STATE BANK OF SAURASHTRA

v .

.. ~/

CHITRANJAN RANGNATH RAJA AND ANR.

April 30, 1980

[A. C. GUPTA, D. A. DESAI AND E. S. VENKATARAMIAH, JJ.] B

Indian Contract Act, Section 141, scope of-Discharge of surety-Conditions under which surety can be discharged under sections 139-141 of the Act,-Secu- 1 rity of pledged goods was lost on account of the negligence of the Creditor- Wheiher "the Surety would not be discharged in the instant case on ti proper con- ,-_ struction of clauses 5, 7 and 13 of, the letter of guarantee. c

Civil Procedure Code, 1908-Secton 144 as amended by Amendment Act of 1976, scope o/-Re.stitution-Dir'ections by the SUpreme Courl) in the instant case, whether could be made-"Court of first instance", meaning of.

 The appellant bank allowed a cash credit facility limited to Rs. 75,000/- to the principal debtor Harilal Parmananddas Adatia on his pledging 5,000 tins of groundnut oil under the lock and key of the Bank and on personal guarantee of D' the surety, respondent No. 2. The principal debtor executed a demand promissory note Ext. 81 in fayour of the Bank on Sept'ernber 16, 1957, and on the same day the principal debtor also executed a. demand promissory note, Ext. 30, in favour of the surety which the surety endorsed in favour of the Bank.

Along with the rwo demand promissory notes, simultan'eously the surety executed a letter of guar.:intee F...xt. 31 in favour of the Bank and the principal debtor executed a

--.J.. bond Ext. 83 in favour of the Bank. The principal debtor also passed letter of E continuity of the bond and the promissory note Ext. 82. Thereafter the principal debtor enjoyed the cash credit facility by borrowing various amounts.

By the end of February 1959 the principal debtor owed Rs. 76,368.04 P in this account to the Bank. Principal debtor died in November 1959. The Bank wrofe to the surety letter Ext. 32 dated December 24, 1959, calling upon him to pay the outstanding balance of Rs. 70,879/- in cash credit account of principal debtor as in the circumsta.nces mentioned in the letter the balance was required to be r'e- F

vered from the surety. Some correspondence ensued thereafter between the Bank and the surety and ultimately the Bank filed the suit for recovery of ii \ Rs. 76,368.04 P . .;;:.gainst defendant 1, the legal representative of princi:Pal debtor and defendant. 2, the surety.

The trial court found tb2.t there was negligence on the part of th'e Bank with regard to the safe custody of the pledged oil tins but as the contract of guarantee

enfered into by the surety with the Bank was independent of the pledge of goods given by the principal debtor, the sur'ety is not discharged from his liability under the guarantee.

So oOOerving the trial court decreed the suit.

The .surety pai<l the entire amount demanded and appealed to t'he High Court.

The High Court held that the two promissory notes, on'e executed by the principal debtor in favour of the Bank Ext. 81, and another by the principal debtor in favour of the surety and endorsed by the surety to the Bank, Ext. 30, and the letter of guarantee Ext. 31 executed by the surety in favour of the Bank as also the bond executed by the principal debtor in favoor Qf the Bank Ext. 83

A and the letter of conlinuity Ext. 82 executed by the principal debtor in favour of the Bank, all on September 16, 1957, constituted one composite transaction and they evidenced that the principal debtor bad offered two securities, one the pledge of oil !ins and another personal guarantee of the surety. The High Court

J.._ further held tht the Bank was utterly negligent and had not exercised. such care

as a prudent man would in the circumstances of th'e case which resulted in the loss of security, namely, pledged oil tins and, therefore, in view of combined B operation of sections 139' and 141 of the Indian Contract Act, the surety is d.i£.. charged. Accordingly, the appeal of th'e surety was allowed and the suit against him wlis dismissed. Hence this appeal by plaintiff Bank.

Dismissing the appeal by certificate, the Court,

HELD : 1. In order to attract section 141 of the Contract Act, it must be shown that the creditor had' ta.ken more than one security from the principal

-~ debtor at the time when the contract of guarantee was enfered into and irrespective of the fact whether the sur'ety knew of such other security offered by the principal debtor, if the creditor loses or without the consent of the surety parts with the other security the surety would be discharged 16 th:e extent of theo value of the security. In the instant case as found by the High Court and not controverted, the principal debtor had offered two securities, (i) the pledge of goods,

(ii) personal guarantee of the surety. Verily, the General Manager of the Bank accepted tire proposal for cash credit facility on the specific condition that the principal debtor s.hall offer two securities, one the pledge of goods to be kept under the lock and key of the Bank to be supervised by the Bank's 'employee, and secondly, the personal guarantee of the surety. The surety himself agreed to give p'ersonal guarant4ee on the specific understanding a.nd with the full knowledge of the Bank that the principal debtor was offering another security, namely, pledge of goods. The' surety contracted on the good faith Of the principal contract when entering into contract of guarantee in which case h'e is d'eemed so to contract that both the securities would be available to the creditor.

If the two promisoory notes Exts. 81 and 30 coupled with the letter of guarantee Ext. 31 executed by the sufety and the bond Ext. 83 executed by the principal debtor at one sitting on September 16, 1957, evidence one composite tr, ansaction, it is an inescapable . concluSion that the principal debtor offered two securities, one the pledge of goods

and the other thepersonal guarantee of th'e surety. The surety in good faith contracted to offer personal guarantee on the dear understanding that the principal debtor has offered security by way of pledge of goods and the goods were - be in the custody of the creditor Bank. On this conclusions. 141 of the Act Wl11 ) be indubitably attracted. [922 A-Fl

Sanderson v. Aston, [1873] L. R. 8 Exch. 73 at 76, quoted wit.h npproval.

2. ,&ction 141 comprehends a situation where the debtor has offered more G than one security one of which is the personal guarantee of the surety. Even if the surety of personal guarante'e is not aware of any other security offered by the principal debtor yet once the right of the surety against the principal debtor is impaired by any action or inaction, which implies negligence appearing from lack of supervision undertaken in the contract, the surety would be disCharged under the combined operation of sections. 139 and 141 of the Act. In any event, if the creditor loses or without the consent of the surety parts with the security, the H surety is discbarged to the extent of tire security lost as provided by s. 141. [922

F-HJ

State of Madhya Pradesh v. Kaluram, [1967] 1 SCR 266. followed .

STATE BANK V. C. R. RAJA 91 7

. Wulff and Billing v. Jay, (1872) 7 QB 756, quoted with approval.

A.·

3. Jn the instant case, clauses 5, 7 and 13 of the letter of guarantee, Ext. 31 would'be of no assistance to the Bank. [926 B, G, HJ

(a) Clause 5 confers right upon the creditor Bank to gra.nt any time or indulgence in payment of the deht or to determine, enlarge or vary its credit and to vary, exchange or take other securities or releae any other securities held by the Bank but such an act on the part of the Bank would not have the effect of disi:Qarging the surety or in any manner affecting his liability under the letter of guarantee. It is not a case of granting time or indulgence to the principal debtor or variation of the credit or taking one set of security in substitution of some other security or release of any s'ecurity. Release of security implies a volitional r

act on the part of the Bank. Loss on account of negligence cannot be e<luated

with release. [925 G-H. 926 A-Bl I

(b) Clause 7 provides for non-Oischarge of surety even if the creditor Bank

enter~ into a composition with the principal debtor and that the surety would nonetheless be liable even if the Bank has other guarantee, security or reniedy guarantees, securities or remedies from the principal debtor. UpOn a true construction of clause 7, the expression 'any other guarantee, s'ecurity or remedy' therein mentioned must be security other than the pledged goods. [926 B-C]

Amrit Lal Goverdhan Lal and Ors. v. State Bank of Travancore and Ors., [19681 3 S.C.R. 724 @ 731, followed.

(c) aause 13 provides for continuing the guarantee where the principal debtor is an association of persons and for continuance of the guaralitee in the event of death, retirement, etc. of one of such association of persons or the guarantee remaining intact and effective and legally enforceable in'Cspective of some defect arising from the internal management of such association of persons.

First security, namely, the pledged goods are lost to the Bank and the concurrent finding again incontrovertible is that the pledged goods were lost on account of the negligence of the creditor Bank. Whole of the security was lost and, therefore, the surety would be discharged in entirety because it is crystal clear that the principal debtor had agreed and had in fact pledged 5,000 tins of oil which even if sold at the then current market price would have satisfied the Bank's ,_.entire claim. Accordingly, the surety would be discharged in entirety. ['>26 G-H, \ 927 A-Bl

4. Accepting a contention that section 141 would not be attracted and the surety would not be discharged even if it is found that a creditor has taken more than one security on the basis of whiph ad'vance was mad'e and the surety gave pelllonal guaranteei on the good faith of other security being offered by the prlnciplli debtor which itself may be a consideration for th'e surety offering his personal guarantee and the creditor by its own negligence lost one of the securities, would tantamount to putting a premium on the negligence of the creditor to the detriment of the surety who is usually described as a 'preferred debtor'.

