Document Fragment View

Matching Fragments

It is further argued that the said Corporate Guarantee does not permit the revocation of the Guarantee. There was a specific clause in the deed of continuing guarantee that the "guarantee shall be a continuing one and shall remain in full force and effect till such time the borrower repays in full the Loan together with interest, liquidated damages, costs, charges and all other monies that may from time to time become due and payable and remain unpaid to the lender under the Loan Agreement". Therefore, in terms of the contract entered upon by the guarantor with the Bank, it was clear that even if the loan account shows no liability, the guarantor will continue to be bound by the terms of the guarantee in the case of continuing guarantee.

It has been further contended that Section 130 of the Contract Act deals with the Revocation of continuing guarantee. Section 130 reads as under :

"130.Revocation of continuing guarantee: A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor."

It has been further argued that no such letter/notice were ever issued by the petitioner to the bank in terms of HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE