~ ·"' ' .. "0 -L· lii2 S.MT. KAMALA DEVI '( v. Pirthichand Lal

filed Civil Suit No. 9-A of 194.7 in the Court of the First Additional District Judge, Jabalpur, against Mu lkraj Malhotra, the second respondent, for dis.50- ll'tion of their partnership and rendition of accouitts. On i\ugust 27, 190, the first respondent applied for attachment brfore judgment of all the bills payable to "M. R. Malhotra and Company", as per descrip tion given in Schedule A attached thereto and for the issue of an order to C.M.A.S.C., Poona, prohibit :VI. R. 1\falhotra and Company, and on the same day the Court issued notice of the said application. On August 28, 19cVi, the Court issued a conditional order of attachment before judgment in respect of the said bills. On September !J, 1947, the second respon<~ nt applied for vacating the order of attachment. On September 11, Hl47, the second respondent offered to to him. On if time was granted give security October J'i, 1947, :i suretv bonds were executed bv the appellant and 4 others. for diffarm "mounts and presented to the Court. The Crrnrt ~<:cepted the bonds and withdrew the order of a1tachrncnt. The appellant's surety bond to the Court was for a sum of Rs. 12,000/-. Under that bond she agreed, ff the second respondent made a default in producing and placing at the disposal of the Court when required the properties specified in the SchcrJ11le attached thereto or the value of the same or such portion of the same a~ may be sufficient to satisfy the decrre, to pay to the Court a sum not exceeding Rs. 12,000/-. On October 13, l!l48, a preliminary decree was made in the said suit. On August I, 19.'ll, the second responrlent was arljudged as an insol wnt by the High Court at Calcutta. On September 20, I !JG!, a final decree was passerl in the said suit against the second re~pondent for a snm of Rs. I, i4,!l06/4i0 plus Rs. i868/10/0 as costs. On October 19, 19iil, first respondent filed an application for execulion of the df'cree bv enforcement of the suretv bonds under J~,; or' the Code of Civil Procedure. Ori ~. - 1963 Kamala De.vi v. Takhatmal Subba Rao J,-. 2 S.C.R. SUPREME COURT REPORTS 155 the second December 7, 1951, the appellant filed objections raising various pleas, inter alia, contending that the decree was passed without jurisdiction and that the surety bond was void. On May 28, 1952, the second respondent filed an application under s. 5 of the Displaced Persons (Debts Adjustment) Act, 1951 (LXX of 1951), hereinafter called the Act, before the Tribunal at Dehra Dun for adjustment of his debts under the provisions of the Act. On July 9, 1952, the adjudication of the second respondent as an insolvent was annulled. On August 2, 1952, the appellant filed an application. before the District Court under s. 15 of the Act for stay of the execution proceedings and for the transfer of all the records to the Tribunal at Dehra Dun. On August 20, 1956, the Tribunal at Dehra Dun, holding that it had no territorial jurisdiction to entertain the application filed by the Act, returned it for presentation to a proper tribunal. On August 22, 1952, the executing Court rejected all the contentions of the appellant. On August 29, 1956, the second respondent preferred an appeal against the order of the Tribunal at Dehra Dun returning his application filed under s. 5 of the Act. It is represented to us by the learned counsel for the re1pondent on imtructions that the said appeal was dismi1sed. The appellant preferred Miscellaneous First Appeal No. 44 of 1952 against the order of the executing Court rejecting her objections to the High Court of Judicature at Nagpur. That Court, by its order dated October 1, l 95ti, dismissed the appeal. The Letters Patent Appeal No. 212of1956 preferred by the appellant against the order of the single Judge of the High Court was also dismissed by a Division Bench of that Court on March 12, 1957. The present appeal has been preferred by the appe llant by special leave. respondent under Mr. Mathur. learned counsel for the appellant following points : (1) The raised befure us ..... ~· ...... -=· ~ 1963 l\'21'Ula fltt:i v. Takhatmal 156 SUPREME COURT REPORTS [1964) VOL. executing Court acted without jurisdiction in refus ing to stay the execution proceedings against appellant contrary to the express provisions of s. 15 of the Act. And (2) a surety bond has to be strictly construed and if so construed it would be obvious on the express terms of the bond that the necessary conditions for its enforceability were not fulfilled. \Ve shall notice the arguments of the learned Additional Solicitor-General on behalf of the first respondent at proper places in the