A Q>urt shonld not by its construction of such letter of guarantee enabre the creditor to ·

act negligently and yet be not in any manner accountable. [927 B-E]

5. By section 144 of Civil PrO\Xl<lure Code 1908, as amended by the Amend IOllD!. Act, 1976, the jurisdiction to grant restitution is conferred upon "the Court

wl!ih ped the decree or order". By an explanation added to section 144 by the Amendment Act of 1976, the expression "Court which passed the decree or

order" shall be deemed to include where the decree or order has been varied or reversed in exercise of appellate or revisional jurisdiction, the Court of first

instance. [927 G-H, 928 Al

In the illstant case (i) the appellant was the plcintiff and its suit was decreed by the trial Court, i.e. the Court of Civil Judge, Senior Division, Gonda!, on November 18, 1960. The present appellant by its letter dated February 14, 1961, demanded from the surety a sum of Rs. 84,828.07 P. inclusive of costs and in terests on the principal amount decreed. The surety respondent 1 in this Court paid the appellant Rs. 84,828.07 P. on April 3, 1961. In the appeal by the surety the High Court reversed the decre'e and dismissed the suit against the surety.

Accordingly, the surety .is entitled to restitution; and (ii) the present one is th'e simplest case where the suit in f.avour of the appellant and against the surety was decreed by the trial court, i.e. the Court of first instance, and this ·-~ decree has been reversed by the High Court in 'exercise of its a.ppellate jurisdic~ ti on.

In such a situation clause (a) of the explanation w6uld be attract.ed and an application for restitution will have to be mad'e to the Court of first instance,

i.e. the Court of Civil Judge, Senior Division, Gonda!. It is nowhere suggested that such a Court does not exist.

Therefore, it would not be prop'er for this Court to direct restitution. However, there will be no justification for the appellant Bank to withhold the amount which was collecfed from the surety on a mere demand. Therefore, an application for restitution, made by the surety would not lie to this Court [928 B-D, F-H].

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1058 of 1970.

From the Judgment and Decree dated 25-4-1969 of the Gujarat

'"h Court in Appeal No. 22/61.

S. N. Kackar, K. J. John and Sri Narain for the Appellant.

S. T. Desai, H. S. Parihar and I. N. Shroff for the Respondents.

The Judgment of the Court was delivered by

DESAI, J.~· This appeal by certificate under Article 133(1) (a) of the Constitutionlis by; the'original plaintiff-StateflBank of Saurashtra ('the Bank', for]short)-w, hose suit for recovery.of Rs.' 76,368 04SP.~ from the legal representative of the deceased principal debtor Harilal Parmanaddas Adatia and his surety original defendant 2 Chitranjan Rangnath Raja. ('Surety' Jor short) was decreed by the trial court I both against the legal representative of the principal debtor and the surety but on appeal by the surety, was dismissed by the High Court .only against the surety . • Harilal Parmananddas Adatia, hereinafter referred to as 'principal

- debtor', approached the Mmager of the Bagasra Branch of State .-Bank ofSaurashtra seeking facilityl for cash credit1 upto' Rs. 75,000/·.

"'i'k"Silbmitted proposal form Ext." 66 on September 10, 1957, offering to give security for the cash credit by pledge of groundnut oil tins as also a personal guarantee of defendant 2 Chitranjan Rangnath Raja ..

~ (

STATE llANK v. c. R. RAJA (Desai, J.) 919

After obtaining !be approval of tbe ©eneral Manager of the Bank cash credit facility to the extent of Rs. 75,000/- was sanctioned against the pledge of approved goods nnder the lock and key of the Bank and on personal guarantee of the surety. The principal debtor executed a

emand promissory note, Ext. 81 in favour of the Bank on September 16, 1957, and on the same day the principal debtor also executed a demand promissory note, Ext. 30, in favour of the surety which the surety endorsed in favour of the Bank. •Along with the two demand promissory notes, simultaneously the surety execufed a letterof guarantee Ext. 31 in favourofthe Bankand' the principal debtor executed a bond Ext. 83 in favour of the Bank.

The principal debtor also passed letter of continuity of the bond and the promissiory note Ext. 82. Thereafter the principal debtor enjoyed the cash

redit facility by borrowing various amounts. By the end of February 1959 the principal debtor owed Rs. 76,368 04 P. in this account to the Bank. Principal debtor .died in November 1957. The Bank wrote to the surety letter Ext. 32dated December 24, 1957, calling upon him to pay the outstanding balance of Rs. 70,879/- in cash credit account of principal debtor as in the circumstances mentioned in the letter the balance was required to be recovered from the surety. Some

orrespondence ensued thereafter between the Bank and the surety and ultimately the Bank filed the suit for recovery of Rs. 76,368 04 P. against defendant 1, the legal representative of principal debtor and defendant 2, the surety.

Defendant 1 contested the suit, inter alia, conten, ding that the court had no jurisdiction to hear the suit and he had no knowledge about the suit transaction. The allegation of fraud made against him in the plaint was denied. He also denied his liability for the claim of the Bank as heir and legal representative of deceased principal debtor. Defendant 2, the surety, contested the suit as per written statement Ext. 7, inter alia, contending that the Bank had agreed to grant cash credit facility to deceased principal debtor on the security .of goads by way of pledge and that though the goods were to be kept in the godown in the compound of Vijay Oil Mills Pvt. Ltd., but the godown was to be kept under the lock and key of the Bank. It was also contended that the principal debtor would provide such quantity of goods as would provide full cover to the outstanding balance in the cash credit account and the Bank was to be responsible for the safe . custody and keeping of the pledged goods. It was also contended that . the principal debtor had all throughout pledged sufficient quantity of goods to provide full cover for the Bank's claim but the Bank either wrongfully lost the goods or was negligent in retaining the goods within

SUPREME COURT REPOIITS

[1980) 3 S.C.R.

A its custody or the Bank wrongfully parted with the goods without the co'lsent of the surety and, therefore, the surety was discharged.

The trial Court found that there was negligence on the part of the Bank with regard to the safe custody of the pledged oil tin.s but as the contract of guarantee entered [into by the surety with the Bank was independent o"f the pledge of goods given by the principal debtor, the surety is not discharged from his liability under the guarantee. So observing the trial court decreed the suit.

On appeal by the surety, the High Court held that the two promissory notes,' one executed by the principal:debtor in favour of the Bank, Ext. 81, and another by the principal debtor in favour of the surety and endorsed by the surety to the Bank, Ext. 30, and the letter of guarantee Ext. 31 executed by the surety in favour of the Bank as also the bond executed by the principal debtor in favour of the Bank Ext. 83 and the letter of continuity Ext. 82 executed by the principal debtor in favour of the Bank, all on September 16, 1957, constituted one composite transaction and they evidence that the principal debtor had offered two securities, one the pledge of oil tins and another personal guarantee of the surety. The High Court further held that the Bank was utterly negligent and had not exercised such care as a prudent man would in the circumstances of the case which resulted in the loss of security, namely, pledged oil tins and,)herefore, in view of combined operation of sections 139 and 141 of the Indian Contract Act, ('Act' for short), . the surety is discharged. Accordingly, the appeal of the surety was allowed and the suit against him was dismissed. Hence this appeal by the plaintiff Bank.

Uncontroverted facts concurrently found and not sought to be reviewed in this appeal are that the principal debtor as per his application "!!!'ii

Ext. 65 sought cash credit facility to the extent of Rs. 75,00-0/- pur- - ) suant to which the Bagasra Branch of the Bank submitted a proposal Ext. 66 seeking permission of the General .Manager of the Bank to extend the facility. The General Manager of the Bank sanctioned 4 advance, inter a/ia, on the following terms:

"A cash credit limit of Rs. 75,000/- (Rupees Seventyfivethousand only) is hereby sanctioned against pledge of approved goods under Bank's lock and key and on the personal guarantee of Shri C. R. Raia, Junagadh.

Noted that the Bank's godown keeper already posted at Amrali would look after the goods pledged by the above party also.

••I I

STATE BANK v. c. R. RAJA (Desai, !.) 921

, .r.

All other terms as proposed." {underlining ours). Accordingly, on tile strength of two pronotes Exts. 30 and 81 and on the strength of

Jdtter of guarantee Ext. 31 and the bond Ext. 83 cash credit facility .was extended to the principal debtor. The pledged goods were kept

in the godown in the compound of Vijay Oil Mills under the lock and

key of the Bank and the Bank had appointed a Godown keeper to look after the goods pledged by the principal debtor. Two promissory

n!)tes Exts. 30 and 81 and letter of guarantee Ext. 31 and the bond executed by the principal debtor Ext. 83 all of September 16, 1957, constituted one transaction. The High Court held that the surety had agreed to become surety, on the principal debtor pledging oil tins as and by way of security for the advance and, therefore, two securities were offered, namely, pledge of goods and the Personal guarantee of the surety. The High Court also found that 5,000 tins of oil had eome to be transferred by Vijay Oil Mills in the name of the deceased principal debtor and they were treated as pledged with the Bank as security for cash credit facility. It is concurrently found thatthe Bank was utterly negligent with regard to the safe keeping and handling of pledged oil tins and the security of pledged oil tins waspostfon

account of the negligence of the Bank. Disagreeing with the trial court the High Court held that the pledge and the personal guarantee were not two independent transactions but they formed part and parcel of one composite tranasaction. The High Court, therefore, held that the creditor having lost one security, namely, the pledg¢ goods, the

s111ety was discharged to the extent of the value of secluity and that as in this case the entire security was lost, the surety was wholly diseharged.

