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10. The second plea advanced by learned Counsel for the petitioner is based on the lack of any consideration for execution of this mortgage. Learned Counsel referred to the provisions of Section 127 of the Indian Contract Act, 1872 (hereinafter to be referred to as, the Contract Act), which reads as under:

127. Consideration for guarantee. Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee.

Illustrations

Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee.

For the validity of a contract of guarantee, it is adequate consideration if anything is done or any promise made for the benefit of the principal debtor. The nature of the things done which constitutes such consideration can be gleaned from some decided cases to which reference has been made by the learned Counsel for the parties.

(9) In Nanak Ram v. Mehin Lal 2nd 1 All 487 where N. advanced money to K. on a bond hypothecating K.'s property, and mentioning M. as surety for any balance that might remain due after realization of K.'s property, M. being no party to K.'s bond but having signed a separate surety-bond two days subsequent to the advance of the money, it was held that the subsequent surety bond was void for want of consideration under Section 127 of the Indian Contract Act.

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(14) A reference to illustration (c) of Section 127 of the Indian Contract Act may be made. It reads:

A. sells and delivers goods to B. C. afterwards without consideration, agrees to pay for them in default of B. The agreement is void.

From this illustration, I feel fortified in my conclusion that anything done or any promise made for the benefit of the principal debtor must be contemporaneous to the surety's contract of guarantee in order to constitute consideration therefore. A contract of guarantee executed afterwards without any consideration is void.

19. A Division Bench of the Madras High Court in Union of India v. Bank of India and Ors. 51 (1981) Company Cases 494 held that in transactions of guarantee, the creditor should have done or agreed to do something in consideration of the surety giving the guarantee. If the execution of this surety bond is simultaneous with the original borrowing, then the original lending by the creditor will itself form sufficient consideration for the surety of bond, but where the surety bond comes into existence after the original borrowing, the creditor must prove if he wants to proceed against the surety or guarantor, that in consideration of the contract of surety or guarantee, he did something or refrained from doing something.