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Section 133: Discharge of surety by variance in terms of contract

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 1872
Section 132 All 266 Sections of Indian Contract Act Section 134

Legal Commentary & Landmark Judgments: Section 133

Section 133 of the Indian Contract Act, 1872 enacts the equitable doctrine of surety discharge by variance, providing that any variance made without the surety's consent in the terms of the contract between the principal debtor and creditor discharges the surety as to transactions subsequent to the variance.

  • Subsequent Variance Without Consent: Applies to any contractual modification made between the principal debtor and creditor after the contract of guarantee without the surety's express concurrence.
  • Materiality of Variation: Discharges the surety where the variation alters the risk profile, interest rate, repayment tenure, or security structure underlying the suretyship.
  • Discharge as to Subsequent Transactions: Terminates the surety's liability for transactions occurring after the date of the unauthorized variance, while preserving liability for prior defaults.
Key Landmark Precedents:
  • State of M.P. v. Kaluram AIR 1967 SC 1105: Supreme Court held that a surety is discharged if the creditor parts with or impairs the security without the surety's consent, altering the suretyship foundation.
  • Amrit Lal Goverdhan Lalan v. State Bank of Travancore AIR 1968 SC 1432: Supreme Court ruled that the surety's liability is strictissimi juris and any unauthorized variance in terms discharges the guarantor.
  • Central Bank of India v. C.L. Vimla (2015) 7 SCC 337: Supreme Court held that a guarantor consenting in advance in the guarantee deed to future facility renewals or extensions cannot claim discharge under Section 133.
Courtroom Practice & Strategic Litigation Guidance:

When defending personal guarantors in debt recovery proceedings, scrutinize the bank's sanction letters; if the bank enhanced credit limits or extended loan tenure without a tripartite amendment signed by the guarantor, plead complete discharge under Section 133.

Section 132 All 266 Sections of Indian Contract Act Section 134