Supreme Court of India upheld the decision of the Allahabad High Court in a case involving the acceptance of security furnished by a judgment debtor. The appellant had provided a rented shop belonging to a third party as security, with the surety being a tenant. However, the court determined that this form of security could not be accepted under the law.

The bench consisting of Justices K.M. Joseph and Hrishikesh Roy heard the appeal against the decision of the High Court, which had dismissed the writ petition filed against the Trial Court's order. The Trial Court had rejected the surety provided by the appellants and dismissed their application filed under Section 17 of the Provincial Small Cause Courts Act, 1887, regarding an ex-parte decree passed by the Court of Small Causes.

The Supreme Court noted that according to the proviso to Section 17 of the Act, an applicant seeking to set aside an ex-parte decree must either make a deposit of the amount in question or provide security. However, the court clarified that based on a previous Supreme Court decision (Kedarnath vs Mohan Lal Kesarwari and Ors., AIR 2002 SC 582), the requirement of deposit could be dispensed with by the court. Therefore, the applicant could seek a dispensation with the deposit requirement and seek permission to furnish alternative security as directed by the court.

In the present case, the Trial Court initially allowed the application filed under Order IX Rule 13 of the Code of Civil Procedure, 1908, and held that the appellants had complied with Section 17(1) of the Act by making the required deposit and providing sufficient surety. However, this order was set aside by the Additional District Judge (ADJ) in a revision petition, and subsequently, the application filed under Section 17 of the Act was dismissed by the Trial Court, and the surety was rejected. The ADJ and the Allahabad High Court also upheld these decisions.

The Supreme Court observed that the proviso to Section 17(1) of the Act contemplates filing a Section 17 application before the application under Order IX Rule 13. The court further stated that based on the Kedarnath judgment, the words "on a previous application" in the proviso to Section 17 are understood to mean an application that may be made along with the application filed under Order IX Rule 13 of the CPC.

The court concluded that since the appellants filed applications under Order IX Rule 13 and Section 17 on the same day, the application under Section 17 should have been accompanied by a cash deposit for the Order IX Rule 13 application to be maintainable. However, the appellants did not furnish any security on the date of filing their applications.

The court emphasized that the appellants had not complied with the mandatory requirement of Section 17 and clarified that the provision allows the court to dispense with the deposit requirement but still requires the applicant to seek leave for furnishing alternative security as directed by the court.

The court also noted that the appellants filed an application seeking permission to deposit/furnish surety but no orders were passed on that application filed under Section 17 on 06.05.2014. Subsequently, on 12.05.2014, the appellants on their own attempted to furnish security in the form of a rental shop owned by the Municipal Corporation, Lucknow, of which the surety was a tenant. The Trial Court allowed this security, but it was set aside by the ADJ.

The court agreed with the previous decisions that the security provided by the appellants in the form of a rented shop belonging to a third party was not acceptable under the law.

The High Court had concluded that the security provided by the appellants was unacceptable because it was not furnished along with the application under Order IX Rule 13 and also because it was not acceptable in law. The Supreme Court agreed with this conclusion.

The court further noted that the appellants did not challenge the ADJ's order dated 01.08.2017, which had set aside the Trial Court's order. The Trial Court was bound by this order, and since the appellants did not challenge it, their belated challenge in a writ petition was deemed to be unhelpful to their case.

As a result, the Supreme Court dismissed the appeal filed by the appellants and stated that there would be no order as to costs.

Case Title: "Arti Dixit & Anr vs Sushil Kumar Mishra & Ors."