according to the terms mentioned therein. Liability of the surety to pay on behalf of the principal debtor as per the surety bond arise only when the decree is passed or the defendant is directed to make payment of the amount. 'Neither the defendant was directed to pay any amount nor the decree against the defendant was passed during life time of the surety. The decree which was passed after the death of the surety, will neither bind the deceased surety nor his legal heirs.

7. The provisions of sections 126 and 135 to 139 of the Contract Act do not apply, where the bond has been executed by the surety in favour of the Court. The principles underlying these sections, however, apply. As authority for this proposition reference can be made to the cases of "Parvatibai v. Vinayak Balwant" AIR 1939 Bombay 23; "Narayan Ramchandra Bhagwat v. Markandya Tukaram and another" AIR 1959 Bombay 516 and "T.N. And Q Bank v. Official Assignee" AIR 1940 Madras 396.

The Courts in the above cases held that when the parties entered into new arrangement and brought substantial variation in the original contract and granted time to the principal debtor, the executant of the surety bond who has submitted the same in the Court, stands discharged. Section 131 of the Contract Act, 1872 postulates that death of the surety results into revocation of a continue guarantee so far as it regards future transaction, The defendant/principal debtor was held liable to pay suit amount after the death of the surety. Therefore, legal heirs of the surety or his estate cannot be made liable for the realization of decretal amount. Learned Executing Court, while passing the impugned order has failed to construe the surety bond according to it's terms and held the legal heirs of the deceased surety liable, erroneously. The liability of surety to pay, arises, only when the decree is passed.

' The decree will not bind the surety, whose death has taken place prior to the decree. The finding of the Executing Court is E not legally sustainable and is accordingly set aside.

8. The upshot of above discussion is that this appeal succeeds and order impugned dated 1-8- 2007 is set aside. The estate of the deceased surety to the extent of the share of respondent No,2 is only liable for the realization of the decretal amount and the other legal heirs are not bound under the law to pay the decretal amount, out of the estate of the deceased.