M GHULAM HASAIN KHAN V. M FAIYAZ ALI KHAN AIR
1940 OUDH 346
BREIF
FACTS
•
At Bahraich, there is a tomb of Saint (Syed SalarMasub Ghazi). Offerings were
made throughout the year, with the exception of one month when a fair is
conducted in connection with the shrine known as "dargah."
•
Dargha is controlled by a committee, with Mr. Faiyaz Ali (Resp 1) as president
and Maulvi Sirajul Haq (Resp 2) as a committee member.
•
On October 1, 1928, the dargah committee auctioned off the lease to collect
offerings in the dargah for three years, through to September 30, 1931, except
the offerings of the three mela months in those years.
•
At the auction, Madar Baksh's (resp3) offer of Rs. 230 per mensem was approved,
and on February 12, 1929, he issued an instalment bond in favour of the
committee, agreeing to pay Rs. 8286, the sum due for three years, in monthly
instalments of Rs. 230 each.
•
On July 9, 1929, Ghulam Hussain (appe1) issued a surety bond in behalf of the
dargah committee, committing himself to Rs. 2762.
•Madar
Baksh paid up instalments due from 1st October 1928 to the end of June 1930, as
well as an amount of Rs. 65 out of the instalment due for July 1930, but no
payments were made for following instalments.
•
The head of the committee and respondent 2 filed the litigation that gave rise
to this appeal on January 6, 1936, for the recovery of Rs. 3387.
•
They claimed they were not liable on two grounds: (1) it was made without
consideration and so unenforceable, and (2) it was invalid due to a lack of
adequate attestation.
•
The trial Court ruled that the bond was not without consideration, that the
sureties had not been discharged, and that even though the bond had not been
properly attested, that fact did not matter because the surety had admitted it.
As a result, the claim was decided against all of the defendants. Madar Baksh
agreed to this decision, but the current appellants filed an appeal with the
District Judge. The learned Judge, on the other hand, confirmed the trial
Court's decision and dismissed their appeal. They are presently before us on
their second appeal.
ISSUES
(1)
Whether the surety bond was issued without consideration and hence cannot be
enforced?
(2)
Whether the guarantee in question was limited to a one-year term commencing on
the date of the bond or on the date of the lease?
ARGUMENTS
• Appellants
relied on the meaning of "consideration" in Section 2(d) of the
Contract Act, arguing that in order to demonstrate that the bond in question
was for consideration, it must be proven that the lease was provided to Madar
Baksh at the "option of the surety." We believe, however, that under
Section 127 of the Act, it is not required that the thing done or the promise
made for the benefit of the principal debtor be at the desire of the surety,
and that that Section has implied in it some such expression as
"notwithstanding anything contained in Section 2(d) of the
Act," If otherwise, there would have been no need to adopt Section
127, because everything done or promise made for the advantage of the major
debtor, if done or made at the wish of the guarantor, would plainly fall within
Section 2. (d). So much for first ground taken before us.
• In
response to the second point raised, the learned Counsel for the appellants
argues that because the surety was only obligated to the extent of Rs. 2762,
which represented only one year's money, the surety should be deemed to have
assumed responsibility for a year starting from the date of the bond or the
date of the lease. This is a claim that we cannot accept. The bond plainly
states that the guarantor assumed duty up to the amount stated above, but there
is nothing in the bond that indicates that the surety would not be responsible
if the lessee owed arrears up to that amount for any term of the lease beyond
the first year.
CONTENTION
OF THE COURT
•
With regard to the first argument, we are of the firm belief that the surety
bond cannot be lawful without consideration under Section 127 of the Contract
Act. That section expressly states that anything done or promised for the
primary debtor's benefit may be adequate consideration for the surety to give
the guarantee. However, the Audh HC
disagreed with this contention and observed that under section 127 it is not
necessary that the thing is done, or the promise made for the benefit of the
principal debtor should be at the desire of the surety. And section 127 has
implied in it the following expression "Notwithstanding anything contained
in section(d) of the act" Otherwise, there was no need to enact section
127 as anything is done or any promise made for the benefit of the principal
debtor at the desire of the surety would clearly come under section 2 (d).
•
The learned Counsel's argument is that there was no consideration for the bond
because it was signed by appellant 1 after the lease had been given to Madar
Baksh, respondent 3, but the word "done" in Section 127 shows that
past benefit to the principal debtor can be good consideration for a bond of
guarantee.
JUDGEMENT
1. The resolution adopted by the dargah committee
and execution of bond by Ghulam constitute one whole transaction. Thus,
Ghulam's act of giving a bond of surety cannot be seen as an isolated event.
Without surety, there cannot be a contract of the lease as per the resolution.
2. The very fact that 127 has been enacted shows
that they intended that they follow a different rule than 2D. Then we can read
it as "Notwithstanding anything contained in section 2 d" We are not
going to impose section 2D".
3. It held that the word, "done" in
section 127 of the Contract Act indicated that past benefit to the principal
debtor will be a good consideration for a bond of guarantee. It does not always
need to be contemporaneous.
•
The appeal is denied, and the case is dismissed with costs.
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