Analysis of Co-extensive Liability of Surety with that of Principal Debtor

In this article ‘Analysis of Co-extensive liability of surety with that of Principal Debtor’, Madhavi Raje and Kushagra Krishna have discussed the contract of guarantee and the extent and nature of surety’s liability.

I. Introduction

According to section 126[1], a contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default. Three parties involved in a contract of guarantee are, surety, who gives the guarantee; principal debtor, the person in respect of whose default the guarantee is given and creditor, to whom the guarantee is given.

The liability of surety with regard to the principal debtor is co-extensive[2]. This means that the surety is liable for the exact amount for which the principal debtor is bound and nothing more than that unless otherwise provided in the contract of guarantee.

It depends upon the creditor to choose against whom he wants to proceed first. If he so wishes to move against the surety first then the fact that he did not initiate a proceeding against the principal debtor holds no consequence. The same is true for hypothecated goods and mortgaged goods. The surety can limit his liability by placing such terms in the contract itself.

The liability of surety can be discharged by:

1. Revocation (S 130)
2. Death of surety (S 131)
3. Novation in the terms of the contract (S 133)
4. Release or discharge of principal debtor (S 134)
5. When creditor compounds with, gives time to, or agrees not to sue, principal debtor. (S 135)
6. Impairing guarantor’s remedy (S 139)

II. Extent of Surety’s Liability

A. Co-Extensive Liability concerning Principal Debtor

The liability of the guarantor is co-extensive with that of the principal debtor and the guarantor will be liable to the extent as the principal debtor will be. It is provided in section 128 of the Indian Contract Act i.e. Surety’s Liability.

Section 128^[3] of the Indian Contract Act states that “Liability of surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract”. This means that unless there is a contrary agreement in the contract, the creditor has the freedom to sue either the principal debtor or surety or both.

In Bank of Bihar v. Damodar Prasad^[4], the Hon’ble Court held that an action against the surety cannot be prevented solely on the ground that the creditor has an alternative relief against the principal borrower. It was held that asking the creditor to exhaust his remedies against the principal debtor first and only then move against the surety would defeat the purpose of the guarantee.

In State Bank of India v. Indexport Registered^[5], the Hon’ble Supreme Court held that surety cannot insist that the creditor should first exhaust his remedies against the principal debtor. The same was reaffirmed in Ram Bahadur Singh v. Tehsildar Bisli^[6]. In the case of, N. Narasimhaiah v. Karnataka State Financial Corpn^[7] it was held that a suit against the surety is maintainable even if the creditor has not sued the principal debtor.

The term ‘co-extensive’ under section 128^[8], implies that the liability of the surety is at par with the principal debtor. Liability of surety is the same as principal debtor and not more than that. In Maharaja of Benaras v. Har Narain Singh^[9], it was held that if the principal debtor is liable to pay interest, the surety can also be held liable to pay the interest. So, it is a settled principle in the law of contracts that if the principal is liable for the principal amount plus the interest and other charges, then the creditor has the option to move against either the surety or the principal debtor to recover that amount.

In Karnataka State Industries Investment and Devp Corpn Ltd v. SBI^[10], the court held that dismissal of the suit against the principal debtor does not itself absolve the surety from his liabilities. In the case of SBI v. Saksaria Sugar Mills Ltd^[11] it was held that if the management of the principal debtor’s company has been taken over, that does not discharge the guarantor from his liability.

In case of death of the principal debtor, a suit against him becomes void-ab-initio but the surety, in this case, is not absolved from his liability. However, if the liability of the principal debtor is scaled down, then the liability of surety also reduces accordingly^[12] or if the liability of the principal debtor is declared unenforceable on the ground that the contract is illegal, then the liability of surety also ends there^[13] or if the contract entered between the principal debtor and the surety is declared to be void on the ground that the principal debtor was a minor at the time of entering into the contract, the liability of surety also ends.^[14]

In Central Bank of India v. C L Vimla^[15], it was held that if the guarantor agreed to be bound by any judgment or decree obtained by the creditor against the principal debtor in the guarantee clause, then any settlement or compromise between the principal debtor and the creditor is binding upon the guarantor and the fact that he did not know of such settlement or compromise has no consequence.