course of our judgment. .., The first question turns upon the relevant provisions of the Act and they read : Section 5. (1) At any time within one year after the date on which this :\ct comes intn force in any local area. a displ<1ced debtor may make an application for the adjustment of his debts to the Tribunal within the loc;d limits of whose jurisdiction he actually and vol11nrarily resides, or carries on business or personally works for gain. Section 16. Where a displaced debtor has made an application to the Tribun:tl under section 5 or under su b-seetion (2) of section 11, consequences ensue, namely :-·- following (a) all proceedings pending at the date of the said application in any civil court in respect of any debt to which the displaced debtor is subject (except proceerlings by way of appeal or review or revision against decrees or orders passed against the displaced debtor) shall he staved, records of all such p rocerdings other than those relating to the appeals, 0 1963 Kamala D.vi •• Takhatmal SuhbtJ Raa J, - - • 2 s.c.R. sUPRE:ME COURT RBi>ORTS • review, or revisions as aforesaid shall be transferred to the Tribunal and consolidated. the date Under said provisions if a displaced debtor filed an application before a Tribunal described under s. 5 of the Act, all proceedings pending in a civil Court application in respect of any debt to which the dis placed debtor is subject shall be stayed. The statutory stay can be invoked only if two conditions are satisfied, namely, (i) the Tribunal before which the applica tion under s. 5 is filed shall be one within the local limits of whose jurisdiction the displaced debtor actually and voluntarily resides or carries on business or personally works for gain, that is to say Tribunal shall be one which has territorial jurisdic tion to entertain the application ; and (ii) the pro ceedings shall be in respect of a debt owed by the said displaced person. From the earlier narration of facts it is manifest that the Debra Dun Tribunal held that it had no territorial jurisdiction to entertain the petition and returned represented to a proper tribunal. The application so returned was not re-presented to the proper tribunal. The appeal filed against the said order was dismissed. As there was no application pending before any Tribunal, the Court was well within its rights in not acting under s. 15 of the Act. it to be Learned counsel for the appellant contended that he had no instructions that the appeal filed in the Allahabad High Court was dismissed. Assuming that the appeal is still pending against the order made by the Tribunal, Dehra Dun, returning the petition filed by the second respondent under s. 5 of the Act, the appellant would not be in a better It is not stated that after filing an appeal position. his client had obtained any interim suspension of it is not disputed the order of the Tribunal ; indeed, 1963 11-amala Dt••i v. 1nkhalmal Subba Jiao J. - - ,... - -· ·-- .... ~ .. ~ .... - ' . .,.. ' 158 Sl.JJ>RE~E COURT REPORTS(1964] \rot. that there was no such order. If so, the legal position would be that the order of the Tribunal would be in forr~ till it w~• mo<lified or set aside hy the appc llat~ Court. The fi!ing of an appeal due; not au10- rnatically suspend the operation of an order appealed from unless the appellate Court stays it or a statute conferring a right of appeal provides for such a stay. Section 40 of the Act confers a right of appeal on an aggrieved party against the final order of a Tribunal to the High Court. The section conferring the said power does not provide for a statutory stay of the order of the Tribunal till the disposal of the appeal. Indee<l, Order XLI, r. ii, of the Code of Civil Procedure, which embodies the general principle of law says that an appeal shall not operate as a stay of proceedings unde1 a decree or order appealed from except so far the appellate Court may order. This principle which applies to stay of proceedings under an order will apply with force to a suspension of an order. The greater Judicial Committee, in Jw;curn lioid v. Pirthicluind Lal ('), summarized the Indian Law of procedure • thus : " ......... under the Indian Law and procedure an original decree is not suspended by presen tation of an appeal nor is its operation inter rupted where the decree on appeal is one of dismissal." Here, the application filed by the second r_espondent before the Tribunal, Dehra Dun, was re3ccted and the said order holds the field till it is reversed by the appellate Court. As the order of the Tribunal was not suspended, the effect was that there was no application pending ·in a Tribuna 1. as defined !n s. fi of the Act. The order of the High Court. m our view, is correct on this point. The second question turns upon the interpre tation of the surety bond executed by the appellant (I) (1918) L. R. 461. A. 52, 56. 