Security bond liability ends with a one-year warehouse licence unless the bond or rules clearly extend it

A security bond executed for a one-year tobacco warehouse licence is construed with the licence and governing warehousing rules, and it does not create continuing surety liability beyond the licence period unless the bond or rules clearly say so. Rule 140 required a bond for compliance with statutory conditions, while Rule 178 limited the licence to one year. Rule 155 did not extend liability after expiry when goods were moved to another warehouse, and a later letter by the surety did not enlarge the bond's scope. The surety was therefore not liable for dues arising after expiry.

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Issues: Whether the surety under a security bond executed for a one-year tobacco warehouse licence remained liable for excise dues arising from tobacco admitted or removed after expiry of the licence period.

Analysis: The bond was executed in pursuance of the warehousing rules and had to be construed with the licence and the relevant rules. Rule 140 required a licence holder to furnish a bond for observance of the statutory conditions. Rule 178 limited a licence to a period not exceeding one year, and nothing in the bond showed an intention to extend the surety's undertaking beyond the licence period. Rule 155, which dispensed with a fresh bond when goods were removed to another warehouse, did not authorise the extension of liability after the expiry of the original licence period. The surety's later letter did not enlarge the contractual or statutory scope of the bond.

Conclusion: The surety was not liable for dues arising beyond the licence period, and the appeal succeeded for the appellant.

Ratio Decidendi: A security bond tied to a one-year excise warehousing licence does not create a continuing liability for a surety beyond the period of the licence unless the bond or governing rules clearly extend that liability.

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