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CONTRACTS CASE SUMMARIES

BAILMENT AND TRUST: Ibrahim Khan v. Govt. of UP: It was held that trust property is not the same as bailment.

BAILMENT AND SALE: United Breweries v. State of Andhra Pradesh: The assesse sold beer in bottles and crates. The dealers paid a deposit as security for the bottles and crate, which was returned to them when these were returned. Circulars were issued by the assesse to the dealers, stating that (i) bottles were not to be sold to the customers (ii) bottles could be returned to ensure the process of bottling beer could continue smoothly and supple maintained. Fresh supplies were made to the dealers only upon returning the empty bottles. Substantial part of the bottles were returned by the customers. It was held that neither the bottle nor the crates were sent to the customers on a sale or return basis. The transaction of the bottles and crates was not a sale, nor did it become a sale later when the company would transfer the profit and loss account as trading receipts, the amount representing the lapsed security deposits not collected by the dealers in time. The deposit represented liquidated damages for the loss of the bottle if it was not returned. Kalyani Breweries Ltd. v. State of West Bengal: In this case, the fact situation was slightly different. The transaction was held to be one of sale as the deposit was exactly equal to the cost of the bottle, and the supposed bailee (i.e. customer) was not aware of the terms of the bailment. Commissioner, Trade Tax v. The Cooperative: This case affirmed the decision in Kalyani Breweries. The judges in this case also considered the bottles to be sold. They relied on the trade practices of the bottling industry. Vis--vis taxing laws, the bottles were considered to be sold, not bailed.

BAILMENT AND LICENSE: Ashby v. Tolhurst: Tolhurst owned a car park. Ashby paid 1/- to attendant after parking his car. He received a ticket for the same, locked his car and went away. The car was given to someone else. It was held that it was a licence only, where there was no change in possession. Therefore, there was no bailment, and thus no obligation on licensor.

BAILMENT IN CASE OF GOODS SEIZED: State of Gujarat v. Memom Mahomed Haji: Vehicles and goods belonging to the respondent were seized pursuant to the powers under the Customs Act, but it was found that the seizure was unsustainable. In the meanwhile, the vehicles were sold as unclaimed property, and could not be returned to the owner. The government was held

liable, as being in the position of a bailee, either to return the vehicles or the price thereof. Property seized by customs officials belongs to the owner till final order of confiscation, and in the meanwhile, the state is bound to preserve it and return it to the owner in case the order of confiscation is not made final. The mere fact of an order passed by a magistrate for the disposal of the seized article does not absolve the government of its liability as a bailee. It was held that such a relationship of bailment could exist in this case even without an enforceable contract. Ghasiram Agarwalla v. State: This was a case relating to criminal breach of trust. It was held that an agreement between a retailer and the government for distribution of food through a fair price shop satisfied the elements of bailment: (i) there was delivery of goods by the government to retailer (ii) the purpose was to enable the retailer to sell to the customers (iii) the contract was that when so sold, the retailer would get the price and the government, the money deposited by the retailer.

DELIVERY OF GOODS: Kaliaperumal Pillai v. Visalakshmi Achi: A lady employed a goldsmith for the purpose of melting old jewellery and making new jewels. Every evening, she used to receive the half made jewels, and put them in a box which was left in the goldsmiths house. She retained the key. These jewels were stolen one night. It was held that there was redelivery of the jewels to the lady, and that they were not in the possession of the goldsmith. The goldsmith was not a bailee as he was not in possession of the goods, the key remaining with the lady. Surendranath Koley v. Kali Kumar Sen: There is no bailment when elephants with mohuts are hired on a daily basis. Just because the mohuts worked under the direction of the hirers, the relationship would not be affected. The hirer could not be held responsible for the loss of elephants or the loss of hire charges or for cost of searching for the missing elephants. Ultzen v. Nicolls: A restaurant patron handed his coat to a waiter before he was led to his table. After the meal, the customer discovered that his coat was gone. He sued the restaurant for breach of bailment and succeeded because the court held there had been transfer of control of the coat. Assent of the guest to a servants assumption of custody of the guests coat may be sufficient evidence of delivery, and so could constitute bailment. G.E. Shipping v. S.M. Sahib: When the master of a ship lends goods and leaves them in charge of the port trust, the legal effect is as if the master delivers the good to the consignee, for whom the port trust is the agent. Liability of the port trust was held to be the same as that of a bailee

