Surety liability under an award survived statutory discharge of the principal debtor; civil challenge to sale officer's order was maintainable.

An award fixing equal, unconditional liability on both a principal debtor and a surety preserved the surety's liability even after the principal debtor's debt was later discharged by operation of the Debt Conciliation Act, because the liability had already merged in the award and Section 134 of the Indian Contract Act did not apply. The court also held that a civil suit challenging the sale officer's order in execution was maintainable, since the applicable co-operative society procedure expressly contemplated such a challenge and the jurisdiction objection failed. The appeal succeeded, the lower appellate decree was set aside, and the trial court decree in favour of the bank was restored.

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Issues: (i) Whether the surety remained liable under an award passed against both the principal debtor and the surety, despite the principal debtor's debt being deemed discharged under the Debt Conciliation Act; (ii) Whether the civil suit challenging the sale officer's order was barred because the dispute fell exclusively within the co-operative society machinery.

Issue (i): Whether the surety remained liable under an award passed against both the principal debtor and the surety, despite the principal debtor's debt being deemed discharged under the Debt Conciliation Act.

Analysis: The award imposed an unconditional and equal liability on both the principal debtor and the surety. Once the award was passed, the rights and liabilities of the parties, so far as determined by the award, stood conclusively fixed. The discharge of the principal debtor's debt by operation of the Debt Conciliation Act did not undo the liability created by the award against the surety. Section 134 of the Indian Contract Act, 1872, which deals with discharge of a surety where the creditor destroys the principal debt by act, omission, or agreement, did not apply where the liability had already been merged in a decree or award and the discharge of the principal debt occurred by operation of law. The surety's right of reimbursement did not control the creditor's right to execute the award.

Conclusion: The surety's liability under the award was not discharged, and execution could proceed against him.

Issue (ii): Whether the civil suit challenging the sale officer's order was barred because the dispute fell exclusively within the co-operative society machinery.

Analysis: The execution of the award was pursued under the special procedure provided by the co-operative society rules, and the sale officer had entertained the objection and made an order. The suit was brought under the rule enabling a challenge to the sale officer's order. The contention that the Civil Court lacked jurisdiction was rejected because the challenge arose from the execution process and the statutory procedure itself contemplated a suit against such an order.

Conclusion: The civil suit was maintainable, and the jurisdiction objection failed.

Final Conclusion: The appeal succeeded, the lower appellate court's decree was set aside, and the trial court's decree in favour of the bank was restored.

Ratio Decidendi: Where liability has been conclusively fixed by an award or decree against both principal debtor and surety, a subsequent statutory discharge of the principal debtor's debt does not, by itself, extinguish the surety's liability under that award or decree.

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