Only contention canYassed in this appeal is that in view of elauses . 5, 7 and 13 of letter of guarantee Ext. 31, even if it is found as a fact that . F V-· negligence of the creditor Bank was responsible for the loss of security

~ of pledged oil tins, Yet the surety would not be discharged. Before we refer to clauses 5, 7 and 13, it is necessary to notice section 141 of the Indian Contract Act under which the surety claims the relief of dis-] charge. Section 141 reads as under:

"141. A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when

the contract of suretyship is entered into, whether the surety knows of the existence of such security or riot; and if the creditor loses, or, without the consent of the surety, parts If with such security, the surety is discharged to the extent of the value of the security."

W--463 SCI/80 .

In order to attract s. 141 it must be shown that the creditor had taken more than one security from the principal debtor at the time wlien the conn:act of guarantee was entered into and irrespective of the fact whether the surety knew of such other security offered by the principal debtor, if the creditor loses or without the consent of the surety parts with the other security the surety would be discharged to the extent of the value of the security. In the instant case as found by th~ High Court and not controverted, the fprincipal debtor had offered two securities, (i) the pledge of goods, (ii) personal guarantee of the surety.

Verily, the General Manager of the Bank accepted the proposal for cash credit facility on the specific condition that the principal debtor shall offer two securities, one the pledge of goods to be kept under the lock and key of the Bank to be supervised by the Bank's employee, and secondly, the personal guarantee of the surety. The surety himself agreed to give personal guarantee on the specific understanding and with the full knowledge of the Bank that the principal debtor was offer-, ing another security, namely, pledge of goods. The surety contracted on the good faith of the principal contract when entering into contract of guarantee in which case he is deemed so to contract that both the securities would be availabe to the creditor (see Sanderson v. Aston)(!)

If the two promissory notes Exts. 81 and 30 coupled with the lettei: of guarantee Ext. 31 .executed by the surety and the bond Ext. 83 executed by the principal debtor at one sitting on September 16, 1957, evidence one composite transaction, it is an inescapable conclusion that the principal debtor offered two securities, one the pledge of goods and the other the personal guarantee of the surety. The surety in good faith contracted to offer personal guarantee on the clear understanding that the principal debtor has offered security by. way of pledge of goods and the goods were to be in the custody of the"creditor. Bank. ..

On this conclusion s. 141 of the Act will be indubitably attracted. 1 Section 141 comprehends a situation where the debtor ha& offered .1 more than one security one of which is the personal guarantee of the \ surety. Even if the surety of personal guarantee is not aware of any j. , /. other securitY offered by the principal debtor yet once the right of the surety against the principal debtor is impairedi\ly any, action or inaction, . ' which implies riegligence appearing from lack. of supervision undertaken in the contract, the surety would be discharged under the combined voperation of sections 139 and 141 of the Act. In any event, if the 1 creditor loses or without the consent of the surety parts with the security, the surety is discha1ged to the extent of the security lost as] provided by s. 141.

- (!) [1873] LR 8 Exch. 73 at 76.

' STATE BANK V. c. R. RAJA (Desai, !.) 923

In Halsbury's Laws of England, 4th Edn., Vol. 20, para 280, p.

A 152, the statement oflaw bearing on this point reads as under:

''280. Effect of loss of securities.-On paying the guaranteed debt the surety is entitled to have all securities held by the creditor for the debt handed over to him by the creditor in exactly the same state and condition in which they were originally provided whether they were in existence at the date of the contract of suretyship or came into existence subsequently.

ConseqUently, any act of the creditor interfering with or impairing that right will, to the extent, at all events, of any loss inflicted, relieve the surety from liability, and, if it has the effect of altering or purporting to alter the contract of suretY ship, discharge him altogether. Thus, where there is a mortgage security given in respect of a debt which is subsequently guaranteed, the creditor must hold the security for the benefit of surety, so that, on paying the debt, the surety

may obtain a transfer of mortgage in its original unimpaired .condition. If the creditor does not fulfil his duty in this

'' I' respect the surety is discharged."

Thi• statement oflaw is reflected in ss. 140 and 141 of the Act.

In State of Madhya Pradesh v. Ka'uram(I) the facts were that one J(aluram had executed a surety bond undertaking to discharge the liability arising out of any act or omission or negligence or default of a forest contractor whose bid was accepted at an auction held for sale of felled trees and who was required to pay the bid amount in four instalments. The forest contract rules provided for preventing the contrac tor from removing the forest goods in case he mage default in payment valJ.f the instalments due. The authorities responsible for supervising \-We contract allowed the contractor to remove the felled trees without

 making the subsequent payments. Subsequently the State of Madhya Pradesh initiated proceedings to recover the balance of the amount throuj!h surety Kaluram. The slirety Kaluram contended before this Court that because the State had lost or parted witj) the security, namely, forest produce, he stood discharged. Upholding this 'contention this Court quoted Wu ff and Bi!iing v. Jay, (2) wherein Hannen, J., stated the law as under:

''. ... I take it to be established that the defendant became

surety upon the faith of there being some real and substantial H -----

{I) [19671 I S.C.R. 266.

{2) LR [18721 7 QB 156.

SUPREME COURT REPORT! [1~0] 3 s.c.R.

security pledged, as well as his own credit, to the plaintiff, and he was entitled, therefore, to the benefit of that rea; I

and substantial security in the event of his being ~. called on to fulfil his duty as a surety, and to pay the debt for which he had so become surety. He will, however, be discharged from his liability as surety if the creditors have put itout of their power to band over to the 'surety the means of recouping himself by the security given by the principal. That doctrine is very clearly expressed in the notes in Kees v. Bqrrington-2 White & Tudor's L.C.

J 4th Edn. at p. 1002-As a surety, on payment of the debt, is entitled to all the securities of the creditor, whether he is. aware of their existence or not, even though they were given after the contract of suretyship, if the creditor who has had, or ought to have had, them in his full possession or power, loses them or Permits them to get into the possession of t)le debtor, or does not make them effectual by giving proper notice, the surety to the extent of such security will be discharged. A surety, moreover, will be released if the creditor, by reason of what he has done, cannot, on payment by the surety, give him the securities in exactly the same condition as they formerly stood in his hands."

This Court concluded that subject to certain variations s. 141 of the Indian Contract Act incorporates the English law relating to discharge from liability of a surety where the creditor parts with or losses t security held by it.

Mr. Kackar, however, contended that in view of clauses 5, 7 and 1J of the letter'ofguarantee, Ext. 31, even ifit is held proved that security

of pledged goods was lost on account of the negligence ofthe creditor~ Bank, yet the surety would not be discharged from the obligation ! undertaken under the letter of. guarantee. Clauses 5, 7 and 13 \ may be extracted:

"5. You shall in any case, be at liberty and without my/our further assent or knowledge, at any .time, to grant to the customer or any person liable with or for him, whether as guarantor or otherwise, any time or indulgence and to determine, enlarge or vary its credit and t<J vary exchange or take other securities or release any other securities held or to be held by you for or on account of the moBeys intended to be hereby secured or any part thereof or to renew any bills, notes or other negotiable s.ecurity and to compound or make any other arrangements with the customer or any

. ,,

UA['E BANI:: v. c. R. RAJA (Desai, J.) 92 5

Person so liable with or for the customer as you may think fit A

without dischar_ging or in any manner affecting my/our liability under this guarantee."

"7. To tho.extent that you may obtain satisfaction of the whole of your claim ll8ainatthe customer, I/we agree that you may enforce and recover upon this guarantee the full amount

hereby guaranteed and interest thereon notwithstanding any such proof or composition as aforesaid, and notwith standing any other guarantee, security or remedy, guarantees, securities or remedies which. you may hold or be entitled to in respect of the sum inded to be hereby secured or any part thereof, and notwithstanding any charges or interest which may be debited in your account current with the customer, or in any other accouµt upon which the customer may be liable."

"13. Should the customer be a limited company, corporate or D anincorporate body, committee, firm, partnership, trustees or debtors on a joint account, the provisions hereinbefore contained shall be construed and take effect where necesary

as if the words importing the singular number included also the plural number. This my/our guarantee shall then remain effective notwithstanding any death, retirement, E change, accession o.r addition as fully as if the person or persons constituting or trading or acting as, such body, committee, firm, partnership, trustees, or debtors on joint account, at the date of the customer's default or at and time previously, was or were the same as the date hereof. And further you may recover against me/us to the extent here in F before mentioned notwithstanding that any security given or to be given to you may be void, defeetive, or informal, or . notwithstanding that the customer being a limitedJcompany,

corporate or unincorporate body or committee, may exceed its borrowing powers or that the borrowing from you may have been ultra vires." G

Clause 5 confers right upon the creditor Bank to grant any time or ii:idu!gence in payment of the debt or to determine, enlarge or vary its credit and to vary, exchange or take other securities or release any

other securities held by the Bank but such an act on the part of the Bank would not have thedJ:ect of discharging the surety or in any manner ; affecting his liability under the letter of guarantee. We fail to see how

'.,,.

clause 5 can help the creditor Bank in any manner. It is not a case of granting time or indulgence to the principal debtor or variation of the credit or taking one set of security in substitution of some other security . or release of any security. Release of security implies a volitional act on the part of the Bank. Loss on account of negligence cannot be equated with release. Therefore, clause 5 would.not assist the Bank J. in this case.

