Liability of Surety in Execution

Liability of Surety in Execution

In Pakistan, the liability of surety in execution of decree arises where the judgement debtor fails to comply it. Surety becomes liable because he himself undertook before the court to ensure the payment of a decreed amount or performance of a specific act as ordered by the court, in case of failure of judgement debtor (JD) to do so. In following provided case laws, his position, scope of liability and course of actions are discussed in detail.

Liability of surety in execution proceedings:

It is the responsibility which arises when a decree-holder (DH), the party in whose favor the decision is made or pronounced, seeks to enforce it against the judgment-debtor. If the judgment-debtor fails to execute, the decree-holder can proceed against the surety to recover the amount or secure compliance with the court’s order.

Section 145 of the Code of Civil plProcedure, 1908 is relevant provision which is provided below:-

145. Enforcement of liability of surety.– Where any person has become liable as surety–

(a) for the performance of any decree or any part thereof, or
(b) for the restitution of any property taken in execution of a decree, or
(c) for the payment of any money, or for the fulfillment of any condition imposed on any person, under an order of the Court in any suit or in any proceeding consequent thereon,

the decree or order may be executed against him, to the extent to which he has rendered himself personally liable, in the manner herein provided for the execution of decrees, and such person shall, for the purposes of appeal, be deemed a party within the meaning of section 47:

Provided that such notice as the Court in each case thinks sufficient has been given to the surety.

Surety need not to be party in execution petition:

On non – availability of the Judgement-debtor, the decree-holder filed execution petition against sureties i.e. Messrs Habib Bank LTD. However the bank denied it’s liability for payment of the decretal amount on the basis of surety bonds and on the ground of not being a party to the suit. 

Court held that with reference to section 145 C.P.C. even though the surety i.e. the bank is not arrayed as party to the suit or appeal, still proceedings can be initiated against him for recovery of the money in the same sense as against the judgement debtor because his liability is co-extensive.

Section 145 of the C.P.C. clearly indicates that such sureties are considered a party for the purposes of appeal under section 47 of the C.P.C. The phrase “deemed to be” signifies a legal presumption that something exists even when it does not actually exist. They does not need to be made a party to the proceedings until execution is sought against him.

Habib Bank LTD V Malik Atta Muhammad and 4 others 2000 CLC 451

Muhammad Shadi V Sultan Ahmed 2000 CLC 85

Khan Muhammad Ishaq Khan v. The Azad Sharma Transport Co. Ltd. and others PLD 1953 Lahore 22

Cholappa Gattina Sanna and another Ramchandra Anna Pai AIR 1920 Bom. 331

Parkash Chand Mahaian v. Madan Theatres; Ltd. AIR 1936 Lah. 463.

Shafiullah V Saifullah Khan PLD 2017 Peshawar 203

Saleem ullah V Abadat Ali Malik 2000 CLC 1648

Coercive statement is not equal to a guarantee:

Petitioner was arrested in an execution application in which he was not himself the judgement debtor but only the brother of judgement debtor. Respectable appeared in said case and requested for releasing the petitioner on submission of bonds. They assured that they are trying to affect the compromise among the parties and in case of failure, the court may arrest the petitioner again.

It is held that the decree of maintenance allowance is not executable against the person who is not party to the suit even if he binds himself as surety. The court cannot give weigh to the statement which is not made independently and voluntarily rather is outcome of coercion.

Muhammad Jamil V Iffat Zia and others 1999 CLC 149

However, it must be clear that coercion is different from the inducement. In Akram’s case, the surety claims that he agreed to act as a guarantor in this case based on the persuasion of his friends but he was unaware of the implications at that time. These excuses are insufficient to absolve him of his responsibility because, according to the applicant’s counsel and Mr. Naimuddin, Advocate, a stay order was issued, necessitating a surety to safeguard the produce.

Muhammad Akram V ADJ and 5 others 2023 CLC 702

Arrest of General attorney of Judgement-debtor:

The petitioner, who is the general attorney for the defendant, argued that he could not be arrested for the recovery of the decretal amount since he was merely the general attorney for the defendant, who resides abroad. However, a review of the general power of attorney revealed that the petitioner was also a surety in execution for the judgment-debtor. Under these circumstances, the Executing Court was justified in employing coercive measures against petitioner to recover the decretal amount, as a guarantor is presumed to be a party to the suit.

Ibrar Meran V JFC, Gujrat and 2 others 2011 YLR 206

Responsibility for partial or whole payment of decree:

According to Section 145 of the Civil Procedure Code, 1908, for the performance of a decree, the restitution of property seized in execution proceedings, or the payment of money under a court order in any suit or proceeding, the decree can be executed against the sureties up to the limit of their personal liability. After default has occurred there is no reason to absolve them from their liability to pay the agreed amount which has become due in view of principles laid down in S.128 of the Contract Act, 1872 and S. 145 of the Civil procedure Code, 1908.