DUTIES OF A BAILOR: Moffat v. Bateman: Defendant took the plaintiff in his carriage gratuitously, without previously examining the bolts and fastenings of his carriage and during the journey

an accident happened. The failure to examine the vehicle was held not to be negligent sufficient to charge the owner. Reed v. Dean: The plaintiff hired a motor launch from the defendant. The launch caught fire, and the plaintiff was unable to extinguish it, the fire-fighting equipment being out of order. They were injured, and suffered loss. The court held that there was an implied undertaking that the launch was as fit for the purpose for which it was hired as reasonable skill and care could make it. Therefore, the bailor defendant was held liable. Hadley v. Droitwich Construction Co. Ltd.: P hired a crane to D with no obligation on D to maintain it. The hirer D undertook to put a competent man in charge to carry out the service. This man neglected to do so. The hirers workman was injured when the cranes superstructure fell on him. He sued P and D, who were both found liable. D claimed indemnity from P on the ground that P had been negligent in providing D with a defective crane. It was held that there was an implied contract that the crane should be reasonably fit for the purpose for which it was hired, but no contractual obligation on P to maintain the crane thereafter. The implied warranty as to fitness was qualified by the undertaking given by D to put a competent man in charge and see that it was properly serviced. Implied warranty could not survive this breach of undertaking by D, and so he was not entitled to be indemnified by P.

DUTIES OF A BAILEE: Bank of India v. M/S Grains and Gunny Agencies: The defendants had opened a key cash credit account with the plaintiffs. They pledged a stock of foodgrains with the Bank, and obtained loans. They has outstanding balance. There was a discrepancy found by the bank in the quality and quantity of the pledged stocks, and so the bank asked them to liquidate the amount and furnish security. The defendants held that the banks as bailees were responsible for any deterioration of stocks. They could exercise section 176 of ICA, but they had allowed the pledged goods to lose value. It was held that the Bank did not take adequate care of the goods. Hence their appeal was dismissed. (Exemption of liability by bailee clause was discussed in this case, but not applied) Union of India v. Udho Ram and sons: The issue was whether the loss of goods by Udho Ram in transit from Calcutta to Delhi was due to the negligence of the Railways. It was held that though there were railway protection police, who escorted the train, it was not adequate to prevent theft. If the protection force did not move out of the guards van to keep an eye on the wagons, then, when the train stopped at a railway station or any other place, the liability of the railway for loss arose. The railways did not exercise enough care as could be expected reasonably. Hence, they were held liable under Sec. 151. Calcutta Credit Corporation v. Prince Peter: Special degree of care is expected from carriers, motor cab drivers and the like. A garage owner, in this case, received a motor car for repairs and his garage building was partitioned by wooden partitions, and contained not only vehicles but also combustibles like thinner and petrol. He