Clause 7 provides"for non-discharge of surety even if the creditor Bank enters into a composition with the principal debtor and that the (. surety would nonetheless be liable even if the Bank has guarantee, security or remedy, guarantees, securities or remedies from the principal debtor. Upon a true construction of clause 7, theeXPression 'any other guarantee, Security or remedy' therein mentioned must be security other than the pledged goods. In an almost iilentical situation with regard to an identical clauses in Amrit Lal Goverdhan La/an v. State Bank of Travancore and Ors,(1) this Court after referring to clause 5 in the letter of guarantee which is in pari materia with clause 7' of the letter of guarantee under discussion, held as under:

"On behalf of the respondent Bank reference was made to cl. 5 of Ex. P-4 which has already been quoted. It was contended that on acccount of this clause in Ex. P-4 the apPel- !ant has opted out of the benefit of s. 141 of the Indian >.- Contract Act. We are unable to aceept the argument put forward by the Attorney General on behalf of the reSpondent Bank. In our opinion, the expression "any security,. in cl. 5 of Ex. P-4 should be prowly construed as "any security other than the pledge of goods mentioned in the primary agreement, Ex. P-1 between the Bank and the . firm''. We consider that there is nothing in cl. 5 ofEx.P-4-e(

to indicate that the appellant is not entitled to invoke the J \ provisions of s. 141 of the Indian Contract Act."

Therefore, cl. 7 is of no assistance to the Bank.

A bare perusal of clause 13 would show that it provides for continuing the guarantee where the principal debtor is an association of persons. and for continuance of the guarantee in the event of death, retirement, etc. of one of such association of persons or the guarantee remaining intact and effective and legally enforceable irrespectiv~ of some defect arising from the internal .management of such association of persons.

We faitto see how it can render anyassistance to the Bank. - (I) [i968J 3 SCR724_at 731.

.).

I ,_ '

STATE BANK v. C. R. RA.TA (Desai, J.) 927

First•security, namely, the pledged goods are lost to the Bank an~. the concurrent finding again incontrovertible is that the pledged goods were lost on account of the negligence of the creditor Bank. WhoTe' of the security was lost and, therefore the surety would be discharged in entirety .because it is crystal clear that the principal debtor had agreed and had in fact pledged 5,000 tins of oil which even if sold at the then current market price would have satisfied the Bank's entire claim. Accordingly, the surety would be discharged in entirety.

It is difficult to entertain a contention that s. 141 would not. be attracted and the surety would not be discharged even if it is found that a creditor has taken more than one Security on the basis of which advanee was made and the surety gave personal guarantee on the good faith of other security being offered by the principal debtor which itself may be a consideratfon for the surety offering his personal guarantee and the creditor by its own negligence lost lone of the SeCUrities. Aceeptance of such a contention would tantainount to putting a premium on the negligence of the creditor to the detriment of the surety who is usually described as a preferred debtor. Should a Court by its construction of such letter of guaranteeenable 'the'crditor to act negligently and yet be not in any manner accountable ? Was the guarantee a guarantee against proper performance of the contract evidencing advance of loan and methods of its repayment, or a guarantee covering Bank's utter disregard of its responsibility or to use the words of the High Court, the Bank's utter negligence in failing to eXercise the care; ora prudent man which one would expect in management of one's own affairs ?

The appeal accordingly fails and is dismissed with costs. The respondent surety has made an application that in comp 1tanct>

11 I._ with the decree made by the trial court he had paid the entire amount

and he should not be exposed to second round of litigation for resti- 1 tution of the amount and that this Court should give aldirection to the Bank as part of this judgment that the amount be returned with interest at current rate to the respondent surety.

Bys.144 of the Code of Civil Proeedure, il90S as it stooa prior to amendment by the Code of Civil Procedure (Amendment) Act, 1976, the jurisdiction to grant reStitution was conferred upon the 'Court

of first instance'. Since the amendment the expressioni'the Court of

 H first instance' has been substituted by 'the Court which passed the decree or order'. An explanation has been added to s. 144 by the

Amendment Act of 1976, the relevant portion of which reads as under:

"Explanation-For the purpoSes of sub-section (I) the exprcliion

"Court which pasSed the decree or order" shall be deellled to include-

(a) where the decree or order has been varied or rcvoned

in exerciSe of apJleUate or revisional jurisdictioa, the Court of first instance.''

In the instant caSe the apjlellant was the plaintiff and its suit was decreed by the trial court, i.e. the Court of Civil Judge, Senior Dfvi. sion, Gonda!, on November 18, 1960. The present apjlellant by its letter dated February 14, 196t,.demanded from the surety a sum of Its. 84,828 07P. inclusive of costs and interest on the principal amo11nt decreed. The surety respondent I in this Court paid the apPcllant

Rs. 84,828 07P. on April 3, 1961. In the apJleal by the ty the High Court reVersed the deeree and dismisSed the suit against the surety. Accordingly, the surety is entitled to restitution.

The limited question is whether this Court can grant restimtion.

Prior .to Amendment Act, 1976, an application for re&titution Wider

s.144 in all caSes had to be made to the Court of first instanee.

EYer since the amendment the substituted eXPreSSion 'the Court which pa8Scd the decree or order' would as Jler clauSe(a) of the explanation, mean the Court of first instance becauSe the expression 'the Court which palled the decree or order' has been deemed to include where the decree or order has been varied or reverSed in eXerCiSe of appellate or revisional jurisdiction, the Court of first instance. The present one is the simplest case where the suit in favour of the appellant and against the surety was decreed by the trial court, i.e. the Court of first instance, and this decree has been reverSed by the High Court in e:tercise of its apJlellatc jurisdiction. In such a situation clause (a) of the explanation would be attracted and an application for re&titution will have to be made to the Court of first instance, i.e. the Court of CiYil Judge, Senior Division, Gonda!. It is nowhere suggested that au..m a Court does not exist. Therefore, it would not be proJler for this Court

t~ direct restitution. However, there will 6e no justification for the apjlellant Bank to withhold the amount which was collected from the surety on a mere demand. Therefore, an applicat_ion for re&titu&ion made by the surety would not lie to this Court and it would stand disposed of accordingly. l ., -.\

S.R.

Appeal dismissed.

STATE BANK OF SAURASHTRA

CHITRANJAN RANGNATH RAJA AND ANR

April 30, 1980

A. C. GUPTA

D. A. DESAI

E. S. VENKATARAMIAH, JJ.

Indian Contract Act

Section 141

sections 139

Civil Procedure Code, 1908

Sept'ernber 16, 1957

December 24, 1959

September 16, 1957

sections 139

Indian Contract Act

section 141

Verily

s. 141

[1967] 1 SCR 266

Clause 5

Clause 7

clause 7

section 141

section 144

section 144

April 3, 1961

S. N. Kackar

K. J. John

Narain for the Appellant.

S. T. Desai

H. S. Parihar

I. N. Shroff

DESAI

Article 133(1)

StateflBank of Saurashtra

Chitranjan Rangnath Raja

Harilal Parmananddas Adatia

Harilal Parmananddas Adatia, hereinafter referred to as 'principal
debtor', approached the Mmager of the Bagasra Branch of State .-Bank ofSaurashtra seeking facilityl for cash credit1 upto' Rs.

Vijay Oil Mills Pvt. Ltd.

sections 139 and 141

Indian Contract Act

C. R. Raia

Junagadh

Amrali

Vijay Oil Mills

section 141

Indian Contract Act

Section 141

s. 141

s. 141

Section 141

sections 139 and 141

s. 141

England

ss. 140 and 141

J(aluram

State of Madhya Pradesh

Kaluram

Hannen

s. 141

Indian Contract Act

Kackar

Clause 5

clause 5

clause 5

Clause 7

clause 7

clause 5

clause 7

cl. 5

s. 141

cl. 5

cl. 5

s. 141

Indian Contract Act

cl. 7

clause 13

s. 141

the Code of Civil Procedure

s. 144

February 14, 196t,.demanded

Amendment Act, 1976


RAMESH KAUSHIK

B. L. VIG, SUPERINIBNDENT AND ANR.

April 30, 1980

[V. R. KRISHNA IYER, 0. CHINNAPPA REDDY AND A. P. SEN, JJ.]

Jtdl Jurisprudence-Prison torture and Constitutional Jurisdiction of the Cowt-Tl'eatment for 'B' class amf 'C' class in Tihar !Mil whither o/Jlmlfs

Artidt 14 of the Constitution-Constitution of India Artie/ea 21, 19 and 14.

