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TMI Blog1931 (9) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... evidencing the so-called new contract between the plaintiffs and defendant No. 1, Exhibit 93, could not be recognised or admitted in evidence, and that therefore there was no variation discharging the sureties. He, however, held that the sum of Rs. 5,875 paid to defendant No. 1 was in variation of the original contract and held the sureties discharged to that extent. He did not consider that there was any contract to give time and that the delay in filing a suit was merely due to forbearance which did not operate to discharge the sureties. He accordingly gave a decree as stated above. 4. The facts material to the present appeal may be briefly stated. Defendant No. 1, who is a pleader practising at Ahmedabad, was in involved circumstances and his four properties with which we are now concerned were mortgaged to different people. It seems that he was desirous of bringing the scattered mortgages into the hands of a single party. Defendants Nos. 2 and 3, the present appellants, are his brothers-in-law, that is, his wife's brothers, and were apparently desirous of helping him. The plaintiffs are the managers of the firm of Anandji Kalyanji, which is a sort of charitable trust of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the fourth property mentioned in the original contract, viz., the land at Vadaj which was mortgaged to Jivanlal Chunilal for Rs. 16,500, was agreed to be sold to the said mortgagee Jivanlal Chunilal for the amount of the loan and interest thereon. Therefore, he was not to take any money from the plaintiffs for redeeming that mortgage, that he had caused the plaintiffs to pay Rs. 5,875 to one Kunjlal and that he had thus received a sum of Rs. 1,00,000 under the mortgage deed of October 17, 1921, and that that deed was to be treated as being one for the amount of Rs. 1,00,000 instead of the original amount stated therein. This document was signed by the principal debtor Krishnalal and attested by two persons, but the two sureties were not parties to it and do not appear to have been consulted, Entries relating to this change in the original transaction were made in the relevant accounts of the plaintiffs which are to be found in Exhibit 124. The entries contain a full recital of the change made in the transaction and credit back a sum of Rs. 25,000 to Krishnalal thus reducing the original debit of Rs. 1,25,000 to Rs. 1,00,000. 6. The term of the original mortgage being for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties to be given as security, they (the mortgagees) were to be content with three properties and that instead of advancing Rs. 1,25,000 they were to advance only Rs. 1,00,000. The original contract of October 17, 1921, is itself hardly a regular deed of mortgage, because at that date the mortgagor had really no interest to mortgage anything except the equity of redemption in those properties, which equity was apparently not very valuable. It was a contract between the parties by which the plaintiffs were to provide funds for redeeming the properties from the original mortgagees and the borrower was then to mortgage those properties to the plaintiffs. I see no reason why an agreement to make a certain change in an earlier contract of this sort between the parties should not be admissible in evidence without registration. Moreover, the contention of the appellants was that Exhibit 93 was given in evidence not for the purpose of affecting any property but for a collateral purpose, viz., to show that some substituted contract had been arrived at between the parties on May 14, 1922. For such collateral purpose it is permissible to receive the document in evidence, as was held in the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortgagee on the ground that part of the consideration was not paid. The question of the position of a surety who had undertaken that the mortgagor should fulfil his part of the contract has not been considered and that is the question with which we are now concerned. The learned Subordinate Judge thinks that there is no reason why the sureties should not be liable within the scope of the surety bond as regards the amount paid for carrying out the terms of the mortgage. But he has overlooked the point that in the present case the terms of the original contract-it is a misnomer to call it a mortgage bond-have been substantially varied without the consent of the sureties. It is not merely that the sum advanced has fallen short of the amount agreed to be advanced. Instead of the mortgagor being enabled to redeem four properties he has been enabled to redeem only three of them. It is conceivable that the sureties were induced to undertake their burden out of sentimental considerations for the preservation of a particular piece of property in the family. It is possible to imagine circumstances in which a surety who would be willing to undertake a burden for the sake of preserving