 Breach of a contract occurs when one of the parties fails to fulfil their part of

obligations. This leads to termination of the contract. There could be actual as well

as anticipatory breach of contract.
Anticipatory breach of contract: When the contract is breached before the due date
of performance has arrived then it is called anticipatory breach of contract. Section
39 of the Indian Contract Act, 1872 makes provision regarding anticipatory breach of
contract, and states that, “when a party to a contract has refused to perform, or
disabled himself from performing, his promise in its entirety, the promisee may put an
end to the contract, unless he has signified, by words or conduct, his acquiescence in
its continuance”.
CASE LAW
 S Venkatesh, a driver by profession from Malkajgiri, joined a five-month-old chit
in September 2015 on the advice given by the company. In accordance with it, a
consent letter, ‘angeekara patram’, was drafted in the presence of the manager to
confirm the transfer of chit fund on payment of an amount of `42,000 towards the
previous instalments. And, he was given a passbook. After completing payment of
15 subscriptions of `10,000 each for a `5 lakh chit, Venkatesh bade for chit amount
in an auction as he required the money to perform his daughter’s wedding. But, the
company did not process his request for the bid and postponed it.
In his complaint to the forum, he alleged, that he was ignored as he was an illiterate
and said that the company did not allow him to participate in the auction. On the
other hand, the company held that Venkatesh never participated in any meeting.
The passbook shown by him was fake and the question of his participation in the
bid did not arise, they claimed. “If the complainant is not the purchaser of a
running chit, how could he issue a cheque drawn in favour of the opposite party as
evidenced by the bank savings account passbook. These facts by themselves show
that the complainant had paid 15 chit subscriptions,” the order said.
The forum directed the company to refund the 15-month subscription amount with
18 per cent interest and another `60,000 for causing him mental agony and
litigation costs.
 SURETY
A member can give sureties depending on the future liability of the chit. Following
are the sureties generally submitted by the members.

1.Personal Surety: Any salaried person working in State/Central Govt./ Public

Limited Companies/Banks and other Reputed Companies will be taken as surety.

2.Pledge: Deposits with the company in chits or otherwise, net paid amount of which,
after deducting foreman's commission should not be less than 1 1/3rd of the
successful bidder's liability to the company.

3.Bank Guarantee: Guarantee given by the Schedule Bank in a schedule format can be
submitted as surety.

4.Income Tax Assessor: Any person having I T Assessment for the past three years
having business, profession etc will be taken as sureties.

5.Property Pledge: Deposit of title deeds of urban property can be submitted as surety.
Third party property can also be given as surety.

Section 126 in The Indian Contract Act, 1872

126. ‘Contract of guarantee’, ‘surety’, ‘principal debtor’ and ‘creditor’—A ‘contract
of guarantee’ is a contract to perform the promise, or discharge the liability, of a third
person in case of his default. The person who gives the guarantee is called the
‘surety’; the person in respect of whose default the guarantee is given is called the
‘principal debtor’, and the person to whom the guarantee is given is called the
‘creditor’. A guarantee may be either oral or written. —A ‘contract of guarantee’ is a
contract to perform the promise, or discharge the liability, of a third person in case of
his default. The person who gives the guarantee is called the ‘surety’; the person in
respect of whose default the guarantee is given is called the ‘principal debtor’, and the
person to whom the guarantee is given is called the ‘creditor’. A guarantee may be
either oral or written."
Case Law for Surety: Sagayam @ Devasagayam Vs State rep. by The Inspector of
Police (Madras High Court)

Some Courts insists that the surety should be a government servant or a public servant
or a person permanently employed in a reputed concern. This is not at all mentioned
in the Code of Criminal Procedure. These are all inventions not by the Code but by
some courts. It cannot be said that all Government servants, public servants are
Buddas. There are many Government servants who are cheats. In many cases under
Section 420 I.P.C., many Government servants are figuring as accused. There are
many private individuals having sterling qualities. Mahatma Gandhi is not a
government servant. But he is Father of our Nation. Yet, as per the present practice
being adopted by certain criminal Courts, even Mahatma Gandhi cannot be accepted
as a surety. Simply because a person is poor, who has no property, no money, no job,
it cannot be said that he is disqualified to stand as a surety. Chapter 33 of the Code
does not say that the surety should be a member of the family or a blood relative.
Court cannot insist that the sureties should be local surety. Suppose if the
accused belongs to a different district, different State or even a foreigner or the
accused is a business man or working here such as Nepalies, Biharies, etc. who will
not have local sureties, their relatives are also in Bihar etc., it will be difficult for them
to secure local sureties.  In Motiram (supra), the Honourable Supreme Court stated
that India is a Bharat, any person, from anywhere in India can stand as surety. As per
section 441(4) of Cr.P.C. a surety should be a fit person. Who is a fit person has not
been defined or explained anywhere in the Code. Generally, a surety must be a
genuine person. He should not be a bogus person. A surety comes to the Court and
gives undertaking to the Court that he will ensure the appearance of the accused. If the
accused fails to appear before the Court, the surety bond executed by the surety will
be forfeited.