2 s.tt.R.. SUPREME COURT REPORTS i5~ the Court. As the argument turns in favour of upon the terms of the said bond, it will be convenient at the outset to read the material part of it. It reads : 1963 Kamala D~r;_i v. Takhatmal Subba Rao J~ "Whereas at the instance of Takhatmal, the plaintiff in the above suit ; Mr. M ulkraj the defendant has been directed by the Court to furnish security in the sum of Rs. 1,00,000/ ( one lac only) to produce and place at the dis posal of the Court the property specified in the schedule hereunto annexed ; Therefore, I Kamla Devi have voluntarily become surety and do hereby bind myself, my heirs and e x:ecu tors, to the said Court, that the said defendant shall produce and place at the disposal of the Court, when required, the property specified in the said schedule or the value of the same, or such portion thereof as may be sufficient to satisfy the said decree; and in default of his so doing, I bind myself, my heirs, and executors, to pay to the said Court, at its order, the said sum of Rs. 12,000/- only or such sum not exceeding the said sum as the Court may adjudge." Schedule 'A' x x x x x x x (ii items) Approximate grand total. .. Rs. 1,10,000/ Learned counsel for the appellant contended that the surety bond must be strictly. construed, that the liability of under the terms of the surety bond the surety arises only if the principal debtor is requi red to produce and place at the disposal of the Court the said bills or the value of the same and if he 1963 Kam•fa 8tci •• T <lklro<mal Subba Ua'J J. 160 st..ri>kt:ME COURT REPORTS [1904] Vot. makes a default in doing so, and that in the present case it has not been established, and indeed it is not the case of the respondent, that any such demand was made on the second respondent and that he made a dcL1ult in doing so. Learned Additional Sohcitor-Generai for the first respondent argued that the said plea was not taken by the appellant and that she should not be allowed to raise it at this stage, for, if it was raised, in 1he pleadings his client might have been in a position to allege and prove that the said condition had been fulfilled or at anv rate waived by the appellant. He further contended that on a fair reading of the terms of the surety bond, having regard to the circumstances under which it was executed, it would be manifC'st that the appe llant had accepted the liability to satisfy the decree debt if the second respondent failed to do so, upto a sum of Rs. 12,000/-. He would say that, as the surety bond was executed for raising the attachment, the amount for which it was given was clearly inten ded by the party to be paid towards the decree amount in case the judgment·debror made a default to place at the disposal of the Court the said bills or their value and that in the said circumstances a reason able interpretation of the term~ of the bond without doing violence to the language would disclose the said intention. It is true that the plea now raised was in the objections filed by tile not specifically taken appellant and it was not specifically advanced before It was rejected by the learned District Judge also. Kotval J. on the ground that it was not raised in the pleadings, and by the Division Bench on merits. But the question raised is one of construction of a surety bond and all the facts on which the respondent seeks to rely upon should only be found in the order If a demand was made or if the judgment sheet. dcbtor or the suretv waived the fulfilment of a condi tion, the order sheet must disclose the issue of a notice or the facts constituting a waiver. There cannot possibly be any facts outside the record. The entir =-"i> 2 s.c.k. SUPREME cotJRT REPORTS 1963 Ji Oma la Devi v. Takhatma/ Subba Rao J, Ju order sheet is on the file. The learned counsel is not able to show any entry therein which will support the fact of a demand or a waiver. the circum stances, even if we remand the case, no useful pur pose will be served for the necessary facts could only be gathered from the order sheet. That apart, before the Division Bench of the High Court the first respon dent does not appear to have contended that he had sources other than the order sheet to prove that either a demand was made or the surety waived the ful filment of the condition, and indeed his Advocate appears to have contended that in view of the sub sequent events that happened such a demand would only be an idle formality. are satisfied