Kaushik, a lifer lodged in Tihar Jail moved a quasi habeas corpus petition .bittaiy complaining with facts and figures, of the terror and horror, pb, ysica1 C and poycbic, let loose on him and ot:ber jail mates by a crypto criminal combiaa- ·.tiOD of senior officials and superior prisoners, thereby making the prison life withia that walled world such a trauma a-nd torment the law never mearit under the sentence suffered at the bands of the Court. Briefly, the petitioner .allqiod that his life in jail is subjected to intimidation by overbearing ooglls'

inlide, that he is forced to be party to misappropriation of jail funds by Biid bribe<y of officers, that homoS:exual and sexual indulence with the connivmi<e D of ollicials are going on, that smuggling in and out is frequent and drug racket <:OOUllOll, that alcoholic and violent nUsconduct by gangs like those involved

in Bank Robbery and other notoriou,, cases are a menace to quieter prisoner& and the whole goal of reformation of sentences is defeated by this supercrimc syndrome. On this the Court appointed Sri Subodh Markentleya as amiaus curiae to inquire into the allegations and submit a report. The respondent Delhi. Adminitration transversed the grounds in the petition.

Allowing the petitions, the Court

HEID : 1. Prison torture is not beyond the reach of the Supreme Court in its constitutional jurisdiction. [931 Fl

Were there a modicum of truth in the disclosures made; of vice and violence,.

~-overt and covert, in the goings on in Tihar such an institutional outrage would

I. mate our constitutional culture blllsh and our judicial punishment 'guilty' pro- ' cednre. And on the materials placed before the, Court there is gronnd enough to exercise our exceptional but undoubted jurisdiction to ensure some minimum ''°f" aocial hygierie and banishment of licentious excesses lest the sentence of court be frustrated in its dual ends of deterrence and rehabilltatioo by prison

pathology. [932 B-C]

2.· When police and prison torture is escalating in our human rights era, courts owe a duty to society not to ignore such a dangerous reality. Under our , a-ilution, deprivatioo of personal liberty as penal policy ill purposive and the

Pemmf O:xle itself is valid because the imprisonment of the criminal is reason~ able. not arbitrary, and is sanctioned as a measure of social defence atid

indmdual rehabilitation. A court sentence does not deprive the prisooer of bis Dmdamental rights. To reform and deter the criminal and to work out that

procellS to social defence, the convict is cast into prison-not k> make Jhim more hardened, more brutal, more cunning and dangerous to society. This

A ron d'etr~ of penological institutions in our Gandhian country, with hnmarusm basic to. the. constitutional scheme, caonot be; written off without peril.

A Prison trm _in T1~ Jail is not a post graduate training in tough crime.

No sentencmg Judge, high and low should hang his helpless head in frustration and. humibation because institutional alternations and personnel perversions havec sullied and stultified the justice of his sentence. [932 F-H, 933 A, B, CJ -

B Sunil Batra v. State (Delhi Administration), [1980] 2 SCR,557; referred to.

3. The human rights of common prisoners are at a discount and~ ia our Socialist Republic moneyed 'B' class convicts operate to oppress the humbler inmates. There cannot be inequality in prison too on the score of social and financial status. Bank robbers in 'B' class because they are rich by robbery andJ nameless little men in •c• class because they are only common Indians! Article C 14 is suffocated if this classification is permitted, and yet that, according to rule itself, is prevalent. Therefore, the Supreme Court must act, will act, to resto1e the rule Of the law and respect of the residual fundamental risbls 0£

any harassed itioner. [933 D-F].

4. The writ jurisdiction Of the Supreme Court must be equal to the need& of human rights and human wrongs. In Sunil Batra (I) v. Delhi Admiltistration, [1979) 1 S.C.R. 393, this Court held that fundamental rights did not forsake prisoners and that the penological purpose of "'1tence was importantly,

reformatory even though deterrent too. In the second Sunil Batrds after a long discussion covering.American Rulings U.N. specifications of the Standard

Minimum Rules for prisons and the implications of Articles 21, 19 and 14 readl in the• light of Maneka Gandhi's case, [1978) 1 S.C.C. 248, this Court accented on the habilitative value contained in Rule 58 of the International Standard Minimum Roles. Jura! justice thus set makei lite COurt an activist instrument of jail Justice. [934 A-B, 935 A-B, 938 G]

5. In the instant case, even aftyr making a liberal allowance for adulteration and distortion, the mia6miatic process and restore basic humanism insidethis penal institution where sentences, punitively sent by court, are subjected' to unbearable tensions and torments oo their physical and moral fibre, thanb tothe prison milieu being what it is. [938 G-H, 939 A]

~ ..

'--'-I

'B' class status for prisoners is, going by averments in the petition, a pa.m~ poring process much abused by officials and, in ., 'class' culture, obnoxbm to-........., ., the Constitution. Equality before the law cannot co-exist with aftluent blacl<- '> guards being looked after with luxury and solicitude and lawly indigents being treated as pmaiahs inside the prisoru. There is reference in the petition to the.. l three dangerous criminals involved in aj big Bank Van Robbery Case being- G lodged in Ward 14 as 'B' aass VIPs, who have, on top of other advantages, certain facilities. It is fairly clear that many vices, including drng racl:ets, occasional violence, smuggling and trafficking in maay other impermissible .".~ things; have hospitable home in this peniteril:iary. The Administration has cons- 1' cientious responsibility for the decency and dignity, for correctional obligationsand social itygiene inside. prison houses and the time is long overdue for a. 'n thorough ov'erhaul of the prison managemenf in Tihar. [940 CE, 941 E-Fj.

6. The crisis in our prisons, the collapse of values in these campuseso th~ inner tension 'red in tooth and c1ass'! the corruption that makes for sensual in.du!-

, • , __ '._L_

gences, the barbarities that blirden the convicts and never heal them-<ill these A> processes can be reviewed and hwnaniution resorted if, only if, onr philosophy toww:ds crime and punishment change. If vengeance is the spirit of punish .. ment violence will be the prison way of life. [944 C-DJ

[The Court, keeping in view the principle of natural justice and, the limita tion of Court time directed a judicial enquiry by the District and Sessions Judge of Delhi who is a member of th" Boani of Visitors stressing the points to be B covered in particular1]

"I . [ORIGINAL JURISDICTION: Writ Petition Nos. 393 & 549 of 1980.

(Under Article 32 of the; Constitution)

S. Markendaya (Amicus Curiae) for the Petitioner.

M. N. Abdul Khader and Miss A. Subhashini for the Respondents.

The Judgment of the Court was delivered by.

KRISHNA IYER J •. ls a prison term in Tihar Jail a post-graduate course in crime? Such is the poignant issue that emerges from the facts of this case.

'The fundamental human right is not to a legal system that is infallible but to one that is fair' -these great words of Lord Diplock in

Mah(uaj v. Attorney General of Trinidad and Tobago (No.2) (I) trigger our jurisdiction to ensure a fair legal deal to the prisoner whose petition to this Court makes frightening exposures about the insiders of Delhi's Central Jail.

Kaushik, a 'lifer' (to use jail jargon), now lodged in the Tihar Central Jail, has moved this quasi-habeas corpus petition wherein he bitterly complains with facts and figures, of the terror and horror,

physical and psychic, let loose on him and other jail-mates by a cryptocrim.inal combination of senior officials and superior prisoners, thereb~ making the prison life within that walled world such a trauma and torment the law never meant under the sentence suffered at the hands of the court. Prison torture is not beyond the reach of this Court in its constitutional jurisdiction and so we appointed Shri Subodh

Markandeya as amicus Curiae and directed the Superintendent' of the JaH to make available for him facilities to meet the prisoner Icaushik and to present, after a brief fact-finding enquiry, the facts necesary for taking

further action, if any. Shri Markandeya has, with a gush of gusto, executed his work of assisting this Court and made a report, and we record our appreciation therefor. What makes law a force is a lawyer with a cause.

(I) (1978]1WLR902, 911.

ll The Delhi Administration has responded through counsel' and traversed the grounds in the petition but Shri Abdul Khader, apJJcllrilig

for the State, has fairly agrood that the Superintendent of the Celllral ~. jail, far from fighting shy of a probe into the prison management SJJ.d the shocking aspersions cast on it would welcome a judicial investigation where he could prove his innocence of the foul charges levelled . .. ) ' Were there a modicum of truth in the disclosures made of Vice

and violence, overt and covert, in the goings-on in Tihar such an illlltitutional outrage would make our constitutional culture blush and our judicial punishment 'guilty' procedure. And on the materials placed before us there is ground enough to exercise our exceptional but undoubted jurisdiction to ensure some minimum of social hygiene and banishment of licentious excesses lest the sentence of court be frustrated in its dual ends of deterrence and rehabilitation by prison pathology.

Briefly, the petitioner alleges that his life in jail is subjected to intimidation by. overbearing 'toughs' inside, that he is forced to be party to misappropriation of jail funds by and bribery of officers, that homosexual and sexual indulgence with the connivance of officials are going on, that smuggling in and out is frequent and drug racket common," that alcoholic and violent miscondu.ct by gangs like those involved in Bank Robbery and other notorious cases are a menace to <1Uieter prisoners and the whole goal of reformation of sentencees is defeated by this supercrime syndrome. Maybe, like Oicar Wilde, the petitioner, in flinging allegations, considers that "moderation is a fatal thing. Nothing succeeds like excess". Making a large margin for unveracious dilution, still if a fragment of truth survives, something is rotten in the state of Denmark'. This Courts'writ must remove from Tihar face such indelible stain and incurable wound.

