Indian Contract Act Section 134 — Discharge of surety by release or discharge of principal debtor

Summary

The surety is released from their obligation when the creditor and the principal debtor make a contract that frees the principal debtor from the debt, or when the creditor does something or fails to do something that, as a legal result, discharges the principal debtor from the debt. In other words, if the main debtor is let off the hook through an agreement with the creditor, or through the creditor’s own action or inaction that legally ends the debtor’s liability, the surety no longer has to pay. For example, if a surety guarantees that A will perform a contract, and the creditor fails to supply the timber that was required, that omission discharges the principal debtor, and the surety is freed from the guarantee.

Official Text

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. Illustrations guarantees A’s performance of the contract. B omits to supply the timber. C is discharged from his suretyship.

Related Judgments

• BRS VENTURES INVESTMENTS LTD. vs SREI INFRASTRUCTURE FINANCE LTD. & ANR — Supreme Court of India (2024)
• MAHARASHTRA STATE ELECTRICITY BOARD, BOMBAY vs OFFICIAL LIQUIDATOR, HIGH COURT, ERNAKULAM, ANR — Supreme Court of India (1982)
• LALIT KUMAR JAIN vs UNION OF INDIA & ORS — Supreme Court of India (2021)
• AJAY KUMAR RADHEYSHYAM GOENKA vs TOURISM FINANCE CORPORATION OF INDIA LTD — Supreme Court of India (2023)
• Mahabir Prasad Golyan vs Indian Bank and Anr — Bombay High Court (Mumbai Principal Seat) (2019)
• DOSHION PRIVATE LIMITED vs IIC LTD., & ORS — Delhi High Court (2018)