Case Note & Summary
The Supreme Court allowed appeal by Appellant against High Court order that discharged sureties from all liability -- The Court held that under Section 133 of Indian Contract Act, 1872, sureties are liable for original sanctioned loan amount of Rs. 4,00,000/- but discharged for subsequent overdrawn amounts as variance occurred without their consent -- The Court restored Gujarat State Co-operative Tribunal order with modification, directing recovery of Rs. 4,00,000/- with interest from sureties -- The judgment clarified that surety liability can be bifurcated between original contract and subsequent variations
Headnote
The Supreme Court allowed civil appeal filed by Appellant against Respondents -- The Court held that sureties are liable under Section 133 of Indian Contract Act, 1872 for original loan amount of Rs.4,00,000/- but discharged for subsequent overdrawn amounts due to variance without consent -- The High Court order was set aside and Gujarat State Co-operative Tribunal order restored with modification -- The judgment interpreted Sections 133 and 139 of Indian Contract Act, 1872 in context of surety liability bifurcation
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Issue of Consideration: Whether respondents are entitled to benefit under Section 139 of Indian Contract Act, 1872 or liable as sureties under Section 133 of Indian Contract Act, 1872
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Final Decision
The Supreme Court allowed appeal, set aside High Court order, restored Gujarat State Co-operative Tribunal order with modification -- Held sureties liable for original loan amount of Rs. 4,00,000/- with interest under Section 133 of Indian Contract Act, 1872 but discharged for subsequent overdrawn amounts
