Discharge of surety by variance in terms of contract
Section 133 of the Indian Contract Act, 1872 deals with discharge of surety by variance in terms of contract. Any variance, made without the suretys consent, in the terms of the contract between the principal [debtor] and the creditor, discharges the surety as to transactions subsequent to the variance. The Act came into force on 01 Sep 1872.
Any variance, made without the suretys consent, in the terms of the contract between the principal 1 [debtor] and the creditor, discharges the surety as to transactions subsequent to the variance.
Illustrations
(a) A becomes surety to C for B's conduct as a manager in C's bank. Afterwards, B and C contract, without A's consent, that B's salary shall be raised, and that he shall become liable for one-fourth of the losses on overdrafts. B allows a customer to overdraw, and the bank loses a sum of money. A is discharged from his suretyship by the variance made without his consent, and is not liable to make good this loss.
(b) A guarantees C against the misconduct of B in an office to which B is appointed by C, and of which the duties are defined by an Act of the Legislature. By a subsequent Act, the nature of the office is materially altered. Afterwards, B misconducts himself. A is discharged by the change from future liability under his guarantee, though the misconduct of B is in respect of a duty not affected by the later Act.
(c) C agrees to appoint B as his clerk to sell goods at a yearly salary, upon A's becoming surety to C for B's duly accounting for moneys received by him as such clerk. Afterwards, without As knowledge or consent, C and B agree that B should be paid by a commission on the goods sold by him and not by a fixed salary. A is not liable for subsequent misconduct of B.
(d) A gives to C a continuing guarantee to the extent of 3,000 rupees for any oil supplied by C to B on credit. Afterwards B becomes embarrassed, and, without the knowledge of A, B and C contract that C shall continue to supply B with oil for ready money, and that the payments shall be applied to the then, existing debts between B and C. A is not liable on his guarantee for any goods supplied after: this new arrangement.
(e) C contracts to lend B 5,000 rupees on the 1st March. A guarantees repayment. C pays the 5,000 rupees to B on the 1st January. A is discharged from his liability, as the contract has been varied, inasmuch as C might sue B for the money before the 1st of March.
Section 133, 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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Mahendra Kumar Rajpal vs Ministry of Corporate Affairs
Court's Decision & Legal Precedent
The Central Government, acting under Section 1(3) of the Insolvency and Bankruptcy Code, 2016, has the power to bring into force different provisions of the Code at different times for different categories of persons. The 2018 Amendment Act, by creating personal guarantors as a distinct category in Section 2(e) and mandating the NCLT as the adjudicating authority in Section 60, provided sufficient legislative guidance for the Central Government to selectively apply the Code to personal guarantors to corporate debtors. The notification dated 15.11.2019 is a valid exercise of conditional legislation, not an instance of excessive delegation or impermissible legislative exercise. Personal guarantors, though individuals, are intrinsically connected to corporate debtors and warrant unified adjudication before the NCLT. The approval of a corporate resolution plan does not discharge the personal guarantor's liability, which remains enforceable as an independent contractual obligation under the Indian Contract Act, 1872.
On this section: Discharge of surety by variance, release, or discharge of principal debtor
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Sanjay Singal vs Union of India
Court's Decision & Legal Precedent
The impugned notification dated 15.11.2019 bringing into force provisions of the Insolvency and Bankruptcy Code, 2016 only in so far as they relate to personal guarantors to corporate debtors is a valid exercise of power conferred by Section 1(3) of the Code. The Central Government acted within its constitutional powers in selectively applying Code provisions to personal guarantors as a distinct category of individuals, as this classification was created by Parliament through the 2018 Amendment Act which amended Section 2(e) and Section 60 to provide unified adjudication of corporate debtors and personal guarantors before the NCLT. The notification does not constitute impermissible delegation of legislative power or excessive modification of statutory provisions, but rather operationalizes the Parliamentary intent to treat personal guarantors differently from other individuals due to their intrinsic connection with corporate debtors. Approval of a resolution plan relating to a corporate debtor does not operate to discharge the liabilities of personal guarantors to such corporate debtors, as the guarantor's liability is co-extensive with the principal debtor and continues notwithstanding involuntary discharge of the principal debtor by operation of law.
On this section: Discharge of surety by variance in terms of contract without surety's consent
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Lalit Kumar Jain vs Union of India
Court's Decision & Legal Precedent
The Central Government, in exercise of powers conferred by Section 1(3) of the Insolvency and Bankruptcy Code, 2016, has authority to bring into force different provisions of the Code at different times for different categories of persons, including personal guarantors to corporate debtors. The 2018 Amendment Act, by creating distinct classification of personal guarantors under Section 2(e) and amending Section 60, provided sufficient parliamentary guidance for such selective application. The impugned notification, which brings into force provisions of Part III of the Code only in relation to personal guarantors to corporate debtors, is valid exercise of power conferred by Section 1(3) and does not amount to excessive delegation or modification of Code provisions. Furthermore, approval of a resolution plan for a corporate debtor does not discharge the personal guarantee liabilities of guarantors, as such liabilities arise from independent contracts of guarantee and are not discharged by involuntary discharge of principal debtor by operation of law.
