Section 134 The Indian Contract Act, 1872
Section 134 of The Indian Contract Act, 1872 deals with the discharge of surety by release or discharge of principal debtor.
📜 Section 134 – Discharge of surety by release or discharge of principal debtor
"The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor."
✅ Explanation:
This section provides that:
If the creditor enters into a contract with the principal debtor that releases the debtor from the obligation, the surety is also discharged.
Similarly, if the creditor’s act or omission causes the legal discharge of the principal debtor, then the surety is no longer liable.
This is based on the principle that the surety's liability is co-extensive with that of the principal debtor. If the debtor is released, the surety cannot be held liable anymore.
📌 Illustration:
C lends ₹10,000 to B with A as surety.
Later, C agrees with B (without A’s consent) to release B from liability.
In this case, A (the surety) is also discharged from his liability.
🧑⚖️ Important Case Law:
Punjab National Bank v. Surendra Prasad Sinha (1993 AIR 1104):
The Supreme Court held that if the creditor discharges the principal debtor, the surety also stands discharged under Section 134.
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