In the case of Nandlal Chogalal v. Surajmal Gangaram^[16], in a suit against the principal debtor and surety, the debtor was ordered to pay in instalments and the suit against surety was dismissed. This decision was held to be improper and the principle of co-extensive liability was reaffirmed in the case of Jagdish Sarda vs. SBI^[17]. Therefore, it is a settled principle in the law of contract that, the liability of the surety is joint and several with the principal debtor.

B. Liability concerning Pledged Goods

In the case of UP Financial Corpn v. Garlonn Polyfeb Industries^[18] it was held that there was no specific condition that the financial corporation should proceed against the hypothecated property first; it can proceed against the surety without proceeding against the hypothecated goods. The same was reiterated in the case of State Bank of India v. Gautmi Devi Gupta^[19] that creditor can move against the surety even without proceeding against the hypothecated property.

Earlier in the case of Union Bank of India v. Manku Narayan^[20], Supreme Court held that in case the creditor obtains a decree against the principal debtor, surety and the mortgaged property, then he should first move against the mortgaged property and then proceed against the surety.

This decision of the Supreme Court was overruled in the case of SBI v. Indexport Registered^[21] where the court held that “The decree is simultaneous and it is jointly and severally (passed) against all the defendants including the guarantor. It is the right of the decree-holder to proceed with it in a way he likes.” It also said that in case the hypothecated goods were sold and the decreed amount was adjusted then the guarantor cannot ask the decree-holder that he should have first moved against him instead of proceeding against the mortgaged goods.

A financial corporation cannot move against the mortgaged property without the knowledge of the guarantor or auction the property without his knowledge.^[22]

C. Surety’s Right to Limit his Liability

Section 128 clearly states that the liability of the surety is co-extensive with the principal debtor unless otherwise provided in the contract. So, if the surety declares that his liability is limited to a certain amount, then the creditor cannot sue him to remove the extra amount. The Patna High Court, in the case of Aditya Narayan Chauresia v. Bank of India^[23], held that if the guarantor binds himself to a certain maximum limit then his liability would not exceed beyond that amount.

D. Liability of Surety when he puts a Condition for Co- Surety

The liability of surety can also become limited if he puts a condition that the creditor would not act upon his guarantee unless a co-surety joins in. In this case, the guarantee given would be valid only when a co-surety joins in^[24].

E. Continuing Guarantee

In case of a continuing guarantee, the agreement continues for an indefinite period as it is for a continuous purpose like for instance one person agrees to do a particular thing ones in a year. So, there will be a new course after every year passes. It is provided in section 129 of the Indian Contract Act i.e. continuing Guarantee.

Section 129 of the Indian Contract Act states that “A guarantee which extends to a series of transactions, is called a ‘continuing guarantee’.”

As per section 129^[25], a continuing guarantee is a guarantee which extends to a series of transactions. Unlike specific guarantee, where a surety undertakes to be answerable towards a particular transaction, in a continuing guarantee the surety may undertake to be responsible for a series of transaction. The surety has the power to revoke a continuing guarantee for any future transaction after giving notice for the same to the creditor.^[26]

III. Discharge of surety from liability

The contract of guarantee is of utmost good faith and the guarantor is the person who safeguards the rights of the debtor and makes the debt secured. So, it was the duty of the lawmaker to make certain provisions to safeguard the rights of the guarantor if anything wrong has been acted. Following are the conditions in which the surety will be discharged of its liabilities.

1. By Revocation

In normal circumstances, the contract of guarantee cannot be revoked; it can only be revoked in the case of continuing guarantee. It is provided under section 130 of the Indian Contract Act i.e., “Revocation of continuing guarantee”.

Section 130[27] of Indian Contract Act states that “A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.”

In the case of Indian Overseas Bank v. Goh Teng Hoon[28], it was held, “Revocation becomes effective for the future transactions while the surety remains liable for transactions already entered into.”