The Petitioner has made himself liable to pay the decretal amount in place of the judgment debtor in case of failure. He thus now cannot wriggle out of his own undertaking. It is settled law that decree can also be executed against a surety. 

Messrs State Engineering Corporation Ltd. V. National Development Finance Corporation and others 2006 SCMR 619

Shafiullah V. Saifullah and 7 others PLD 2017 Peshawar 203

Ghulam Shabbir VTanzeela Nusrat 2023 CLC 2169

Muhammad Muzamal Riaz V ADJ shorkot, Distt. Jhang and 6 others. 2020 CLC 970

Muhammad Bashir V Zarina Bibi PLD 2014 Lahore 429

Revival of discharged liability of surety in execution:

Messrs Habib Bank denied it’s responsibility to satisfy the decree on the ground that the trial court while dismissing the suit also released the bonds furnished by the bank. Said decision was assailed and the appeal was accepted. Court held that the appeal is continuation of suit, therefore, the liability of bank shall sustain during appeal, and even on acceptance of appeal, the same shall revive with the revival of suit.

Habib Bank LTD V Malik Atta Muhammad and 4 others 2000 CLC 451

Attachment before judgment which ceased to be in force with the dismissal of the suit will revive when the decision dismissing the suit is subsequently reversed and a decree in the plaintiffs favor is passed, even by the same Court or by a superior Court and this revival will be in force from the date on which the attachment before judgment is effected as provided for in the C.P.C.

Thampai Muhammad Abdul Khadhir v. Patmenapha Pillai Parameswaran Pillai AIR 1952 Tr.C. 414

Court held that while construing the tenure of the surety bond, the words and recitals must be taken into consideration to get the intention of executant.

Raj Reghubar Singh V Jai Indra Bahadur Singh  AIR 1919 PC 55

Liability of grandfather in presence of surety of judgement debtor:

Though, the minors have independent right to claim maintenance allowance from their grandfather in case of poverty of father. It does not mean that the Judgment-debtor or his sureties are no more liable to pay in presence of grandfather. In present case, the surety-bonds were executed without any condition upon or subject to any claim of the minors against the grandfather. 

Besides, the sureties have no right to claim that the decretal amount be recovered from the judgment debtor or anybody else or the decree-holder may be directed to assert his right against any other party or stranger to the proceedings before recovery of the same from them. 

Rafique Hazquel Masih V. Bank Alfalah Ltd. and others 2005 SCMR 72

Muhammad Muzamal Riaz V ADJ Shorkot 2020 CLC 970

Liability of surety continues even after arrest of Judgement-debtor:

Petitioner raised the ground that he has produced JD in court who has been sent to civil prison,  therefore, he is not bound to make payment of the decretal amount. Suffice it to say that arrest of the judgment debtor does not absolve the guarantor from making payment of the decretal amount and his liability is joint and several with the judgmnent debtor for making such payment.

Javaid Iqbal v. Judge Family Court and others 2018 MLD 1296

Muhammad Amin v. Judge Family Court and 3 others 2015 YLR 316

Muhammad Muzamal Riaz V ADJ Shorkot 2020 CLC 970

The petitioner argued that since he was not the judgment debtor but merely a surety for the judgment debtor, no further action could be taken against him after he had fulfilled his duty by producing the judgment debtor before the court. This contention was misconceived because the petitioner did not took the responsibility for the appearance of the judgment debtor but for the payment of the decretal amount. Consequently, the petitioner could not be absolved of his liability due to the arrest of the judgment debtor, and actions for the recovery of the decretal amount could validly be taken against him.

Muhammad Amin V JFC, Sahiwal 2015 YLR 316

Amanullah Khan V District judge 2012 CLC 679

Arrest of sureties in execution:

The undertaking was given about being responsible to produce the judgement-debtor before the court as and when required. On failure to do so, under section 54, 55 and under O. XXI of the Civil Procedure Code, 1908, civil court may adopt coercive method e.g. arrest of surety etc. The petitioner could not be absolved of the liability for which he has given undertaking.

Hussain Gul V Qeemat Gul and 2 others 2019 CLC 716

Compromise of parties would discharge surety:

The principle of revocation or discharge of guarantee are provided in sections 133 to 141 of the Contract Act. Under section 133, surties are not liable for the variant transactions which are made without their consent. Section 134 provides that the guarantor is released if there is a contract between the creditor and the principal debtor that releases the principal debtor, or if the creditor’s actions or omissions legally result in the discharge of the principal debtor. Under section 135, a contract between the creditor and the principal debtor, in which the creditor agrees to a composition, grants an extension of time, or promises not to sue the principal debtor, discharges the guarantor unless he consents to the contract.

N.D. Leasing Corporation v. National Fibers Ltd. 2002 CLD 643

Surties are not bound to satisfy a decree which is passed on the basis of a compromise deed.

Rasheed Ahmad ( deceased) V Nazar Hussain Malik 2018 CLC 1811

Decision on the basis of award:

Where the suit is compromised and decision is obtained on the basis of award of arbitrator, it would operate as discharge of sureties.

