Case Note & Summary
The case involved a dispute over a guarantee provided by the appellant for an overdraft facility extended by the respondent Bank to a principal debtor, Sankaran. The appellant initially agreed to guarantee an overdraft of Rs. 25,000, but the document was altered to Rs. 20,000 without his knowledge or consent. The trial court ruled in favor of the appellant, stating that the alteration was material and discharged him from liability. However, the High Court reversed this decision, asserting that the alteration was made to reflect the common intention of the parties involved. The appellant appealed to the Supreme Court, which examined the nature of the alteration and the authority under which it was made. The court concluded that the alteration did not discharge the appellant's liability as it was made by the principal debtor, who was acting as the agent of the appellant. The court emphasized that the surety's liability remains intact unless the alteration is made while the document is in the possession of the promisee or their agent. Ultimately, the Supreme Court dismissed the appeal, affirming the High Court's ruling and upholding the appellant's liability under the guarantee.
Headnote
A) Contract Law - Guarantee - Discharge of Surety's Liability - Indian Contract Act, 1872, Section Not Mentioned - The appellant contended that he was discharged from liability due to a material alteration made to the guarantee document without his consent. The court held that the alteration did not discharge the surety as it was made by the principal debtor acting as the agent of the surety, thus maintaining the surety's liability under the contract (Paras 1-10).
Issue of Consideration
Whether the appellant was discharged from liability due to the alteration of the guarantee document without his consent.
Final Decision
The Supreme Court dismissed the appeal, affirming the High Court's ruling that the appellant remained liable under the guarantee despite the alteration.
Law Points
- Guarantee
- Surety
- Material Alteration
- Liability
- Negotiable Instruments Act