In the case of Bhikabhai v. Bai Bhuri[29], the court clarified regarding the “Notice to the Creditor” that only those notice will be deemed valid which is clear in its meaning with the intention to terminate the liability under the guarantee. “A denial of liability in a previous suit was held to be not serving as a notice.”[30]

2. By Death of Surety

It is only applicable in the case of continuing guarantee. If the guarantor dies and there is no contract of continuation after his death, the contract of guarantee will come to an end. It is provided in section 131 of the Indian Contract Act i.e. “Revocation of continuing guarantee with surety’s death”.

Section 131[31] of the Indian Contract Act states that “The death of the surety operates, in the absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future transactions.”

The termination of liability will be in respect of future transactions and the heirs can be sued for those liabilities which has already incurred. In the case of R.K. Dewan v. the State of U.P.[32], the court observed, “The liability of the deceased surety can be imposed against his legal heirs but only to the extent of the property inherited by them.”

3. By Variance

The liability of surety can be discharged on the ground of variance in the main contract if it is without the permission of the surety. It is surety’s right that his permission should be taken for any variance in the main contract. It is provided in section 133 of the Indian Contract Act i.e. “Discharge of surety by variance in terms of a contract”. There is no effect of advance authorization of alteration on the provisions of section 133 of the Indian Contract Act.

According to section 133 of the Indian Contract Act, 1872^[33], “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 transaction subsequent to variance.” A contract of guarantee initially may not be of good faith but once it is formed, the creditor has the duty of utmost good faith.^[34]

A guarantee is not a contract in respect of primary transaction but an independent transaction containing reciprocal obligations. So, some relief is given to both the creditor and guarantor.^[35] Special care of surety’s interest has been taken up by the court of equity and law.

It was held in the case of Rouse vs. Bradford Banking Co Ltd, “A surety is considered a favoured debtor & his liability is in srictissimi juris”^[36]. In the case of T. Raju Setty v. Bank of Baroda^[37], it was held, “a surety is discharged when, without his consent, the creditor makes any change in the nature of terms of his contract with the principal debtor.”

In the case of Pratapsing Moholalbhai v. Keshavlal Harilal Setalwad^[38], it was held that the surety is discharged as soon as the original contract is altered without his consent. Also, in the case of Bonar v. Macdonald^[39] and Brahmarya & Co v. K. Srinivasan Thangirayar^[40], it was held, “the surety could not be called on to make good the loss as the fresh agreement was a substitution of a new agreement for the former which discharged the surety.”

In the case of Khatun Bibi v. Abdullah^[41], the surety was discharged since the rent was increased without the consent of the guarantor. Also, in the case of C.N. Sundaram v. Chennai Finance Co Ltd^[42], the surety was discharged on account of a promissory note from the principal debtor without reference to the surety. In the case of Jowand Singh v. Tirath Ram^[43], the surety was discharged because the business was extended without his knowledge.

In the case of Holme v. Brunskill^[44], the Cotton LJ stated,

“The true rule, in my opinion, is that if there is that any agreement between the principals regarding the contract guaranteed, the surety ought to be consulted and that if he has not consented to the alteration, although in cases where it is without inquiry evident that the alteration is unsubstantial, or that it cannot be otherwise than beneficial to the surety, the surety may not be discharged; yet that if it is not self-evident that the alteration is unsubstantial or one which cannot be prejudicial to the surety, the court will not in an action against the surety, go into the inquiry as to the effect of the alteration.”

The Dictum of this was approved by the judicial committee in Ward v. National Bank of New Zealand Ltd.^[45]

In the case of Bolton v. Salmon^[46], it was held that alteration discharges surety from his personal liabilities as well as also releases the property which the guarantor included in the contract. In the case of National Bank of Nigeria Ltd vs. M.S. Awolesi^[47] and Burnes v. Trade Credits Ltd^[48], the surety was discharged on account of variance in the contract.

4. By discharge of Principal Debtor

If there is any contract between the creditor and the principal debtor by which the debtor is released will have the effect of releasing the guarantor as well. If the principal debtor who is the responsible person for which the surety is paying is released, then there is no ground on which the guarantor must be punished. It is provided under section 134 of the Indian Contract Act i.e. “Discharge of surety by release or discharge of the principal debtor”. This section discharges the guarantor firstly if the principal debtor is released by any contract with the creditor or if there is any act by which the principal debtor is released.