allowed one of his employees to do the cooking in the place. Hence, he was held guilty of want of care and of negligence, and was held liable as a bailee for damage to a motor car sent for repairs. Jain and sons v. Cameron: The case deals with care of an involuntary bailee. Newman v. Bourne and Hollingsworth: P, a customer in Ds shop, put a brooch with her coat and forgot to pick it up. One of Ds assistants found it and placed it in a drawer over the weekend. It was found missing on Monday. D was held liable to P in view of the absence of the ordinary care that a prudent man would have exercised in the circumstances. L&NW Railway Co. v. Nelson: Cant find. Jaggilal Kamlapat Oil Mills v. Union of India: In this case, adulterated oil transported by the plaintiff by train was seized by the health authority and destroyed by court orders. It was held that the railways as a bailee could not be held responsible to the bailor if the goods were taken away and destroyed by the authority of law as exercised through valid and regular procedure. Boseck and Co. v. Maudlestan: A jeweller of Lahore dispatched jewellery by post to a Calcutta craftsman without getting the jewellery insured. The craftsman also sent the repaired jewellery back without insurance, as a value payable parcel as per instructions. The parcel did not reach Lahore. It was held that B could not be held liable for the loss of jewellery merely because he failed to insure the parcel, as this was not evidence of want of care which an ordinary reasonable man would exercise over his own goods in similar circumstances, especially when the owner himself did not insure the goods. Orient Longman Ltd. v. Jayati Laila Kabir: A copy each of the completed text of a book composed by Professor Humayun Kabir on the basis of notes dictated by Moulana Abdul Kalam Azad was deposited under sealed covers in the National Archives, New Delhi and the National Library, Calcutta, with a stipulation that they should be opened thirty years after his death at the respective places as desired by Moulana Azad. However, the government decided to open both the seals in New Delhi. It was held that the government failed to perform its duty as a bailee under the contract of bailment, and its action violated section 160. Shaw and Co. v. Symonds and sons: Accidental loss or destruction is no defence if it occurred while the bailee was wrongfully detaining the goods. Cant find facts.

RIGHT OF LIEN: Jaddah v. King Emperor: Cant find this case anywhere In re. Bombay Saw Mills Co. Ltd. : The secretaries and treasurers of a company who have made advances to the company and incurred expenses and made disbursements on behalf of the company in the conduct of its business are not factors, and are not entitled to any lien on the property of the company in their possession, as the loans were not specially assigned to the property and did not constitute disbursements in respect of that property.

Vijay Kumar v. M/S Jullundur Body Builders: The contract between the customer (judgement debtor) and the bank was to furnish a guarantee for a certain amount on the understanding that the bank will hold the fixed deposit receipts furnished by the customer as a security for the guarantee the bank gave on behalf of the customer. The liability under the guarantee was discharged by the Court. The bank could not hold the deposit receipts in their hands for the general balance due to the customers overdraft account. When the endorsement of the bank manager on the reverse of the letter given by the customer in connection with the guarantee read that the fixed deposit receipts were given in connection with the bank guarantee only, the letter had to be read with the endorsement, and so read would constitute a contract contrary to the general lien of the bank. Consequently, the Court, in whose favour the bank guarantee was given, could attach the fixed deposit receipts in the hands of the bank as the amount under the fixed deposit belonged to the customer. (Basically, bankers general lien cannot extend to special contracts).

PLEDGE: DELIVERY OF POSSESSION: Appa Rao v. Salem Motors: In March, DI, a mercantile agent and motor distributor, pledged three new vans and six chassis with B. Two vans and six chassis were numbered in the letter of the pledge, and two vans and five chassis were delivered to B, but one unnumbered van and one chassis were retained by A for display purposes. In April, A fraudulently sold the retained van (say V1) to C. In May, the debt to B being largely unpaid, there was a fresh agreement of pledge between A and B covering four chassis and three vans, where one van and one chassis were to be retained by A for display. There was no evidence where the van sold to C was still in possession of A. In June, the debt still being unpaid, B demanded possession of the van in possession of A for display, and A fraudulently sent a new van (Say V2 not same as V1 which he had sold to C) to B, which the owner of the van, P, had left for sale with A. B took it in good faith, and in due course, his debt being unpaid, sold it to D. Subsequently, P sued A, B and D for conversion. D pleaded that section 178 applied, but the court held that there was no valid pledge to him of van V2. Two views: (1) It was assumed that van V1 was in possession of A on the date of the second pledge in May. Therefore, the court held that there was no valid pledge as B intended to demand possession of the van left with A for display under the first pledge in March. There was, therefore, a mistake on part of pledgee as to the identity of the chattel pledged, which prevented possession passing on to him. Further, A could not, without the consent of B, substitute van V2 for van V1 as the subject of pledge. (2) Assuming that van V1 was no longer in possession of A in May, the court held that there was no pledge in this case as well, as not even A intended to constitute a pledge by the dispatch of van v2 in June. Blundell Leigh v. Attenborough: The delivery preceded the pledge in this case. B handed her jewels to M to value and inform her as to what the value of the advance he could make on them, it being agreed that M was to retain the jewels as security if he did not make any advance. The same day, M pledged them with A, a pawnbroker,

