' The order dated 28-5-2004 of the learned Additional District Judge, Jhang has been assailed in this appeal. It arises out of execution proceedings in the following circumstances.
2. On 7-1-2002 Muhammad Akbar, respondent No,1 filed a suit for recovery of an amount of Rs,8,00,000 against Aman Ullah, respondent No,2 under Order XXXVII of the Code of Civil Procedure on the basis of a promissory note. Respondent No,2 was allowed leave to appear and defend subject to his furnishing the security. The appellant herein stood surety for him, bound himself and his property measuring 20 Kanals and a residential house to satisfy the decree which may be passed against respondent No,2. The bond was submitted before the learned trial Court A on 15-4- 2002. On 8-6-2002, respondents Nos.1 and 2 compromised the dispute. Respondent No,2 stated that he had paid Rs,4,70,000 to the plaintiff, respondent No,1 and had no objection, if the suit was decreed to the extent of Rs,3,30,000. This was accepted by the plaintiff. Accordingly, on 8-6-2002 the suit filed by respondent No,1 was decreed for a sum of Rs,3,30,000. It may also be noted that according to the compromise application jointly submitted by respondents Nos.1 and 2 before the learned trial Court it was stated that an amount of Rs,3,30,000 was lying in the Muslim Commercial Bank in the Banking Adjustment Account and if the same was attached and recovered, respondent No,2 will not have any objection. Accordingly, initially, respondent No,1 sought attachment and recovery of the amount of Rs,3,30,000 lying in the Banking Adjustment Account of the Muslim Commercial Bank, respondent No,3. The said respondent contested the same, filed an objection petition but it was withdrawn vide order, dated 1-1-2003 on the statement of the decree-holder that he had no claim against the bank. On 29-3-2003, the decree-holder, respondent No,1 moved an application for attachment of the property of the appellant. It may also be noted that the respondent-Bank had also moved an application under section 12(2) of the C.P.C. Which was also dismissed as withdrawn. The appellant challenged the initiation of execution proceedings against him. His application was dismissed by the learned trial Court vide judgment, dated 28-5-2004 which has been impugned in this appeal.
3. The learned counsel for the appellant contends that when the decree was passed on 8-6-2002, an amount of Rs,3,30,000 was lying in the Banking Adjustment Account of respondent No,3 deposited by respondent No,2, while it was released to one Mukhtar Ahmad on 4-3-2003.
According to him from 8-6-2002 to 4-3-2003 sufficient time was available for the decree-holder to proceed in the agreed manner and on account of inaction of the decree-holder, the appellant, stood discharged. Reliance was placed on sections 134 and 139 of the Contract Act. He contends that although the decree-holder had sought execution in the same manner, it was agreed to, the Muslim Commercial Bank filed proceedings under section 12(2), C.P.C. As well as the objection petition and thus, allowed the time from 8-6-2002 to 4-3-2003 to run out. His other submission was that the appellant had stood surety for respondent No,2 but had never undertaken that even if a consent decree is passed, he will be liable. Reliance was placed on Seth Pratapsingh Moholalbhai and another v. Keshavlal Harilal Setalwad and another AIR 1935 PC 21, Mahnath Singh v. U Ba Yi AIR 1939 PC 110 and Mian Aftab A. Sheikh, and others v. Messrs Trust Leasing Corporation Limited and others 2003 CLD 702.
4. The learned counsel for respondents Nos.1 and 3 have opposed this appeal. The learned counsel for respondent No,3 explained that Aman Ullah, respondent No,2 was a Bank employee and there were many complaints against him of embezzlement of the money of the deposit holders. On the complainants was Mukhtar Ahmad. Respondent No,2 had been depositing certain amounts in the Banking Adjustment Account maintained by the Bank and the amount of Rs,3,30,000 was released by the bank in favour of said Mukhtar Ahmad. It is further maintained that the bank was not party to the consent decree and was, therefore, not bound by it. The learned counsel for respondent No,1 has contended that there was no reservation in the surety bond submitted by the appellant that his liability was restricted only if a decree was passed after contest of the suit. He also referred to the final order of the Court which only decreed the suit of respondent No,1 and not the agreed manner of the recovery of the suit amount.
5. Mr. Zafar Iqbal Chohan, Advocate, appearing for respondent No,2, has supported this appeal.
According to him, to the agreement filed before the learned trial Court by respondents Nos.1 and 2, the appellant was not a party and thus, he stood discharged. It is further maintained that the amount lying in the Banking Adjustment Account (Rs,3,30,000) belonged to the appellant and should not have been released to Mukhtar Ahmad. It was further maintained that criminal case was registered at the instance of Mukhtar Ahmad but it was cancelled.