According to section 134 of the Indian Contract Act, 1872, “The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.”^[49] The most desirable interpretation of Section 128 is that it makes the liability of the surety coextensive with that of the principal debtor. The effect of this section is “that a statutory reduction or extinguishment of the principal debtor’s liability will operate as a pro tanto reduction or extinguishment of surety’s debt.”^[50]

The Supreme Court held in State of Madhya Pradesh v. Kaluram^[51] and further in State Bank of Saurashtra v. Chitranjan Rangnath Raja^[52] that “by reason of the deliberate act of the principal debtor or the creditor and without the knowledge, consent and approval of the surety, the question of further liability would not arise and in the contextual facts discharged the guarantor. Significantly, it may be stated that the liability of the guarantor cannot but be stated to be a strict liability and even if the principal debtor is discharged from his liability unless such discharge is through the act of the creditor without consent of the surety/guarantor, the creditor’s right of action against the surety is preserved.”

In the case of Ramswaroop & Anr. v. State Bank of Bikaner & Jaipur & Anr.^[53], the Hon’ble court stated, “when the creditor himself agrees to accept entire decretal amount from the borrower (defendant) only, then it amounts to voluntarily entering into a new contract by the creditor with the principal debtor.” This new compromise (agreement), by necessary implication, discharges the guarantor.

In the case of Kahn Singh v. Tek Chand^[54], the Indian Contract Act 1872^[55] provides that if the creditor makes any arrangement with the principal debtor by which the latter is released, the surety is discharged. The learned judges held, “the decree-holder gave up the idea of seeking any remedy against the sureties and remained content to realize the decretal amount from the principal debtor and that too in instalments fixed with him.

By this compromise a composition was entered into between the creditor and the principal debtor, time was given to the principal debtor to make payment and all this was done without the assent and consent of the surety-appellant. Therefore, from that moment onwards the liability of the surety became extinct and the only available remedy to the decree-holder remained against the principal debtor.”

5. By Composition, Giving Time to or Agreeing Not to Sue Principal Debtor

By Composition

According to section 135 of Indian Contract Act, 1872, “A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue the principal debtor, discharges the surety, unless the surety assents to such contracts.”^[56]

According to Halsbury’s law of England, “Whatever expressly or impliedly discharges the principal debtor from liability usually discharges the surety also by implication, as his position is thereby altered without his consent, notwithstanding that the alteration is accomplished by operation of law. He is therefore discharged where he can establish that the alteration changes the nature of his liability, but not otherwise.”^[57]

In the case of Bolton v. Salmon^[58], it was held that composition inevitably involves a variation of the original contract of the guarantee and therefore the surety is discharged. Followed in the next case of Mahomedalli Ibrahimji v. Laxmibai^[59], it was held that compromise of the suit by the principal debtor undertaking to pay the dues by instalment, discharges the surety. Such a compromise was not one which he contemplated when he entered into the suretyship.

In the case of Sri. N.B. Gurudeva v. M/s. State Bank of Mysore and Ors^[60], it was held, “a settlement was entered into between the principal borrower and bank for one-time settlement without reference to the guarantor.” The court said that this amounted to novation of the contract between the creditor and principal debtor to the exclusion of the guarantor. The liability of the guarantor ceased to exist. No proceeding could be initiated against the guarantor. The Guarantor could challenge the action initiated against him by invoking writ jurisdiction.

Promise to give time

The surety is a person who secures the creditor and makes sure that there is no loss to the creditor but if the creditor gives time to the principal debtor, it will be a violation of the right of surety.

In the case of Samuel v. Howarth[61], it was held, “The creditor has no right, it is against the faith of his contract, to give time to the principal, even though manifestly for the benefit of the surety, without the consent of the surety.”

In the case of Polak v. Everett[62], Blackburn J observed, “It is very undesirable that there should be any dispute or controversy about whether it is for his benefit or not; there shall be the broad principle that if the creditor does intentionally violate any rights the surety had when be entered into the suretyship, even though the damage be nominal only, be shall forfeit the whole remedy.”

