Report No. 13

103. Section 130.-

There is divergence of opinion between some High Courts as to the right of the sureties to revoke surety bonds given to Courts. In Bai Somi v. Chokshi, 19 Bom 245, which was a case of security for the guardian of a minor's estate, it was held that section 130 was inapplicable and that such a surety could not be discharged, as the very object of requiring security was to guarantee the minor's estate against the misconduct or mismanagement on the part of the guardian. In Raj Narain v. Ful Kumari, 29 Cal 68, a case under the Probate and Administration Act, the surety had made an application for his discharge on the ground that the Administrator had been guilty of waste which the surety could not prevent.

It was held that it was open to the Court to grant the application. In Subroya Chetti v. Ragammall, 28 Mad 161, an application by the surety for an administrator for his discharge, was dismissed on the ground that no such maladministration had been proved. Thereupon the surety instituted a suit praying that the Court should discharge the plaintiff from his guarantees as a surety in regard to future transactions. The suit was dismissed upon the grounds that:

(1) The making of an order for discharge might defeat the object for which an Administrator is required to find sureties to his administration bonds;

(2) Section 130 does not apply to a special contract of suretyship; and

(3) If the section applies to an administration bond, the surety could, without any action or any legal proceeding put an end to his liability by giving notice to the Registrar or to the Court.

In Kandhya Lal v. Manki, 31 All 56 the view of the Madras High Court was followed and it was held that where a person guarantees that an administrator will duly get in and administer the estate of a deceased person, there is a continuing guarantee within the meaning of section 129.

In our opinion the law has been correctly stated by Sulaiman, A.C.J., in In goods of Dr. Abinash Chandra1 It was held in that case that although it was true that the surety cannot claim as of right to be relieved of all liability by merely expressing his intention to do so either by notice or by a proper application to the Court and, although it is also true that the case of a surety whose security has been accepted by a Court, cannot be treated as one falling under sections 129 and 130 of the Contract Act so as to entitle him to put an end to the guarantee at his will, yet that is quite a different thing from saying that the High Court itself to which the guarantee is given has no power to exonerate the surety from all liability for future transactions. This view is in consonance with that of the Privy Council in Mahomed Ali v. Howeson Bros, AIR 1926 PC 110. We recommend that an Exception be added to the section providing that a guarantee given to the Court cannot be revoked without the permission of the Court.

1. AIR 1932 All 262.

104. Sections 131-133.- No change is considered necessary in sections 131 to 133.