Revocation of continuing guarantee
Section 130 of the Indian Contract Act, 1872 deals with revocation of continuing guarantee. A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor. The Act came into force on 01 Sep 1872.
A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.
Illustrations
(a) A, in consideration of B's discounting, at As request, bills of exchange for C, guarantees to B, for twelve months, the due payment of all such bills to the extent of 5,000 rupees. B discounts bills for C to the extent of 2,000 rupees. Afterwards, at the end of three months, A revokes the guarantee. This revocation discharges A from all liability to B for any subsequent discount. But A is liable to B for the 2,000 rupees, on default of C.
(b) A guarantees to B, to the extent of 10,000 rupees, that C shall pay all the bills that B shall draw upon him. B draws upon C. C accepts the bill. A gives notice of revocation. C dishonours the bill at maturity. A is liable upon his guarantee.
Section 130, The Indian Contract Act, 1872 (Act 9 of 1872).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Sita Ram Gupta v. Punjab National Bank
Court's Decision & Legal Precedent
Judgment of Main Case order-9.pdf 2008-03-10 DATE VERIFIED. CA 1878/2008 (from SLP(C) 21358/2006). Tarun Chatterjee / H.S. Bedi. REPORTABLE. Isolates Contract Act 130: a surety may revoke a continuing guarantee as to future transactions by notice, but that statutory benefit can be waived; a clause that the guarantee ‘shall continue to be a guarantee and remain in operation in respect of all subsequent transactions’ binds the guarantor and a later revocation letter does not discharge him. Map contract-act 130 cited only. Do not pad 126 (definition; not the isolate) or 128 (already filled).
On this section: Contract 130 revocation of a continuing guarantee can be waived by a clause keeping the guarantee alive for subsequent transactions; a later revocation notice does not discharge the surety (Sita Ram Gupta).
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… offered earlier for subsequent liability incurred by the second defendant company the plaintiff cannot be mulcted with liability for the fresh sanctions and fresh loan to which the plaintiff was not a signatory. 62. Even otherwise, a continuing guarantee can be revoked at any time after due notice in terms of Section 130 of the Indian Contract Act1872, Section 130 of the Indian Contract Act, 1872. which the plaintiff has done. Reads as under:- > "A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor". 63. As per Section 133 of the Indian Contract Act, 1872, any …
Questions about Section 130
What have the courts held on Section 130 of the Indian Contract Act?
Sita Ram Gupta v. Punjab National Bank (10 Mar 2008) is the leading judgment on this section among those set out below: Contract 130 revocation of a continuing guarantee can be waived by a clause keeping the guarantee alive for subsequent transactions; a later revocation notice does not discharge the surety (Sita Ram Gupta).
How do I find court cases under Section 130 of the Indian Contract Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Contract Act 130, section 130 Contract Act, section 130 of the Indian Contract Act. People searching for it also type indian contract act section 130. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Sita Ram Gupta v. Punjab National Bank (10 Mar 2008).
When did Section 130 of the Indian Contract Act come into force?
Section 130 of the Indian Contract Act, cited as Contract Act 130, came into force on 01 Sep 1872, having been enacted on 25 Apr 1872. It is in force as at the date shown on this page.
Other sections of this Act
- 73. Compensation for loss or damage caused by breach of contract1822 words
- 23. What considerations and objects are lawful, and what not596 words
- 74. Compensation for breach of contract where penalty stipulated for577 words
- 28. Agreements in restraint of legal proceeding void512 words
- 25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law423 words
- 16. "Undue influence" defined397 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.