On this section: Discharge of surety by variance in terms of contract without surety's consent; does not apply to involuntary discharge of principal debtor by operation of law
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K.a.anand vs Indian Overseas Bank
Court's Decision & Legal Precedent
A guarantor who had deposited title deeds as collateral for facilities sanctioned in 2011 and 2013, and who resigned from the borrower company and wrote to the bank withdrawing his association, is discharged as regards the fresh sanctions made after his exit: a continuing guarantee is revocable as to future transactions under Section 130, and under Section 133 a variance in the terms between creditor and principal debtor made without the surety's consent discharges the surety as to transactions subsequent to the variance. The bank's unilateral treatment of the 2011 security as continuing security for the later facilities was held illegal and it was directed to return the title deeds.
On this section: Applies Section 133 directly to hold that fresh loan sanctions and enhanced facilities granted to the principal debtor without any fresh letter of guarantee amount to a variance that releases the surety from the subsequent transactions.
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Australia, New Zealand Banking Group Ltd. vs Lt. Col. Hardeep Singh Bedi
Court's Decision & Legal Precedent
A surety may waive in advance, by an express clause in the deed of guarantee, the rights conferred on him by Chapter VIII of the Contract Act including Section 133, so that a later rescheduling of the principal debtor's liability does not discharge him; the contrary single-judge view in Central Bank of India v. Ali Mohammed is no longer good law after H.R. Basavaraj v. Canara Bank. Further, a guarantor who as managing director of the principal debtor consented to the varied arrangement cannot claim that he did not consent in his capacity as surety.
On this section: Rejects a Section 133 defence of discharge by variance on two grounds - contractual waiver of the section in the guarantee deed, and the guarantor's own consent to the variation - and so marks the limits of the section in bank guarantee litigation.
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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… Trac Inds. and Components Ltd, AIR 1978 Mad. 134. 29AIR 1969 (1) SCR 620. 30AIR 1992 SC 1740. 31(2009) 9 SCC 478. <span id="page-24-0"></span><sup>27 (2003) 8</sup> SCC 369. 44. The Solicitor General submitted that neither the guarantor's obligations are absolved nor discharged in terms of Sections 133 to 136 of the Indian Contract Act, 1872, on account of release/discharge/composition or variance of contract which a principal borrower may secure by way of operation of law for instance as under the Code. The rights of a creditor against a guarantor continue even in the event of bankruptcy or liquidation, …
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… Trac Inds. and Components Ltd, AIR 1978 Mad. 134. 29AIR 1969 (1) SCR 620. 30AIR 1992 SC 1740. 31(2009) 9 SCC 478. <span id="page-24-0"></span><sup>27 (2003) 8</sup> SCC 369. 44. The Solicitor General submitted that neither the guarantor's obligations are absolved nor discharged in terms of Sections 133 to 136 of the Indian Contract Act, 1872, on account of release/discharge/composition or variance of contract which a principal borrower may secure by way of operation of law for instance as under the Code. The rights of a creditor against a guarantor continue even in the event of bankruptcy or liquidation, …
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… Trac Inds. and Components Ltd, AIR 1978 Mad. 134. 29AIR 1969 (1) SCR 620. 30AIR 1992 SC 1740. 31(2009) 9 SCC 478. <span id="page-24-0"></span><sup>27 (2003) 8</sup> SCC 369. 44. The Solicitor General submitted that neither the guarantor's obligations are absolved nor discharged in terms of Sections 133 to 136 of the Indian Contract Act, 1872, on account of release/discharge/composition or variance of contract which a principal borrower may secure by way of operation of law for instance as under the Code. The rights of a creditor against a guarantor continue even in the event of bankruptcy or liquidation, …
Questions about Section 133
What have the courts held on Section 133 of the Indian Contract Act?
Mahendra Kumar Rajpal vs Ministry of Corporate Affairs (21 May 2021) is the leading judgment on this section among those set out below: Discharge of surety by variance, release, or discharge of principal debtor. Another 4 judgments on this section are set out below, 3 of them from the Supreme Court. They run from 2014 to 2023.
How do I find court cases under Section 133 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 133, section 133 Contract Act, section 133 of the Indian Contract Act. People searching for it also type indian contract act section 133. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 5 reported judgments on this section are set out on this page, beginning with Mahendra Kumar Rajpal vs Ministry of Corporate Affairs (21 May 2021).
When did Section 133 of the Indian Contract Act come into force?
Section 133 of the Indian Contract Act, cited as Contract Act 133, 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 14 Oct 2026. This page is not a substitute for legal advice.