M. S.

Anirudhan vs The Thomco'S Bank Ltd: (1963 AIR 746, 1963)

Sec 133 of ICA: Discharge of surety by variance in terms of contract

“Any variance, made without the surety’s consent, in the terms of the contract between the
principal debtor and the creditor, discharges the surety as to transactions subsequent to the
variance.”
Issue: Where a variation is not substantial or material, or is beneficial to the surety, will he be
discharged?
Facts:The defendant (N. S. Anirudhan), guaranteed the
repayment of a loan given by the plaintiff bank (Here,
Thomco's Bank Ltd.), to the principal debtor (V. Sankaran).
The guarantee paper showed the loan to be Rs 25,000. The
bank refused to accept. The principal debtor then reduced
the amount to Rs 20,000 and without intimation to the
surety gave it to the bank which was then accepted. The
principal debtor failed to pay and the bank sued the surety.
Judgement of Kerala HC

While taking note of the Sec 133 of ICA and Sec 87 of Negotiable instrument act, the court answered affirmatively.
Sec 87 of Negotiable instrument act: “Effect of material alteration.

Any material alteration of a negotiable instrument, renders the same void as against any one who is a party thereto at the time of making such alteration and does not

consent thereto, unless it was made in order to carry out the common intention of the original parties;

Alteration by endorsee: And any such alteration, if made by an endorsee, discharges his endorser from all liability to him in respect of the consideration thereof. The

provisions of this section are subject to those of sections 20, 49, 86 and 125.”
View of Supreme Court:

the SC while reversing the judgement of hon’ble HC, held that the variation made in the agreement can’t be consider as substantial or material to the original terms, hence

surety will not be discharged.

Thank You.