6. The submissions made by the learned counsel for the parties have been considered. In the application made by respondents Nos.1 and 2 the manner of execution of the decree to the extent of Rs,3,30,000 was also indicated but it was not lying in the personal account of respondent No,2, it was lying in the Banking Adjustment Account. Unless, therefore, the Bank was party to the said arrangement, it was not binding on it. Perusal of the order dated 8-6-2002 shows that on the statement of respondent No,2, the suit filed by respondent No,1 was decreed to the extent of Rs,3,30,000 in accordance with the statements of respondents Nos.1 and 2 made before the trial Court. Therefore, the contention of the learned counsel that by virtue of the said arrangement, the appellant stood discharged has no merit. In compliance with the direction of this Court in the order, dated 29-7-2004, a complete statement of account of respondent No,2 was placed on record. The last transaction in his account was made on 30-3-2001. It shows a balance of Rs,18 only. As far as the decree-holder. Is concerned, he had sought execution of the decree in the same manner it was agreed to but it was resisted by the Bank on a number of grounds. Therefore, the contention of the learned counsel for the appellant that omission of the decree-holder to proceed against the amount lying in the Banking Adjustment Account had the effect of discharge of the appellant by virtue of section 139 of the Contract Act had no merit. The said section is reproduced hereunder for facility of reference:-- "139. Discharge of surety by creditor's act or omission impairing surety's eventual remedy.--- If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged.".
' The decree-holder cannot be said to have committed any act inconsistent with the rights of the surety, or omitted to do any act which his duty to the surety required thereby impairing the remedy of the principal debtor against the surety.
7. The other contention based on section 134, has no merit either. The said section is reproduced hereunder:-- "134. Discharge of surety by release or discharge of principal debtor. --- The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by an act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor."
' The agreement before the learned trial Court did not amount to release of the principal debtor nor the plaintiff was guilty of any act or omission' the legal consequence of which was the discharge of the surety. The liability of the appellant was required to be determined in accordance with the terms of the bond, he had submitted before the learned trial Court. The only question which agitated my mind was whether the consent decree had the effect of discharging the surety. I have carefully examined the surety bond. The appellant categorically undertook that in case the suit was decreed he will be liable to pay the decretal amount and he also bound his property to satisfy the decree passed by the D learned trial Court. There was no such reservation in the bond that he will be bound only by a decree passed after contest of the suit. None of the judgments cited by the learned counsel for the appellant laid down the rule that in case of a 'consent decree, the surety is ipso facto discharged.
8. The question as to the effect of a consent decree on the liability of the surety was considered by Full Bench of Jammu and Kashmir High Court in Mohan Lal v. Suraj Mani and another AIR 1973 J&K 92, Kabiruddin v. Debish Singh and others AIR 1935 Nag. 16, Annadana Jadaya Goundar v.
Konammal and another AIR 1933 Mad. 309, Dalip Singh v. Kishan Chand and others AIR 1937 Lah. 34 and Messrs Meena Trading Co., Karachi v. Abdul Ghani and another PLD 1972 Kar.
19. In case of Mohan Lal (supra) there was a compromise between the plaintiff and the defendant in the suit during the pendency of which, one Nityanand had stood surety for the judgment-debtor.
However, a consent instalment decree was passed in favour of the plaintiff. The learned District Judge held that the surety was discharged. On appeal to the High Court, it was observed that he was not discharged. It was held that according to the recitals of the surety bond the surety did not either impliedly or specifically exclude the passing of the consent decree and, therefore, on the terms of the bond there could have been no doubt that the consent decree was in contemplation of the surety when he executed the bond. It was further observed that there was nothing in the decree to show that the compromise between the parties was at variance with the terms of the surety bond then even if a compromise was arrived at in the absence of the surety he continues to remain liable. In support of this view, apart from an earlier view of the said Court, the views of Bombay, Kerala and Assam High Courts noted in the aforesaid judgment were also relied upon. In the case of Kabiruddin etc. (supra), a compromise was made in the appeal with the observation that a surety was bound by the consent decree and he could claim exemption only in case of fraud or collusion or any of the matters on which a decree could be set aside or the decree comprised matters which did not arise out of the litigation. The view taken in Annadana Gadaya, (supra) was that the surety is not discharged, if the consent decree is not outside the scope of the surety bond.
In the case of Dalip Singh, (supra) the surety was held to be discharged on account of a compromise with the observations "I have set forth in English and the vernacular, indicate very clearly that there had to be a decision of the Court against the defendants. This follows from the use of the word "faisal". And the view taken was that on a proper interpretation of his contract of surety ship, he was discharged. In the case in hand, the appellant had undertaken to abide by the decree and not necessarily one passed after the contest. In the case of Meena Trading (supra), it was observed that "mere passing of a consent decree does not absolve the surety because when a surety undertakes to be bound any decree that may be passed, such a recital includes the bona fide compromise which is entered into by the parties without any fraud but in cases where there is an express recital in the surety bond or one by necessary implication by which liability is restricted only to a decree on contest, the surety would stand discharged if a compromise decree is passed".
However, it was a case in which the decree was passed for the specific amount payable at once in lump sum but by compromise instalments were allowed. The views of various Courts that allowing instalments caused prejudice to the surety were noted to hold that grant of time to the principal debtor by the decree-holder, without the consent of the surety had the effect of discharging him.
9. For what has been stated above, I find no merit in this appeal which is, accordingly, dismissed.