that the respondent would not be pr~judiced if the appellant was allowed to argue on the construction of'thc surety bond, as she .did in the courts below. In the circumstances, we . Now coming to the construction of the surety bond, the first question raised by the learned Addi that the terms of the tional Solicitor-General is surety bond should be construed in the context of the surrounding circumstances, namely, the circumstances under which the surety bond came to be executed. In support of this contention he relied upon the · judgment of the Judicial Committee in Raghunandan v. Kirtyanand (1 ). There, the Judicial Committee was asked to construe a surety bond. The question raised was whether under the terms of the bond the liability undertaken by the surety was to pay the entire decree amount or to pay the balance of the amount due under the decree after the mortgage security was reafoied, up to the limit of the amount terms of the guaranteed under the bond. The In document were not clear and unambiguous. those circumstances, Lord Tomlin, speaking for the Board, observed : "The bond must be considered in the light of the order directing the security to be given. (!) A.I.R. 1932 P,C. 131, 132·331 1963 Kamoia Dni •· TokUlmal SuHo Roo J. ·- ··- - .., -· . . ,, ~ .... ' . ...._ ·~···-..i.- - .......... 162 SUPREME coi. Jki REl'ORis [l9!i4] \roL. ............................. .In those circumstances what is the meaning of the language employed in the bond~"' These observations only apply the well settled rule of construction of documents to a surety/bond. Sec tions 94 to 98 of the Indian Evidence Act afford guidance in the construction of documents; they also indicate v.hen and under what circumstances extri· mic-evidencc could be relied upon in construing the terms of a document. Section 94 of the Evidence Act lays down a rule of interpretation of the langu- age of a document when it is plain and applies It says that c videncc accurately to existing facts. may be given to show thar it was not meant to apply to such facts. When a court is asked to interpret a document, it looks at its language. If the language is clear and unambiguous and applies accurately to existing facts, it shall accept the ordinary meaning, for the duty of the Court is not to delve deep into the intricacies of the human mind to ascertain one's undisclosed intention, but only to take the meaning of the words used by him, that is to say his expressed intentions. Sometimes when it is said that a Court · should look into all the circumstances to find an author's intention, it is only for the purpose of find- ing out whether existing facts. But if the words are clear in the context of the surroundin~ circumstances, the Court cannot rely on them to attribute to the author an intention contrary to the plain meaning of the words used in the document. The other sections in said group of sections deal with ambiguities, peculia· rities in expression and the inconsistencies between the written words and the existing facts. In the instant case, no such ambiguity or inconsistency exists as we shall demonstrate presently. The Privy Council"s case was one of ambiguity and the surrounding circumstances gave the clue to find out the real inten- tion of the parties as expressed by them. the words apply accurately - - 196$ Kamala Dtvi v. I akhalmal Suhba Rao J. - - 2 s.c.R. SUPREMt<: couR.t REPOR.ts 16a to produce furnish security Bearing the said principles in mind, let us look at the document closely. The preamble to the surety bond in clear terms gives the object of the bond. It says that "the defendant has been directed by sum of the Court to Rs. 1,00,000/- and place at the dis posal of the Court the property specified · in the Schedule hereunto annexed". Therefore, the object is to see that the said direction is properly carried out, and to provide for a contingency if a default is made by the judgment-debtor in complying with the said direction. The second paragraph of the bond binds the surety to Court in that the said defendant shall produce and place at the disposal of the Court, when required, the said property or the value of the same. The words used in this part of the undertaking given by the surety is clear anrl unambiguous. The judgment-debtor shall produ'Ce the bills or their value and place them at the dis1)osal of the Court when required to do so. The expression "when re quired" can only mean Court". The obligation undertaken by the surety is that the judgment-debtor shail produce the said property when required by the Court. Her obliga tion does not arise at all till the Court makes the In this case there is no order or entry