In the case of Amitlal Govardhan Lalan v. State Bank of Travancore[63], the Supreme Court of India has held that in cases of the bank, if the bank decides to give time to the principal debtor for raising of quality of pledged goods, it would not amount to give time for payment if it is seen in the ambit of section 135.

Exception- The exception to the above-stated provision is given in section 136[64] of the Indian Contract Act i.e. “Surety is not discharged when agreement made with the third person to give time to the principal debtor”. According to this when there is an agreement with the third person by which the principal debtor gets some time will not discharge the guarantor of his liability.

Promise not to sue

If an agreement is formed between the creditor and principal debtor in which the creditor promises not to sue the principal debtor, then the surety will be discharged. In this type of situation, the surety can ask the creditor to force the principal debtor for the debt which is a violation of the right and therefore the surety is discharged.

Forbearance to sue different from the promise not to sue

A promise when made by the creditor not to sue the principal debtor absolve the liability of the guarantor and also the right of the creditor to sue which is different from a mere forbearance to sue. Section 137[65] of the Indian Contract Act i.e. “Creditor’s forbearance to sue does not discharge surety” tells about the impact of forbearance to sue.

6. By impairing Guarantor’s Remedy

If there is an act done by the creditor which is inconsistent with the guarantor’s rights, this also includes omission of an act by the creditor which is required by the guarantor to be done, then the surety will be discharged from the liability. It is provided in section 139 of the Indian Contract Act i.e. “Discharge of surety/guarantor by creditor’s act or omission impairing surety’s eventual remedy”.

Section 139 of Indian Contract Act states that “If the creditor does any act which is inconsistent with the right of surety or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged.”

In the case of SBI v. Praveen Tanneries[66], the court held that the creditor must preserve any securities he had against the principal debtor. Failing to do the same, the guarantor will be discharged to the extent of the securities. “If the creditor’s act or omission deprives the surety of the benefit of this remedy, the surety is discharged.”[67]

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Author(s): Madhavi Raje and Kushagra Krishna

Students, Dr. Ram Manohar Lohiya National Law University (RMNLU)

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References

Books

• Dr Avtar Singh, Contract and Specific Relief (12th Edition, Eastern Book Company, 2017).
• Giffard Halsbury and Hardinge Stanley, Halsbury’s Laws of England (16th vol, Butterworth, 1935).
• R K Bangia, The Indian Contract Act (5^th Edition, Allahabad Law Agency, 1991).