who advance 1000 pounds in good faith. Two days later, M agreed to lend B 500 pounds on the security of the jewels. The trial judge held that there was no valid pledge between B and M at the time of the contract to pledge, nor, subsequently, were the jewels ever in Ms possession. B could, therefore, recover the jewels from A without any tender of the amount still due to M. The Court of Appeal reversed this decision, holding that the original delivery, though it accompanied a gratuitous bailment, was also to constitute a goods delivery to create a pledge should M find he could advance a sum which B was willing to accept. Bank of India v. Binod Steel: Binod Steel Ltd. Company had borrowed on mortgage of its machinery, a sum of Rs. 33 lacs on various debts from the Bank. The Company had closed its business on April 11, 1975. The Payment of Wages Inspector has raised a demand of Rs. 25,765.78 P. against M/s. Binod Steel Limited Company towards the amount of wages due and payable by the Company to the workers for the month of March 1975. The Payment of Wages Inspector moved the Additional Tahsildar for recovery of money from M/s. Binod Steel Ltd. Co. having recourse to the provisions of the Land Revenue Code. The Additional Tahsildar took steps to attach the machinery and other moveables belonging to the Company and bring the same for public auction. At that stage the petitioner Bank objected to the recovery proceedings initiated by the Additional Tahsildar under the Land Revenue Code. The ground on which the petitioner Bank objected to the recovery proceedings is that it is a secured creditor having obtained a pledge or mortgage of all the moveables belonging to the Company and the revenue authorities or any other creditor has no right to proceed against the machinery and other moveables of the Company without satisfying the claim and debt of the Bank. It was held that the debt due and payable to the petitionerBank had come into existence even prior to the incident of liability of the Company towards the workers. So, the right to possess movables and the machinery in the present case is vested in the Bank, and no one could touch the pledged property until the claim of the Bank was satisfied.

SEC. 178- WHO CAN PLEDGE? Moody v. Pall Mall Deposit Co.: A French company sent to ther London agents certain pictures, some being for exhibition only, but the agent pledged them, the pledge was held to be valid, the court saying that the principle applies to all goods in the custody of the mercantile agent whether for sale or not. De Gorter v. George Attenborough: The plaintiff a dealer in the diamonds at Amsterdam, sent some diamonds to a diamond broker in London. The broker asked a friend of his to pledge the diamonds for him. The friend pledged them with the defendants, who were the pawn brokers. In the owners action against the defendant for the diamonds, the pledge was held to be invalid. It was not the ordinary course of business of a mercantile agent to ask a friend to pledge goods entrusted to him,but to pledge them for himself.

SEC. 178-A Phillip v. Brooks Ltd.: A rogue purchased some items from the claimant's jewellers shop claiming to be Sir George Bullogh. He paid by cheque and persuaded the jewellers to allow him to take a ring immediately as he claimed it was his wife's birthday the following day. He gave the address of Sir George Bullogh and the jewellers checked the name matched the address in a directory. The rogue then pawned the ring at the defendant pawn brokers in the name of Mr. Firth and received 350. He then disappeared without a trace. The claimant brought an action based on unilateral mistake as to identity. Held: The contract was not void for mistake. Where the parties transact face to face the law presumes they intend to deal with the person in front of them not the person they claim to be. The jewellers were unable to demonstrate that they would only have sold the ring to Sir George Bullogh Ingram v. Little: Two sisters Hilda and Elsie Ingram sold their car to a rogue calling himself Mr. Hutchinson. They agreed a price for cash, but when the rogue offered a cheque Elsie said the deal was off. She wanted cash or no sale. The rogue then gave them his full name and address and Hilda went to the post office, which was two minutes down the road, to check the details out. When she returned she informed Elsie that the details checked out and the sisters agreed to let Mr. Hutchinson take the car. The cheque was dishonoured and the car was sold on to Mr. Little. The sisters brought an action to recover the car. Held: The contract was void for mistake. The Court of Appeal held that the sisters only intended to deal with Mr. Hutchinson at the address given because they were not willing to offer a sale for payment by cheque from anyone else. This case has received widespread criticism and has not been followed since. Lewis v. Avery: The plaintiff sold a car to another person who represented himself as being a famous TV actor. The plaintiff asked for identity as well. On receiving the same, he agreed to sell his car to him and was presented a cheque in return. But, the cheque bounced on being presented. The defrauder sold the car to another student, who got in touch with Mr. Lewis as he needed the handbook for the car. The plaintiff then realised that he was defrauded and has brought an action against Avery for conversion. The court held that evidence showed that the plaintiff did not intend to enter into a contract with the TV actor in particular and hence that was a concluded contract. The defendant continues to have title to the car.