Muhammad Yousaf V Ram Govinda Ojha  AIR 1928 Calcutta 177(2)

Consent decree without knowledge of surties:

If a consent decree is passed without the knowledge and consent of the judgement debtor, his surties are discharged. AIR 1926 Calcutta 818

The guarantor  of the party to the suit is discharged if the matter in suit is compromised and said compromise was not contemplated by him and is prejudicial to his rights.

Messrs Meena Trading Co V Abdul Ghani PLD 1972 kar 19

Mahomedalli Ibrahimji V. Lakshamibai Anant Palande  AIR 1930 Bombay 122

Change of circumstances like Variation in mode of payment subsequent to execution of guarantee contract would relieve the guarantor from his liability.

Jafar Khan V Arbitration Board 1997 MLD 434

Exemption to the rule of discharge of surties:

However, it is also held that even the consent decree would not discharge the sureties, if the consent decision between the parties was not at variance with the terms of the guarantee contract, then even if compromise was effected in their absence and without their consent, they continue to remain liable.

Shahamad Khan V Sh. Muhammad Akbar and others 2005 CLC 641

Coextensive liability:

Under section 128 of the Contract Act, 1872 liability of the sureties is co-extensive with that of the principal debtor, and the decree holder can proceed to exhaust his remedy for recovery of the loan amount either against the principal borrower or the guarantor.

Ashfaq Hussain V Banking Court No.II 2016 CLD 1281

National Bank of Pakistan V Simnwa Polyproplene Pvt. Ltd 2016 CLD 812

Scope of liability of surety in execution:

The surety-bond which was submitted by the petitioner was related to a decree issued by the Family Court in 2010, which the Appellate Court had subsequently remanded back to the Family Court. Said guarantee was only applicable to the pre-remand decree, which was nullified by the Appellate Court. Consequently, with the nullification of the decree, the surety’s liability ceased. He cannot be made bound for any decree issued against the defendant/judgment-debtor in the post-remand proceedings..

Muhammad Mohsin Fawad V Hina Tayyaba Khalil 2018 YLR 2199

Surety did not undertook to pay the the future liability of the judgment-debtor rather he declared to pay the decretal amount due against the judgment-debtor at that time. The decretal amount at that time was undeniably Rs.75,000 which fact is evident from the warrants of arrest as well as the security furnished by respondent No.3. In the circumstances, respondent No.3 cannot be held liable for any amount which becomes due in future against the judgment-debtor. 

Ghulam Ali V Mst. Fatima Bibi 2014 CLC 1529

Execution of decree against the surety of trial:

The appellant, provided a bond on behalf of the defendant. Beside this, he undertook the responsibility for paying the decretal amount if the plaintiff’s suit was ultimately decreed. Judicial proceedings could not be dismissed or contradicted without solid proof. There is a presumption of regularity and correctness attached to judicial proceedings. The appellant’s land was attached in execution of a money decree, and no legal or factual defects could be identified in the proceedings. Therefore, the appellant could not absolve himself of the liability he had undertaken based on mere unfounded assertions. 

Ghulam Farid V ADJ T.T.Singh 2007 YLR 2764

Liability of surety even prior to the judgement debtor:

Petitioner stood guarantor for payment of decreed amount by giving undertaking. It is not open for him to wriggle out of his undertaking. He cannot raise the plea that before proceeding against him, the proceeding of execution be initiated against the judgement debtor. 

If principal fails to fulfill his obligations, the surety steps into the shoes of principal to do that. He is as responsible as judgement debtor for the decretal amount.

Rafique Hazquel Masih V Bank Alflah Ltd 2005 SCMR 72

Akbar V Muhammad Ikhtiar 2010 CLC 444

Zafar Ullah V AdJ Nankana Sahib 1993 CLC 255

Fresh surety for recurring cause of action:

Any interference with the channel constitutes a breach of the surety bond and provides a valid ground for its forfeiture. The decree-holder, in the event of a recurring cause of action, has the right to request a new security if the existing one is subject to forfeiture upon proof of its violation.

Haji Khair Bakhsh V Allah Dad 2011 MLD 1982

Non-submission of surety-bonds before appellate court:

Court held that the since there is no condition precedent in Section14 of the Family Courts Act, 1964 to deposit whole decreed amount or to submit security to file appeal, therefore the order of dismissal of appeal by the appellate court due to non-deposit is nullity in the eye of law.

Muhammad Yaqoob V AD&SJ Attock 2012 CLC 625

Messrs Syed Match Co. Pvt Ltd V Messrs century paper & board mills Ltd. PLD 2002 Lahore 155 

Objections be decided after framing of issues and recording of evidence:

The executing Court should decide the objection petition of surety, if any, pending, after framing of issues, recording of evidence of parties regarding the amount paid or to be paid and affording opportunity of hearing to the parties. 

Ahmad Ali and another V Sheikh Amman Elahi 2015 CLC 1704

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