the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor is a continuing one and likely to result in a series of transactions, some taking place before and some after the variance of the contract, It does not seem to me to be applicable to the present contract which does not consist of a series of transactions. The mortgagees were to lend a total sum of Rs. 1,25,000 and as security for it were to receive four properties of the mortgagor in first mortgage after they had been freed from prior encumbrances. It is not like a contract guaranteeing the honesty of an employee over a period of time where the conduct of the person guaranteed might be honest for a few months and thereafter become dishonest. In short Section 133 contemplates a contract of guarantee of the sort that is defined as a continuing guarantee in Section 129. Here the guarantee was merely as regards one single point, viz., that if the mortgagees fail to realise their money from the principal debtor or his mortgaged property, the sureties would be responsible, and the consideration for that was that the mortgagees were to advance a sum of Rs. 1,25,000 and thus put the mortgagor in funds for the redemption of four properties. This the mortgagees failed to do. They advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l principles of the law of contract in the present case. It is true, as pointed out by the learned Counsel for the respondents, that the Court must interpret the Act itself where it applies and that the natural meaning of the words of the statute should be followed uninfluenced by the previous state of the law: see Ramdas Vithaldas Durbar v.S. Amerchand Co. (1916) L.R. 43 IndAp 164 : 18 Bom. L.R. 670 Mohori Bibee v. Dhurmodas Ghose and Norendra Naik Sircar v. Kamalbasini Dasi I.L.R. (1896) Cal. 563 But where the Act does not cover the case with which the Court has to deal, then the Court is bound to follow the principles of the common law. It has been laid down in more than one case that the Indian Contract Act is not exhaustive : see Jagjiwandas v. King, Hamilton Co. (1931) 33 BOM LR 709 Irrawaddy Flotilla Company v. Bugwandass (1891) L.R. 18 I.A, 121 Jwaladutt Pillani v. Bansilal Motilal I.L.R. (1929) Bom. 414 : 31 Bom. L.R. 687 and Scott Hodgson v. Keshavlal AIR 1930 Bom 529 , 14. Now there can be no doubt that on the accepted principles of the law on this point a variation of the kind that has taken place in the contract now before the Court discharges the sureties. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n consonance with a long series of decisions enforcing, in varying circumstances, the same principle, viz., Johnson v. Gandy (1855) 4 W.R. 22 Bonser v. Cox (1844) 13 L.J. Ch. 260 Whitcher v. Ball (1826) 5 B. C. 269 Polak v. Everett (1870) 1 Q.B.D. 669 Bonar v. Macdonald (1850) 3 H.L.C. 226 Calvert v. The London Dock Company (1838) 2 Keen's Rep. 638 and Holme v. BrunsKill (1877) 3 Q.B.D. 495 A reference to these cases is sufficient to show that if there is a substantial alteration, even if there be no actual prejudice to the surety which can be shown to exist, the surety will be discharged because the Court or the jury will not go into the question whether there has been any actual prejudice or not. The surety is to be the judge as to whether he will continue to remain liable on the new contract or not. In Polah v. Everett the surety was aware of the new arrangement between the creditor and the debtor, still it was held that the variation discharged him. You cannot keep the surety bound and transact his affairs without consulting him. It is interesting to note that the cases cited have been referred to in the commentary under a 133 in Pollock and Mulla. It is clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat any plea, of negligence can be made out. 19. In support of the view that the transaction between the plaintiffs and defendant No. 1 was single and indivisible and not to be viewed as a series of transactions, it may be pointed out that defendant No. 1 would not have been entitled to redeem the mortgage from the plaintiffs piecemeal. The mortgage was one single transaction and a single sum was to be lent to redeem the four properties. The whole of the sum was debited to defendant No. 1 immediately on completion of the contract and taken to his credit in a deposit account. The interest on the whole sum was also to run from the same date. All these circumstances clearly show that the contract in suit did not consist of a series of transactions to be entered into between the parties from time to time but contemplated a single and indivisible transaction. 20. The result is that the decree against the appellants, original defendants Nos. 2 and 3, must be set aside and the appeal allowed with costs in both Courts. William T.W. Baker, J. 1. I agree. The material point in this case lies within a small compass. The facts have been fully set out by my learned brother, and it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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