When police and prison torture is escalating in our human rights era, courts owe a duty to socfoty not to ignore such a dangerous reality. "At this time the lack of law and order is especially of prime concern. Our courts must bear their .share .of blame and shame for / this condition" .(I)

Under our Constitution, deprivation of personal liberty as penal policy is purposive and the Penal Code itself is valid because the impriwnment of the criminal is reasonable, not arbitarary, and is sallCtioned as a measure of social defence and individual rehabilitation. A court sentence does not deprive the prisoner of his fundamental rights as a Constitution Bench., in Suni/ Batra' s case(2) recently expounded.

(1) From the dissellt of Montogomery, J. in Workmen and Pipes v. Kentucky

(376) (see also United States Prison Law Edn. 1975, Vol. I, p. 624 .

(2) Sunil Batra v. Delhi Administration [1980] 2 S.C.R. 557.

To reform and deter the criminal and to work out that process geared to social defence, the conviq is cast; into Prison-not[to make him more hardened, more brutal, more cunning and dangerous to society. This raison d'etre of penological institutions in our[Gandhian country, with humanism as basic to the constitutional scheme, cannot be written off without peril. And so it is that, after reading the fea1ful circumstances revealed in this case we focussed sharply, right at the outset, the grave issue:, Is a prison term in Tihar Jail a post-graduate training in tough crime? Is an invisible 'carser' mafia in defacto management of this penal institution? Should every sentencing judge, high and low, hang his helpless head in frustration and humiliation becanse institutional aberrations and personnel perversions have sullied and stultified the justice of his sentence?

We have been told by counsel for the State that several hundreds of VIPs have (ceremonially) visited and, of course, complimented the jail management. These conducted tours cannot, in themselves, contradict the contention that this campus of correction has degenerated into a human zoo. We keep an open mind and examine the facts bnt must confess that the Tihar Jail has come up for unhappy judicial notice too often in the past. We must also stress that the human rights of common prisoners are at a discount and, in our Socialist Republic, moneyed 'B' class convicts operate to oppress the humbler inmates, Can there be inequality in prison too on the score of social and financial status?, Bank robbers in 'B' class because they are rich by robbery and nameless little man in 'C' class because they are only common Indians! Article 14 is suffocated if this classification is permitted, and yet that according to rule itself, is prevalent as this Court has even in earlier cases pointed out. This , Court must act, will act, to restore the rule of law am! respect the residual fundamental tights of any harassed petitioner.

We are aware that general charges and sweeping complaints may tarnish innocent officers. We do not intend to find fault with any until proof is forthcoming. We are conscious 'that correctional orientation and cautious humanization have changed the attitudes of many jail officials. To blame them is beyound our purpose or power but to protect the caged humans from torture, gross or subtle, beyond what the law permits is our function, indeed, our duty.

From this perspective we may rapidly suryey the circumstances and

mould the reliefs.

Prison Jurisprudence, developed through case-law and derived Jl from constitutional law, already exists. As a jurisdictional matter and background-setter we may briefly refer to some of these aspects

before we discuss the controversial questions. In the Sunil Batra Case(I) the Constitution Bench brushed aside the 'hands off prisons' doctrine, upheld the fundamental rights of prisoners, though circumscribed severely by the reality of lawful custody. Desai, J., speaking for three of his colleagues and broadly concurring with the fourth clarified two positions (a) that fundamental rights did not forsake prisoners, and (b) tkat the penological purpose of sentence was, importantly, reformatory, even though deterrent too. In a later case, Suni/ Batra v. Delhi Administration (supra) another bench explained:

The court has a continuing responsibility to ensure that the constitutional purpose of the deprivation is not defeated by the prison administration.

In a few cases, this validation of judicial invigilation of prisoners' condition has been voiced by this Court and finally reinforced by the Constitution Bench in Batra (supra) (2).

The Court need not adopt a "hands off"[ attitude ... .in regard .D to the problem of prison administration. It is all the more so because a convict is in prison under the order and direction of the Court.

. .E.

. F

Under the caption "Retention of Authority over Prisoner by Sentencing Judge" (Krantz notes) (3),

As noted by Judge Lay in a Judicial Mandate, Trial Magazine (Nov.-Dec. 1971) at p.15

It should be the responsibility of the court in imposing the sentence to set forth as it would in any equitable decree, the end to be achieved and the specifics necessary to achieve that purpose .

If then, we are to have accountability in the execution of the sentence, courts must make clear what is intended in the imposition of the sentence. Every sentence should be couched in terms similar to a mandatory injunction. In this manner, the penology system is to be held to account if the government does not faithfully execute the order. '

In other words, the sentencing court should be required to retain jurisdiction to ensure that the prison system responds to the purposes of the sentence. If it does not, the sentencing court p could arguably have the authority to demand compliance with

; H (I) Suni/ Batra v. Delhi Administration [1979] l S.C.R. 393.

(3) Sheldon Krantz : Corrections and Prisoners' Rights P. 274-75.

\ . .........,

.,,

' IlAMESH KAUSHJK v. B. L. VIG (Krishna Iyer, J.) 935

the sentence or even order the prisoner released for non- A compliance.

Whether inside prison or outside, a person shall not be deprived of his guaranteed freedom save by methods, 'right, just and fair'.

A long discussion covering American rulings, U .N. specifications .of the Standard Minimum Rules for Prisons and the implications of B Arts. 21, 19 and 14 read in the light of ManekiJ Gandhi's case(I) led this Court in Suni/ Batra (2) (supra) to accent on the habilitative value contained in Rule 58 of the

International Standard Minimum Rules :

The purpose and justification of sentenee of imprisonment or a similar measure deprivative of liberty is ultimately. c

to 'protect society against crime. This end can only be achiev ed if the period of imprisonment is used to ensure, so far as possible, that upon his return to society the offender is not only willing but able to lead a law-abiding and Self-supporting life.

The action-oriented conclusion in that judgment, which bind the State, need re-emphasis since die-hard, practiees Persist. We rePeat

some of them here : (2)

Lawyers nominated by the District Magistrate, Sessions Judge, High Court and the Supreme Court will be given all facilities for interviews, visits and confidential communication

with prisoners subjeet to discipline and Security considerations.

This has root~ in the visitorial and supervisory judicial role.

The lawyers so designated shall be bound to make Periodical visits and records and report to the coneerned court results which have relevance to legal grievances.

Within the next three months, Grievance Deposit Boxes shall be maintained by or under the orders of the District Magistrate and the Sessions Judge which will be OPened as frequently as is deemed fit and suitable action taken on complaints made.

Access to such boxes shall be afforded to all prisoners.

District Magistrates and Sessions Judges shall, personally or through surrogates, visit prisons in their jurisdiction and afford effeetive opportunities for ventilating legal grievanees, shall make expeditious enquiries there into and take suitable remedial action. In appropriate cases reports shall be made

(I) [1978] I S.C.C. 248

936 SUPREME COURr ltEPORTS

[1980] 3 S.C.R'.

A to the High Court for the latter to initiate, it found necessary, habeas action.

xx xx xx

No solitary or pun\tive cell, no hard labour or dietary change as painful additive, no other punishment or denial of privileges and amenities, no transfer to other prisons with iJenal consequences, shall be impoSed thout judicial appraisal of the Sessions Judge and where such intimation, on account of emergency, is difficult, such information shall be given within two days of the action. xx xx xx

The State shall take early steps to prepare in Hindi a Prisoner's Handbook and circulate copies to bring legal awareness home to tbe inmates. Periodical jail bulletins stating how improvements and habilitative programmes are brought into the prison may create a fellow-ship which will eaSe tensions. A prisoners' wall paper, which will freely ventilategrievances will also reduce stress. All these are implementary . of s.61 of the Prisons Act. xx xx xx

The prisoners' rights shall 'be protected by the court by its writ jurisdiction plus contempt power. To make this jurisdiction viable, free legal services to the prisoner programmes shall be promoted by professional organisations recogni&ed by the Court such as for e.g. Free Legal Aid (Supreme Court) Society. The District Bar shall, we recommend, keep a cell for prisoner relief.

How far have these directives been implemented, especially to the !""'JI extent they affect the present petitioner? We will examine it pre- -, t sently, but before that, some materials about this jail and its way of life is needed to appreciate where the truth lies, as between assertiou. ! and denials.

In the 2nd Sunil Batra case(l)--- the Superintendent of the Tihar Jail testified :

A number of prisoners in the Tihar Jail are habitual offenders, professional .criminals who have been inmates of the Jail from time to time. . . . It has been noticed that these types of' prisoners have been able to develop a certain rapport with some

(1) [1980] 2 S.C-R. 557

of the lower staff in the jail namely Head Warders, Warders etc. and obtain certain facilities illegally including smuggling of number of items e.g. drugs etc. for their use. It may also submitted that to check smuggliug of narcotic drugs against prisoners who indulge in such activities 30 cases of narcotic offences were got registered against the prisoners with the Janakpuri Police Station during this year ...... It may also be mentioned that due to paucity of accommodation, the said jail is occupied by double the number of prisoners than it is otherwise authorised.