Cases

• Bank of Bihar v. Damodar Prasad AIR 1969 SC 297.
• State Bank of India v. Indexport Registered AIR 1992 SC 1740.
• Ram Bahadur Singh v. Tehsildar Bisli AIR 2002 All. 344.
• Narasimhaiah v. Karnataka State Financial Corpn AIR 2004 Kant 46.
• Maharaja of Beneras v. Har Narain Singh ILR (1906-1907) 28 All 25.
• Karnataka State Industries Investment and Devp Corpn Ltd v. SBI (2004) 4 Kant LJ 266 (DB).
• SBI v. Saksaria Sugar Mills Ltd (1986) 2 SCC 145 (146).
• Narayan Singh v. Chattarsingh AIR 1973 Raj. 347.
• Varadarajulu v. Thavsi Nadar, AIR 1963 Mad. 413.
• Kelappan Nambiar v. Kunhi Raman AIR 1957 Mad. 164.
• Central Bank of India v. C L Vimla (2015) 7 SCC 337.
• Nandlal Chogalal v. Surajmal Gangaram AIR 1962 Nag 62.
• Jagdish Sarda vs. SBI AIR 2016 Cal 2.
• UP Financial Corpn v. Garlonn Polyfeb Industries AIR 2001 All 286.
• State Bank of India v. Gautmi Devi Gupta AIR 2002 MP 81.
• Union Bank of India v. Manku Narayan AIR 1987 SC 1078.
• SBI v. Indexport Registered (1992) 3 SCC 159.
• Prakashwati Jain v. Punjab State Industrial Development Corpn, AIR 2012 P&H 13.
• Aditya Narayan Chauresia v. Bank of India AIR 2000 Pat. 222.
• Indian Overseas Bank v. Goh Teng Hoon (1989) 1 CLJ 554.
• Bhikabhai v. Bai Bhuri (1904) ILR 27 Bom 272.
• K. Dewan v. State of U.P 2005 All LJ 2067.
• Industrial Finance Corpn of India v. Cannanore Spg & Wug Mills Ltd [2002] 5 SCC 54.
• Rouse v. Bradford Banking Co Ltd 1894 AC 586 (HL).
• T Raju Shetty v. Bank of Baroda AIR 1992 Kant 108; [1991] 4 Kant LJ 475.
• Pratapsing Moholalbhai v. Keshavlal Harilal Setalwad AIR 1935 PC 21.
• Bonar v. Macdonald (1850) 3 HL Cas 226.
• Brahmarya & Co v. K Srinivasan Thangirayar AIR 1959 Mad 122.
• Khatun Bibi v. Abdullah ILR [1880]3 All 9.
• CN Sundaram v. Chennai Finance Co Ltd AIR 2006 NOC 505 (AP).
• Jowand Singh v. Tirath Ram AIR 1939 Lah 193.
• Holme v. Brunskill [1877] LR 3 QBD 495 (CA).
• Ward v. National Bank of New Zealand Ltd [1883] LR 8 AC 755 (PC).
• Bolton v. Salmon [1891] 2 Ch 48.
• National Bank of Nigeria Ltd v. MS Awolesi [1964] 1 WLR 1311.
• Burnes v. Trade Credits Ltd [1981] 1 WLR 805 (PC).
• State of Madhya Pradesh v. Kaluram [1967] 1 SCR 266 [16].
• Saurashtra v. Chitranjan Rangnath Raja [1980] 4 SCC 516 [9].
• Ramswaroop & Anr v. State Bank of Bikaner & Jaipur & Anr 2002 SCC OnLine Raj 661 [17].
• Kahn Singh v. Tek Chand AIR 1968 J&K 93 [15].
• Mahomedalli Ibrahimji v. Laxmibai AIR 1930 Bom 122.
• Sri NB Gurudeva v. M/s State Bank of Mysore and Others AIR 2011 Kar 188 [14].
• Samuel v. Howarth 3 Mer 272, 279.
• Polak v. Everett (1876) 2 KB 256.
• Amitlal Govardhan Lalan v. State Bank of Travancore AIR 1968SC 1432.
• SBI v. Praveen Tanneries 1992 (3) ALT 353.

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[1] Contract Act 1872, s 126.

[2] Contract Act 1872, s 128.

[3] Contract Act 1872, s 128.

[4] Bank of Bihar v. Damodar Prasad AIR 1969 SC 297.

[5] State Bank of India v. Indexport Registered AIR 1992 SC 1740.

[6] Ram Bahadur Singh v. Tehsildar Bisli AIR 2002 All. 344.

[7] N. Narasimhaiah v. Karnataka State Financial Corpn AIR 2004 Kant 46.

[8] Contract Act 1872, s 128.

[9] Maharaja of Beneras v. Har Narain Singh ILR (1906-1907) 28 All 25.

[10]Karnataka State Industries Investment and Devp Corpn Ltd v. SBI (2004) 4 Kant LJ 266 (DB).

[11] SBI v. Saksaria Sugar Mills Ltd (1986) 2 SCC 145 (146).

[12] Narayan Singh v. Chattarsingh AIR 1973 Raj. 347.

[13] Varadarajulu v. Thavsi Nadar, AIR 1963 Mad. 413.

[14] Kelappan Nambiar v. Kunhi Raman AIR 1957 Mad. 164.

[15]Central Bank of India v. C L Vimla (2015) 7 SCC 337.

[16] Nandlal Chogalal vs. Surajmal Gangaram AIR 1962 Nag 62.

[17] Jagdish Sarda vs. SBI AIR 2016 Cal 2.

[18] UP Financial Corpn v. Garlonn Polyfeb Industries AIR 2001 All 286.