requisition. in the order sheet requiring the judgment-debtor to produce and place the property in Court; nor even the execution petition judgment-debtor. in one of the columns, asks for any relief against him. But it is said that the words "when required" must be confined only to a situa tion when the biils could be produced or the value of the same could be paid by the judgment-debtor; and that in this case, as the bills were cashed and the money misappropriated by him and as he had been adjudged an insolvent, it would be an empty for mality to call upon him It is also said that the condition could apply only when the money could lawfully be paid by the judgment·debtor; but, "when required by it describes to do so. though /'J{J3 f.:1Jma.'a Otd v. Talcholmal Subba Rao, J. I • • 1G4 SUPREME COURT REPORTS [l!l!H] VOL. insolvent, as the judgment-debtor had become an neither the Court could demand of him to pay the cunount, nor could he pay it. The construction of tlic word "when required" suggested by the learned counsel for the respondent, if accepted, would make it would mean that the those wonls unnecessary : judgment-debtor should be required to produce the property only if he could do so and need not be rcquirc<l to produce it if he could not do so; in such a case those words could as well be excluded from the sentence, for they would not serve any purpose. If the words were retained there to accept the argu ment of the learned counsel, they should be qualified by adding "if the bills could be produced and when the money could lawfully be paid by the judgmcnt debtor". But those words are not there and we them, full cannot add them, for without adding meaning could be given to the words used in the clause. But whatever ambiguity there may be-in o.ir view there is none ·the words "in default of his doing so" make it absolutely clear that the surety binds herself only if the judgment-debtor makes a default when he is required to produce the document. The intention of the parties is very clear. The surety undertook that the judgm~nt-debtor would produce the bills if required by the Court and that if he made a default, she would be bound to pay the decree amount up to a particular limit. A court the judg cannot possibly decide beforehand ment-debtor would not produce the bills vi" at any rate the value of the same if demanded; for ought we know he might have paid that amoul't from other sources or he would have taken out an application to the Official Receiver to do so, or on the events that subsequently happened, the annul ment of the adjudication, he could have paid that It is well settled that a surety bond has amount. In The State of Biluu v. to be strictly constmed. Jf. Ho mi ('), this Court ruled that provisions in a surety bond which are penal in nature must be very ,:. e., on ti) [195~12 S. 0, R, 76. 2 S.C.R. SUPREME COURT REPORTS 165 strictly cumtrued. This Court again in 1'he State of Uttar Pmde.sh v. Maham.med 8ayeed (1 strict rule of comtruction of a surety bond in that case. In the present case a strict construction of the bond leads that a demand of the Court on the judgment· debtor and a default made by him were necessary conditions for the enforcement of the bond against the appellant. the only conclusion ), applied 1963 Kam ala nvJi v. Takhatmal S"hba Rao }. In the result, we set aside the order of the High for execution the application Court and dismiss filed by the first n~spondent against the appellant. But we do not think that this is fit case for award ing costs to the appellant. She has failed to raise in her objections or to this objection specifically learned District Judge the present place before the In the circumstances we direct each con tent ion. party to bear his or her own costs throughout. MEE:'olGL\S TEA ESTATE v. ITS WORKMEN 1963 I .bruarY 22, (P. B. GA.JENDRAGADKAR, M. HIDAYATULJ,AH and J.C. SHAH JJ.) T>iBpufe-Requireme-nts of vrdifl inquiry- /lri'.ncip/f'.~ nf natuta! jtt~lice-Practice, of Suprerne ('nurt nnt In Pnfr r irifu fridenre to .find facts for itsefj-(1ase of no f.vid1,nrr. lnd11strla! In Jan:,ary, I ()j6, there was an incident in which a group of workrnen assaulted the Manager and tv,;o Assistant Managers of the appellant company. All the three offi,·ers were wound IA'< re suspended, :ind cbargt'·Sheets wen>: ed. Sornr: w• 1rk1nr.n c!'iar~ii,g them with participation in the riot. served on them, 'rhe inquiry After an inquiry the VIOrkmen wert" disrnissed. was hr.ld liy the M;1nager and one of the 1\ssistant Managers. During the inquiry, no witness was ~xarnine<l and no stat(' .. ment marle by any witnt ss was tendered in evidence. (IJ (1957] S. C.R. 770.