KHAN SINGH VS

TEK CHAND 1968

SECTIONS IN THE CASE
 134 - Discharge of surety by release or discharge of principal debtor.
 135 - Discharge of surety when creditor compounds with, gives time to, or agrees not to sue,
principal debtor.
 139 - Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy.
FACTS OF THE CASE
 S. Jagdesh Singh who was the principal debtor bought a no. plate J & K 4177 , which was
financed by the plaintiff decree holder
 S. Jagdesh Singh made S. Kahn Singh and Dulla Singh as the guarantors for the payment that
would be due on the hire purchase agreement
 5 Some payments were made but ultimately a pronote for Rs. 6,000 was executed on 26-7-
1958 by the principal debtor and two sureties in favour of the respondent No. 1. An agreement
was simultaneously executed by these persons in favour of the plaintiff-respondent No. 1.
When no payment was made, a suit was instituted by the respondent No. 1 against the three
person for Rs. 6,480, Rs. 6,000 as principal and Rs. 480 as interest, describing Jagdesh Singh
as the principal debtor, and the two other defendants,
 the appellant and Jagdesh Singh put in an application for fixation of instalments, which
application was rejected by the trial Court.
 The learned counsel for the principal debtor made a statement in Court on that date to the
effect that Jagdesh Singh had paid Rs. 500 to the decree-holder, the remaining amount would
be paid by the principal debtor to the decree-holder in instalments of Rs. 325 per month
beginning
 Every instalment would be paid in the first week of each month. If there was a default of
payment of any instalment, the decree-holder would be at liberty to recover the entire amount
outstanding in lump by means of execution.
 When no payment was made by the principal debtor to the decree-holder in terms of this
compromise, the decree-holder took out execution for the entire amount against the present
appellant.
 He took no action against the principal debtor nor did he take out execution against Dulla
Singh, the other surety. In this appeal also the learned counsel for the decree-holder refused to
take any proceedings against S. Dulla Singh but insisted that the entire decretal amount should
be realized from Kahn Singh, appellant.
 When execution was taken out against the present appellant, he raised an objection in the trial
Court to the effect that as the decree-holder had entered into a compromise with the principal
debtor without the consent and concurrence of the appellant, he was discharged and was not
liable to pay any amount to the decree-holder under the decree.
 The learned counsel for the decree-holder argues that the present appellant may have been a
guarantor only but once a decree was passed against him, he became a co-judgment-debtor
and, therefore, was liable to the same extent as the principal debtor.
 The distinction between him and the principal debtor came to an end as soon as the decree was
passed. This argument is not correct either factually or legally.
 The agreement dated 26-7-1958 and the plaint clearly describes Kahn Singh as Dulla Singh as
the guarantors and S. Jagdesh Singh as the principal debtor
 It was argued by the learned counsel for the appellant that the principle of Sections 134, 135
and 139 of the Contract Act would apply to the facts of this case. The surety would be
discharged as soon as the decree-holder entered into a compromise with the principal debtor
without the consent of the surety.
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