[19] State Bank of India v. Gautmi Devi Gupta AIR 2002 MP 81.

[20] Union Bank of India v. Manku Narayan AIR 1987 SC 1078.

[21] SBI v. Indexport Registered (1992) 3 SCC 159.

[22] Prakashwati Jain v. Punjab State Industrial Development Corpn, AIR 2012 P&H 13.

[23] Aditya Narayan Chauresia v. Bank of India AIR 2000 Pat. 222.

[24] Contract Act 1872, s 144.

[25] Contract Act 1872, s 129.

[26] Contract Act 1872, s 130.

[27] Indian Contract Act 1872, s 130.

[28] Indian Overseas Bank v. Goh Teng Hoon (1989) 1 CLJ 554.

[29] Bhikabhai v. Bai Bhuri (1904) ILR 27 Bom 272.

[30] Dr Avtar Singh, Contract and Specific Relief (12th edn, Eastern Book Company, 2017) 640.

[31] Indian Contract Act 1872, s 131.

[32] R.K. Dewan v. State of U.P 2005 All LJ 2067.

[33] Indian Contract Act 1872, s 133.

[34] Dr Avtar Singh, Contract and Specific Relief (12th edn, Eastern Book Company, 2017) 640.

[35] Industrial Finance Corpn of India v Cannanore Spg & Wug Mills Ltd [2002] 5 SCC 54.

[36] Rouse v Bradford Banking Co Ltd 1894 AC 586 (HL).

[37] T Raju Shetty v Bank of Baroda AIR 1992 Kant 108; [1991] 4 Kant LJ 475.

[38] Pratapsing Moholalbhai v Keshavlal Harilal Setalwad AIR 1935 PC 21.

[39] Bonar v Macdonald (1850) 3 HL Cas 226.

[40] Brahmarya & Co v K Srinivasan Thangirayar AIR 1959 Mad 122.

[41] Khatun Bibi v Abdullah ILR [1880]3 All 9.

[42] CN Sundaram v Chennai Finance Co Ltd AIR 2006 NOC 505 (AP).

[43] Jowand Singh v Tirath Ram AIR 1939 Lah 193.

[44] Holme v Brunskill [1877] LR 3 QBD 495 (CA).

[45] Ward v National Bank of New Zealand Ltd [1883] LR 8 AC 755 (PC).

[46] Bolton v Salmon [1891] 2 Ch 48.

[47] National Bank of Nigeria Ltd v MS Awolesi [1964] 1 WLR 1311.

[48] Burnes v Trade Credits Ltd [1981] 1 WLR 805 (PC).

[49] Dr Avtar Singh, Contract and Specific Relief (12th edn, Eastern Book Company, 2017) 646.

[50] Ibid 648.

[51] State of Madhya Pradesh v Kaluram [1967] 1 SCR 266 [16].

[52] Saurashtra v Chitranjan Rangnath Raja [1980] 4 SCC 516 [9].

[53] Ramswaroop & Anr v State Bank of Bikaner & Jaipur & Anr 2002 SCC OnLine Raj 661 [17].

[54] Kahn Singh v Tek Chand AIR 1968 J&K 93 [15].

[55] Indian Contract Act 1872, s 134.

[56] Indian Contract Act 1872, s 135.

[57] Giffard Halsbury and Hardinge Stanley, Halsbury’s Laws of England (16th vol, Butterworth, 1935) 192.

[58] Bolton (n 48).

[59] Mahomedalli Ibrahimji v Laxmibai AIR 1930 Bom 122.

[60] Sri NB Gurudeva v M/s State Bank of Mysore and Others AIR 2011 Kar 188 [14].

[61] Samuel v. Howarth 3 Mer 272, 279.

[62] Polak v. Everett (1876) 2 KB 256.

[63] Amitlal Govardhan Lalan v. State Bank of Travancore AIR 1968SC 1432.

[64] Indian Contract Act 1872, s 136.

[65] Indian Contract Act 1872, s 137.

[66] SBI v. Praveen Tanneries 1992 (3) ALT 353.

[67] Dr Avtar Singh, Contract and Specific Relief (12th edn, Eastern Book Company, 2017) 653.

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