WHO HAS THE BETTER RIGHT: THE RULE OF PRIORITY Bank of Chitoor v. Narsimbulu: a cinema projector and accessories were pledged with a bank. The bank allowed the property to remain with the pledgers (hypothecation), since they formed the equipment of a running cinema. Subsequently the pledgers sold the machinery. After bank came to know about the sale it filed sued the pledgor . court gave the decision in favour of Bank by

following the doctrine of Secured creditor where bank is always considered as an entity which has firsr right over pledge Bank of Bihar v. State of Bihar: Police seized the goods of the pledgor which were put with the pledger as a pledge, and subsequently sold that without giving notice to the Bank. And money was appropriated by the govt. under general welfare. final court verdict was in favour of bank by following the same principle.

Sec. 179 Belsize Motor Supply Co. v. Cox: a pledge by a seller remaining in possession after sale and by a buyer obtaining possession before sale is valid.

RIGHT TO SELL GOODS (SEC. 176) Muthoot Leasing and Finance Ltd. v. Vasudev Publicity Services: the purchase of the vehicles was financed, and the financier neither gave information as to the latest position of instalments nor gave any notice before seizure of the vehicles by force, the fact that being all instalments had already been paid, the seizure was held to be illegal. The order of the trial court awarding damages to the extent of Rs. 50,000 for breach of contract by the financiar was upheld. Bank of Maharashtra v. M/s Racmann Auto:

Duty to Repay Dhanlakshmi Bank v. KK Jose: Plaintiff in a suit for realisation of money is the appellant. The suit before Sub Court, Ernakulam was filed by plaintiff for realisation of an amount of Rs. 17,427.77 due from defendant under a key loan transaction. A promissory note was executed by defendant on 11-12-1978 for Rs. 12,000/- and an Instrument of pledge of goods was also executed on the same day. The balance amount due was not paid in spite of a registered notice and hence the suit. Defendant admitted the execution of the promissory note and the instrument of pledge, but contended that he had not received any consideration for the promissory note and that the documents were executed at the instance of the bank officials. He contended that the key loan transaction was entered into at the time of closure of a gift scheme sponsored by the plaintiff bank known as "Grihalakshmy Gift Scheme" as part of plaintiff's deposit mobilisation scheme. The washing machines pledged with the bank under Ext.A2 did not belong to defendant and he had no responsibility of selling those machines and to discharge the amount covered by Ext.A1. Defendant disclaimed liability to pay any amount. Held: The Supreme Court has held that if the pawnee is not in a position to redeliver the goods he cannot have both the payment of the debt and also the goods. Since plaintiff is not in a position to return the goods to the pawnee in the same condition in which they were entrusted to them at the time of pledge they have no right to sue

