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1 - 10 of 11 (0.20 seconds)Section 62 in The Indian Contract Act, 1872 [Entire Act]
Section 130 in The Indian Contract Act, 1872 [Entire Act]
The Indian Contract Act, 1872
Section 84 in The Multi-State Co-Operative Societies Act, 2002 [Entire Act]
The Companies Act, 1956
Mukesh Gupta vs Sicom Ltd. on 11 June, 2003
Learned counsel for the Petitioner submits that
even if this part of the case could be said to be overruled by
the Division Bench in Mukesh Gupta's case (supra), that any
alteration of the contract as between the creditor and the
principal debtor, not assented to by the surety, discharges him
still holds as good law. No doubt that is so. But, as observed
above, there is no variance here so far as the original contract
of finance as between the creditor and the principal debtor is
concerned and accordingly, the law stated in Ali Mohammad's
case has no application here.
Pratapsing Moholalbhai Seth vs Keshavlal Harilal Setalvad on 27 November, 1934
On this issue, learned counsel
relies on the decision of the Privy Council in the case Seth
Pratap Singh Moholalbhai vs. Keshavlal Harilal Setalwad
(AIR 1935 PC 21). In that case, the principal debtor had
originally created a charge upon four immovable properties.
On the strength of this original contract, the surety had
guaranteed repayment of the debt of the principal debtor.
This contract was subsequently altered by releasing the
charge upon property no. 4. The advance made by the
creditor to the principal debtor was treated as reduced from
the original advance of Rs.1 lakh 25 thousand to Rs. 1 lakh,
and the security was reduced from four properties to three.
Their Lordships of the Privy Council held that for this
performance, for which the surety had not contracted, the
surety could not be held liable. The original contract of
finance of Rs. 1 lakh 25 thousand on the security of four
properties was gone and what was substituted in its place
was a contract for advance of Rs.1 lakh on the security of
three properties. The surety had not assented to this new
contract. It was not this contract for the performance of
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which he could be bound. Unless the surety assented to the
new terms there was nothing to which he could be bound and,
accordingly, the contract of surety-ship was treated as
discharged. This is nothing but the effect of section 133 of
the Contract Act, where variance of the contract between the
principal debtor and the creditor, without the surety's consent ,
discharges the surety. The facts of this case are materially
different from the facts of our case. In our case, there is no
alteration or substitution of the original contract as between
the creditor and the principal debtor. The original finance
made by the creditor to the principal debtor was simply
continued by a document of renewal of the contract and the
guarantee of the surety for this contract being a continuing
guarantee, and there being no notice of revocation of such
continuing guarantee under section 130 of the Contract Act,
the obligation of the surety clearly continued to operate.
There is no discharge, thus, either under Section 133 or
Section 130.
The Indian Bank, Madras vs S. Krishnaswamy And Others on 15 February, 1989
12 Even the decision of Madras High Court in the case
of Indian Bank, Madras vs. S. Krishnaswamy, (AIR 1990
Mad115) is clearly distinguishable. In that case, the appellant
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bank had not kept the guarantor informed about the
securities taken by the bank from the principal borrower. The
creditor had lost some of these securities. Neither the losing of
the movables such as LIC policy and shares taken control of
nor the shortfall in the securities was communicated by the
creditor to the guarantor. So also, there was some additional
security taken by way of second mortgage without the
knowledge of the respondent-guarantor. The respondent
guarantors were not parties to this fresh arrangement with
the principal debtor by which all outstanding accounts were
adjusted and converted into a term loan for Rs. 35 lakhs. In
these facts, the court held that the respondent sureties had
stood discharged from their liabilities by (a) negligence of
the bank in losing goods in their custody, and (b) by virtue of
a fresh agreement between the appellant bank and the
principal debtor, which the respondent sureties were neither
party to nor made aware thereof.
Sita Ram Gupta vs Punjab National Bank And Ors on 10 March, 2008
14 As held by the Supreme Court in the case of Sita
Ram Gupta's case (supra), the surety cannot claim the benefit
of section 130 or any other provision of the Contract Act by
reason of waiver of such benefit whilst entering into the
agreement of guarantee with the creditor. As a general Rule,
any person can enter into a binding contract to waive the
benefit conferred upon him by any Act of parliament, unless
it can be shown that such agreement or waiver is, in the
circumstances of the particular case, contrary to public policy.
The advantage of any law or rule, made solely for the benefit
or protection of the individual in his private capacity, may be
dispensed with by him without infringing any public right or
public principle.