In that very case, the Court bad occasion to observe, on the materials present there :

"Since many officers busy themselves with production of prisoners in court, the case of the Superiutendent is that the other prisoners "try to do mischief, make thefts of other prisoners who go to work, smuggle things and even resort to assaults."

The crowning piece is that the jail officials themselves are allegedly in league with the criminals in the cells. That is, there is a large network of criminals, officials and non-officials in the house of corrections Drug racket, alcoholism, smuggling, violence, theft, unconstitutional punishment by way of solitary cellular life and transfer to other jails are not uncommon."

In that case, Dr. Chitale, who appeared for the prisoner, brought to our notice a literary work written by Shri Kuldip Nayar "In Jail" where the author bas recorded I: (1)

" ........ one could get as much money as one wanted from outside against a price. There was a money order and mail service that perhaps was more dependable than what the postal department could offer.

For instance, when a prisoner in my ward wanted two hundred rupees, he sent a note through a warder to his people in old Delhi and in less than twenty-four hours he had the money. He paid sixty-six rupees as collectiug char.gestbirty-three per cent was the prescribed "money-order charges." ...... Dharma Teja, the shipping magnate who served his sentence in Tihar, for instance, had thousands of TUPeeS delivered to him, we were told. And if one could pay the jail functionaries one could have all the comforts one sought.

Teja bad all the comforts-he had an air eooler in his cell, a . radio-cum-record player set aud even the facility of using the -(l) pp:-30-34.

21-463SCI/80

phone ...... Haridas Mundhra, a business man who was convicted of fraud, was another rich man who spent some time in Tihar. Not only did he have all the facilities, but he could also go out of the jail whenever he liked, at times he would be out for several days and travel even up to Calcutta.

All this, of course, cost a Jot of money. An even richer prisoner was Ram Kishan Dalmia; he spent most of his jail term in hospital. He was known for his generosity to jail authorities, and one doctor received a car as a gift.

But more than businessmen it was the smugglers jailed in Tihar who were lavish spenders. Their food came from Moti Mahal and their whisky from Connaught Place. They had not only wine but also women. "Babu ji, not tarts but real society girls," one warder said. The women would be brought in when "the sahiblog" went home for lunch, and their empty offices became "recreation rooms".

Corruption in jail wus so well organised aud so systematic that everything went like clockwork once the price had been paid. Jail employees at almost all levels. were involved, and everyone's share was fixed. There was never a dispute; there has to be the proverbial honour among thieves."

.. ..,

This backdrop to the Tihar lifestyle is disturbing enough. (Have )..

E other States their Tihars ?) The writ jurisdiction of this Court must be equal to the needs of human rights and human wrongs. Relying upon legal literature in the American jurisdiction especially the crystallised statement in American jurisprudence, this Court has laid down : (•)

The writ is not and never has been a static, narrow forma- listic remedy. Its scope has grown to achieve its purpose- 1 the production of individuals against erosion of the right to i. be free from wrongful restraints on their liberty.

Jura\ perspectives, thus set, make the Court an activist instrument of Jail Justice. We proceed on this basis to a consideration of the issues raised before us. But to clothe theSe issues with flesh and blood and to make abstract poignancies into concrete problems, We may excerpt at random some of the allegations made by the petitioner, perhaps, by mixing fiction with fact. Even after making a liberal allowance for adulteration and distortion, the miasmatic residue presses upon our judicial conscience to use the court processes and restore basic humanism inside this penal institution where sentencees, punitively

RAMESH KAUSH!K v. B. L. VIG (Krishna Iyer, J.) 93 9

sent by court, are subjects to unbearable tensions and torments on their physical and moral fibre, thanks to the prison milieu being what it is. The petitioner states that he had sent to one of the Judges of this Court* complaints about "atrociously unwholesome". treatment in the jail, on September 21, 22 and 24, 1979. He alleges that he had lodged a complaint against the Superintendent with the vigilance De partment of the Delhi State. His further version is better projected by quoting a few paragraphs from his own petition :

 That the Superintendent and Deputy Superintendent, under a severe threat of dire consequences and infliction of punitive torture, pressured the petitioner into signing an affi davit, denying having lodged any such complaints in the Supreme Court, the Delhi Administration and the Vigilance Department.

That, judging from the incidents of corruption, torture and drug-distribution, there can be no two opinions aut the Superintendent and Deputy Superintendent, brought from the adjoining province of Haryana, performing only in a manner of predators. Torture and drug-distribution are merely the means to corruption to achieve their ultimate end.

That there is a foreign convict confined in the Tihar Jail, along with a woman, who he claims to be his wife. They are

--J. both wanted by the Interpol. This man's criminal biography has been published in two books, written by foreign authors, wherein the criminal exploits of this criminal are admitted facts. He performs in the Tihar Jail as though he is the virtual administrator thereof. He retains a portable tape recorder, strapped of his calf, wherein he has filled incriminating , evidence against the Superintendent and the Deputy Superinl. :endent. By virtue of this black-mailing hold upon them he ) enjoys the following privileges :

(a) Free movements all over the jail compound from his own place of confinement in Ward 2.

(b) At least a dozen visits are made by him daily to the B class Ward 14.

Here he holds periodic conferences to plan his furtive strategy in company with three intimate associates-all co-accused in the six-lacs Bank Van Robbezy Case.

(c) The petitioner has himself seen the tape recorder kept hidden by him and his B Class criminal associates.

;; •Krishna Iyer, J.

SUPREME COURT IUIPORTS

[1980] 3 S.C.R,

(d) This foreigner is especially encouraged. and protected by the Superintendent and Deputy Superintendent. He can be seen visiting these offic.ers and holding private conforences in the private retiring rooms at the back of their offices almost daily.

(e) So much so, that the Deputy Superintendent even allows this foreign-convict to consummate sexual intercourse in his private back-room from time to time-the Deputy Superintendent performing as though he were this foreignconvict's pimp.

(f) Naturally, for conceding such and many more extra facilities, both the Superintendent and Deputy Superintendent charge heavy amounts from his foreign convict, who has now struck rich after the publication of his two books. ·

'B' Class status for prisoners 1s, going by averments in the petition, a pamperiug process much abused by officials and, in a 'class' culture, obnoxious to the Constitution. Equality before the law.cannot coexist with affluent black-guards being looked after with luxury and '

solicitude and lawly indigents being treated as paraiahs inside the prison. There is reference in the. petition to the three dangerous criminals involved in a big Bank Van Robbery Case being lodged inward 14 as 'B' Class VIPs, who have, on top of other advantages,. certain facilities like being. }.._

"Specially. allowed the privilege of having two young and handsome habitual drug-addicts locked in his cell at night, to serve him as passive agents for the appeasment of his homosexual lust, (e) has been provided with a TV set in his cell exclusively for his and his associates' entertainment, (f) smuggled-in alcohol is being regularly consumed by. the so- ·--f locked-together several prisoners in his cell, being rich, it is } these so-locked, together associates who finance the drug-and- '- alcohol racket.

Another shocking allegation of corruption is that even from sentencees undergoing rigorous imprisonment money is collected by high officials

"for allotting hard labour (of soft types'/) in the course of serving rigorous imprisonment and placing the convicts in the general barraks or private cells."

The petitioner further complains of having been physiCljllY assaulted and the averments relating to it run thus :

• I

That the agents appointed by the Superintendent and Dy.

Superintendent to sell narcotics in the Tihar Jail; (written complaint to this effect lodged with the Superintendent, who passed the matter on far enquiry to the Dy. Superintendent, who in turn took no disciplinary action) physically assaulted the petitioner on December 25, 1979 and Janu11ry 6 and February 7, 1980. However, no action has so far been taken and the culprits, being the agents of the Superintendent and Dy. Superintendent were skilfully shielded. In fact, the matter was deliberately suppressed because of the involved personal financial interests of the officers.

Apart from these statements there are serious charges of misappopriation, corruption, bribery and the like and the artful strategems adopted in that behalf. Shri .Markandeya contended that there was truth in the allegation that mandrex, charas and opium are freely ava1lable, thereby trying to establish that the sub-culture in the Central Jail, far from being reformatory is de-formatory of the morals of the prisoners. Indeed, many more things are mentioned in support of the petition, including newspaper reports, of the vices of the jail. But we are/not concerned in these proceedings with a general enquiry into the jail affairs and, therefore, confine ourselves to what has bearing on the ill-treatment of the petitioner.

It is basic fairness that we should not come to any conclusiop without remembering the fact that detailed counter-affidavits have been filed on behalf of the Superintendent and the Dy. Superintendent with supportive materials calculated to exonerate them. Even so it is fairly clear that many vices,. including drug rackets, occasional violence, smuggling and trafficking in many other impermissible ..... -things, have a hospitable home in this penitentiary. The Adminis-

' tration has conscientious responsibility for the decency and dignity, ...l.1. for correctional obligations and social hygiene inside prison houses f and the time _is lo_ng overdue for a. through overhaul. of the prison · management ID T1har. In an earlier Judgment, late ID 1979 (!W.P.

1009 of 1979), the Supreme Court had, in the strongest terms, stressed the imperative and urgent need for carrying out certain reforms and added the imprimatur of the court's authority for certain directives contained in Sun ii Batra' s case. Shri Markandeya complained that the injunctions of this Court have not been carried out while a contrary version is given by the Superintendent. While we express our consternation at the deterioration of the conditions in Tihar Jail despite its being in the capital city of the country, we are disturbed that no major measure of reform has yet taken place in the prison order or,

A for that matter, in the prison manual. Such indifference cannot deter the writ of this court running into the prison and compelling compliance, however tough the resistence, however high the officials.

Natural justiee and the limitations of court time persuade us to avoid a detailed investigation into the charges and the defences, by us B directly. We, therefore, adopt the alternative and more feasible method of directing a judicial enqujry by the District & Sessions Judge of Delhi who is a member of the Board of Visitors and whose responsibilities in this behalf have been outlined by us in both the Simi! Batra cases.

The petition contains specific grievances of physical assault and psychic torture, of tense atmosphere and delinquent pressure for which some 'B' class prisoners and superior officers are responsible.

This matter has to be investigated. Furthermore; iu the Suni/ Batra case (Supra), precisely to obviate the pernicious potential of prison torture, remedial mechanics had been worked out, formulated and translated into mandates. Whether these have been complied with, and if not, why not, require to be enquired into. When this Court issues a writ recusant parties will have to pay the penalty for noncompliance. This means, the violations and violators will have to be identified after due investigation. Having regard to all these instructions we make the following directions :

(1) The District and Sessions Judge, Delhi, will, within three months from today, hold an open enquiry within the jail premises, into the allegations contained in the petition of the prisoner Kaushik and in the report submitted to this Court by Advocate, Shri Subodh Markandeya.

(2) He will further enquire, with specific reference to the charges ofpersonal assault and compulsion for collaboration in canteen~ swindle and other vices made by the prisoner against the Superin- 'J 1 tendent and the Dy. Superintendent. . .1 ~

(3) He will go into the question of the directives issued in the concluding portion of Sunil Batra's case (supra) with a view to ascertain whether these directions have been substantially complied with and to the extent there is shortfall or default whether there is any reasonable explanation therefor.

(4) Being a Visitor of the jail, it is part of his visitorial functions for the Sessions Judge to acquaint himSelf with the condition of tension, vice and violence and prisoners' grievances. He will take . this opportunity to enquire into thoe aspects also with a view to

suggest remedial action.

The result of this inveStigation will be crystallised in the shape of findings, followed by specific instructions with a view to See that the petitioner and others like him are not burdened by additional aeerbities and harsher pressures than a legal, sentenee of rigorous im prisonment geared to reformation and intended for deterrenee necessari ly implied. The Sessions Judge will also give a specific time to the jail authorities for carrying out his directives, and after the period for compliance is over, will make a fresh visit to verify whether those mandates have been fulfilled. In the event of non-fulfilment, a report will be made to this Court before September 30, 1980 whereupon appropriate action to enforce compliance will be taken by this Court in its jurisdiction.

We may make it perfectly clear that the Sessions Judge will allow any person or official who wants to make any representations to him in the course of his enquiry to meet him publicly or in camera, but o.utsiders and strangers will not be allowed exeept Shri Subodh Markandeya or Government's Counsel. Of course, it will be open to

the Judge if he considers that such a stepwilladvancetheinterestsof D justice to allow any other public organisation or legal aid society.

The sessions judge, whom We have charged with the responsibility for enquiry, will make constructive suggestions to protect prisoner~· rights and to promote prisoners' habilitation and thus disprove Oscar Wilde :

. This two I know-and wise it were If each could know the same-

That every prison that men build is built with bricks of shame,

And bound with bars lest Christ should see How men their brothers main .

• • • • The wiles! deeds like poison weeds Blowm well in prison air :

It is only what is good in Man' That wastes and withers there.

(The Ballad of Reading Gaol)

' Jn this context, the focus of the Sessions Judge should not be

solely upon the warden and warders ofthejail, but also on the medical H offieers, whose connivance may, perhaps, explain Jiow drugs like mandraix are officially indented.

Our immediate concern is to protect the petitioner and others of his ill-from physical assaults by fellow-prisoner or warders, from moral stress by being forced; to assist in falsification and manipulation for canteen sales misappropriation, from discrimination in being subjected to hard labour of a harsh type if he does not oblige the 'B' class 'bosses' or senior officer's, from pressure against transmitting grievances to the Sessions Judge through the Grievance Box ordirectly to this Court bf.post. But remedial perspectives and procedures, to be successful, must be holistic, collective and not individualistic.

So, the human canvas ha' to be spread wider, the diagnosis has to be deeper and the recipe must senitize the environ.

The crisis in our prisons, the collapse of values in these campuses, the inner tension 'red in tooth and claw', the corruption that makes for sensual indulgences, the barbarities that harden the convicts and never heal them-all these processes can he reviewed and humanization resorted if only if, our philosophy

owards crime and punishment change. If vengeance is the spirit of punishment, violence will be the prison way of life. That is why Karl Menninger in his "The Crime of Punishment" exposes this folly: ...... Punishment is in part an attitude, a philosophy. It is the deliberate infliction of pain in addition to or in lieu cif penalty .... What is gained for anybody when a man who has forged a check for sixty dollars is sentenced to the penitentiary for thirty years •... The judge's rationalization was that the man had offended in this way twice before (!)and had served shorter sentence without reforming :

( , "' ..

I. -...,

'll ...... This is not penalization. This is not correction. This is not public protection. This is not reformation. It is sadistic persecution of the helpless at public expense, justified by the ~. .. 1 ': .. ·· punishment principle. '"' .

From this new angle, the hospifal-setting approach to pisons . < t .

Gandhiji advocated, the therapeutic tbuch penologists argue for and l ;,, the raising of the level of consciousness, institutional and individual, l of officials and prisoners-all these woven into a composite strategy- ·" may well be the highway to higher awarensss and socialisation of feeling inside correctional homes. This technology takes us to method like transcendental meditation, self-expression through work, facilities for studies and artistic development. The warden's drill the warder's billy or the VIP's 'good chit' cannot work magic.

Shri Markandeya's further report substantiates the thesis we have set out that prison violence and scalating criminality directly

' 1"i'

RAKBSH KAUSHIK v. B. L. VIG (Krishna Iyer, J.) 945

ll.ow from the anti-rehabilitative strategies and counter-productive 'life-style prevalent in the Tihar. The VIP criminals in league with other prison toughs are alleged to have organised the beating up of one prisoner. The part of the prison officials may or may not be direct, but is surely vicarious. Not until a transformation iri the awareness .of the top-brass, not until new techniques of instilling dignity and mutual respect among the prisoners, not until a hospital setting and -curative techniques pervade the staff and the inmates, can there be any human right conscious reformation in the Tihar prison. All that we need say is that in the enquiry that we have directed the Sessions Judge to hold this perspective will inform his interrogations and investigations.

We have drawn the broad lines indicative] of the direction of correction and leave it at that. The fundamental fact of prison reforms comes from our constitutional recognition that every pri- -soner is a person and personhood holds the human potential which, if unfolded, makes a robber a Valmiki and a sinner a saint. ·

S.R.

Petition allowed. ,

RAMESH KAUSHIK

B. L. VIG, SUPERINIBNDENT AND ANR

April 30, 1980

V. R. KRISHNA IYER

0. CHINNAPPA REDDY

A. P. SEN, JJ.

Constitution of India

Subodh Markentleya

Supreme Court

Gandhian

[1979) 1 S.C.R. 393

Sunil Batrds

Articles 21, 19 and 14

Maneka Gandhi

crisis in our prisons

District and Sessions Judge of Delhi

Article 32

S. Markendaya

M. N. Abdul Khader

A. Subhashini

KRISHNA IYER

Diplock

Delhi

Subodh

Markandeya

Icaushik

Markandeya

Delhi Administration

Abdul Khader

Oicar Wilde

Denmark

Penal Code

Suni/ Batra

Montogomery

[1980] 2 S.C.R. 557

Article 14

Sunil Batra

Constitution Bench

Desai

Batra

Lay

Sheldon Krantz

Arts. 21, 19 and 14

ManekiJ Gandhi

Prisons Act

Janakpuri Police Station

Chitale

Kuldip Nayar

Dharma Teja

Tihar

Haridas Mundhra

Calcutta

Ram Kishan Dalmia

Connaught Place

Krishna Iyer

September 21, 22 and 24, 1979

Haryana

Interpol

They are
J. both wanted by the Interpol.

•Krishna Iyer

December 25, 1979

Janu11ry 6 and February 7, 1980

.Markandeya

Sun ii Batra

District & Sessions Judge of Delhi

Simi! Batra

District and Sessions Judge, Delhi

Kaushik

Subodh Markandeya

September 30, 1980

Oscar Wilde

Karl Menninger

Gandhiji