on the debt whereas they can only retain the goods or whatever left of them. The result is that defendant is absolved of all liabilities under Ext. A1 and the claim of plaintiff for return of the money has only to be negatived. Vimal Chandra Grover v. Bank of India: This appeals is directed against the order dated June 21,1996 of the National Consumer Disputes Redressal Commission (National Commission) holding that there was no negligence on the part of the respondent Bank in dealing with its security of pledged shares of the appellant or its release in part to him and that the Bank could also not be faulted on its practice not to dispose of shares through brokers not on the approved list of the Bank and lastly that it could not be said that there was any deficiency in service by the Bank as defined in Section 2(1)(g) of the Consumer Protection Act, 1986 ('Act' for short). Leave was granted limited to the claim of the appellant to his shares of Castrol Limited pledged with the Bank. Held: The appeal is, therefore, allowed. Impugned judgment of the National Commission is set aside and the complaint of the appellant is allowed. There shall be award of Rs. 5,09,037.47 with interest at the rate of 11% from August 1,1992 in favour of the appellant and against the respondent Bank of India. Bank is granted four weeks time to make the payment of the amount so awarded. In case of default the appellant shall be entitled to further interest at the rate of 18% on Rs. 5,09,037.47 from the date of this judgment till payment. Bank shall be entitled to adjust the amount of award against any sum due to it from the appellant in any of his accounts with the Bank or any other account in which he has interest as a partner or otherwise. Parties shall bear their own costs.

RIGHTS OF PAWNER (SEC. 177) MR Dhavan v. Madan Mohan: the pawner has the right to take back with the goods the increase, if any, that the goods have undergone during the period of pledge. In this case the pledge was that of certain shares of a company and during the period of the pledge the company issued bonus and rights shares. It was held that these increases belonged to the pawner.

INDEMNITY Dugdale v. Lovering: an indemnification bond was signed by the Truck owner to service station owner to cover loss if anyone comes to claim the trucks as true owner, hell indemnify the service station owner. Adamson v. Jarvis: an auctioneer sold the certain cattle on instructions from the defendant and was held liable to the true owner for conversion. He recovered indemnity from the principle because the act in question was apparently lawful under sec. 223 of ICA 1872. Gajanan Moreshwar v. Moreshwar Madan Mantri:

London Insurance Co. v. Preston: the main issue which was settled was that all insurance contracts except life insurance can be considered as contract of indemnity.

CONTRACT OF GUARANTEE Conditional Guarantee Union of India v. Avinash Bhonsle: James Graham co. v. South gate sands: Surety asked for three co-sureties and they must be the directors of the company. Only two have signed whereas third has refused. His sign was frged by the principal debtor. The issue was that how many of the sureties be held liable. the court held that unless all three have signed guaranty voluntarily and freely, no one could be held liable.

Continuing Guarantee Kay v. Groves: Five Sacks of flour has been delivered on a particular day. It was not considered as continuing guarantee. It was also established that the conduct and intention of the parties are also essential to declare a contract as continuing contract.

DISCHARGE OF SURETY BY REVOCATION AND DEATH (SEC. 130 AND 131) Hargopal Aggarwal v. SBI: The overdraft of the company were guaranteed by the companys directors and the banker recovered a part of the loan by disposing of certain goods belonging to the company, The Madras high court held that the liability of the surety had gone down accordingly. Windfield v. De St Croin: when a person guaranteed the payment of the rent by his servant and revoke the guarantee as soon as the servant left his employment, he was not held liable for rents which became due after the revocation.

BANK GUARANTEE: Maharashtra Electricity Board, Bombay v. The Official Liquidator, High Court Ernakulam: A bank under took to pay to the SEB a sum not exceeding Rs. 50,000 within 48 hours of demand. The guarantee was submitted on behalf of the supplier who had deposited with the bank sufficient securities. There was no condition to the banks liabilities except the demand by the board. The board demanded the payment. The supplier was the company which went into liquidation. The liquidator sought to prevent the board from realising the guarantee and the bank from paying it. No such relief was allowed. The board has the right to enforce the payments of the guarantee and the bank had the right to reimburse itself out of the securities.

UNCONDITIONAL GUARANTEE UP state sugar corp. v. M/s Sumac international:

Kudremukh iron ore v. Karola rubber co.: bank found that that there was a pending arbitrationunder which the liability of all parties had to be ascertained, hence HC of Karnataka upheld the decision of the bank to withhold the payment. DTH construction v. SAIL: the contract was for the dredging and deepening the reservoir. Advance payment was made to the contractor for the purchaseof essential machinery on bank guarantee. SAIL sought encashment on account of the contractors default. The contractor tried to prevent it on the ground that the work assigned to him was impossible and that important facts were suppressed from him. These grounds were held to be not sufficient to prevent encashment. CIBC mortgages v. Pitt: wife told loan needed for buying holiday home, she agreed to give her property in mortgage, money spent by husband on investments in shares, loss, wife allowed to avoid because the finance company did not take care to see that she had independent advice. Barclays Bank v. Obrien: the court may rescue the surety where he was prevailed upon and therefore, his consent was not free. A surety may be described as vulnerable where there is a relationship of trust and confidence between him and debtor. In this case the wife stood surety for husbands debts. She received no independent advice. The court freed her from liability either because of undue influence or misrepresentation.

RIGHTS OF A SURETY: Mamata Ghose v. United Industrial Bank: It was held in this case that even before the payment of the debt by the guarantor to the creditor, the guarantor, by evoking the equitable doctrine of subrogation, can apply for temporary injunction for restraining the principal debtor from disposing off his personal properties till the disposal of the suit filed by the creditor. Goverdhan Das v. Bank of Bengal: The security was given after the contract of suretyship. The surety had guaranteed only a part of the debt, and he had discharged his part. The court decided that he was entitled as against a subsequent assignee of the creditor, to a proportionate share in the security held by the creditor at the time that the surety discharged his liability, even though the creditor had still not been fully paid. The court considered that any other view would enable the creditor to make an appropriation to the detriment of the surety who had already paid Mahoney v. McManus: The right to contribution from a co-guarantor may depend on the solvency of the co-guarantor at the time the contribution is sought. Facts cant find. Bank of Bihar v. Damodar Prasad: Where the creditor has obtained a decree against the surety, and the principal, the surety has no right to restrain execution against him until the creditor has exhausted his remedies against the principal debtor. The surety does not have the right to restrain any action against him by the creditor on the ground that the principal debtor is solvent or that the creditor may have some relief against the principal debtor in some other proceedings.

Narayan Singh v. Chatar Singh: A statutory reduction or extinguishments of the principal debtors liability would pro tanto reduce or extinguish the suretys liability. Florence Mabel v. State of Kerala: A loan was advanced by the respondent cooperative society for the purpose of bee keeping, for which the appellate guarantor agreed to be jointly and severally liable in case of default by the debtor. The business failed due to the bees contracting viral infection. It was held that where the guarantor specifically agreed to be liable jointly and severally in the event of the failure on part of the principal debtor to pay off the loan instalments, the plea of the guarantor that the contract of guarantee is void on account of frustration of contract owing to the failure of the business of the principal debtor disabling to repay the loan is not tenable. Union Bank of India v. Manku Narayana: It was held by the Supreme Court that the creditor must proceed against the mortgaged property first, and only then against the surety for the balance, even if the decree is a composite one against the principal debtor, mortgaged property and the guarantor. MS Anirudhan v. Thomco Bank: there was a contract between PD and surety for providing guarantee to the loan of 25,000 by the PD. Bank told to give only 20,000 and hence PD without informing surety changed the amount in contract of guarantee to 20,000. The question was that is surety discharged under sec. 133. Court held that as this was for the advantage of surety, there was no need to inform surety and as result surety was not discharged. Pratap Singh v. Keshavlal: In this case Lord Atkin did not consider the concept of Advantage- disadvantage to the surety and hence always discharged the surety because he was not informed of changing the terms of contract. Bank of Madura Ltd. v. bank of Baroda: the contract of guarantee will not change when mergers and acquisitions take place because there is a takeover of liabilities also. And hence it does not discharge the PD and surety of their Liabikities under the doctrine of Successor in interest. Bombay Co. v. Official Asignee, Madras: under sec. 135 when creditor compounds with the PD for increasing time limit and not to sue then surety will be discharged unless he gave his consent.