The liability of a guarantor can be discharged if the creditor's conduct implies consent to a variation in the contract between the principal debtor and the guarantor, as per Section 133 of the Indian Contract Act.

S.B. Sinha, J.

This first appeal is directed against a judgment and decree dated 15.12.1986 passed by Sri Yogendra Prasad, 2nd Additional Subordinate Judge, Jamshedpur in Money Suit No. 76/56 of 1983-85, whereby and whereunder the said learned court decreed the suit as against the defendant nos. 1 and 3 but dismissed the same as against the defendant no. 2.

2. In view of the points involved in this appeal, it is not necessary to state the facts of the matter in great details.

3. Suffice it to say that admittedly the appellant granted a loan for a sum of Rs. 34,000/- to the defendant no. 1 who agreed to re-pay the same amount with interest @ 11 percent per annum on monthly rent on demand, repayable in 24th monthly instalment of Rs.1500/-

4. Admittedly, the defendant no. 1 was to purchase a trekker out of the aforementioned amount of loan and the defendant no.2 stood as guarantor of the defendant no. 1 in respect of the loan. The defendant no. 1 purchased a trekker and the said trekker was also hypothecated and the defendant nos. 1 and 2 executed a term loan agreement of hypothecation of the said vehicle bearing registration no. BHX 7431. The defendant no.2 also deposited his fixed. deposit receipt no. 115524 dated 17.3.1978 for a sum of Rs. 10,000/- by way of colateral security. He further executed a letter of guarantee in favour of the plaintiff, in respect of the aforementioned loan.

5. It appears that the maturity value of the aforementioned fixed deposit sum being Rs. 14600/-, was further deposited by way of colateral security. The defendant no.2 allegedly approached the plaintiff's Manager for grant of a receipt of the said fixed amount which was deposited by him.

6. Admittedly, the defendant no.1 had paid certain instalments. On 18.11.1981 the defendant nos,1 and 3 joint by gave a letter to the plaintiff's manager stating that the defendant no. 1 has handed over his vehicle in question to the defendant no.3 for plying the same and the instalment towards the liability would be paid by her. Allegedly the said arrangement was made by the defendant no.1 with defendant no.3 without the knowledge, consent and permission of the plaintiff.

7. The defendant no.3, by a letter dated 1.2.1983 informed the plaintiff that the vehicle in question bearing registration No. BHX 7431 has been taken back by the defendant no.1 on 31.1.1983 from her.

8. In paragraph 28 of the plaint the plaintiff stated as follows :

"That, the present liability of the defendants is Rs. 24,878.49 (Rupees twenty four thousand eight hundred seventy-eight and paisa forty-nine) which the plaintiff is entitled to recover from the defendants jointly and severally together with interest @ 1950 % per annum from 1.4.1983 till realisation and hence the necessity of filing this suit against the defendants for recovery of the aforesaid amount as fully described in the schedule below of this plaint."

9. In the aforementioned suit, thus, the plaintiff prayed for a decree as against all the defendants jointly and severally.

10. The defendant-respondent no.2 filed a written statement asserting, inter alia, therein that the plaintiff-Bank was acting in collusion with the defendant no. 1. According to the defendant no. 2, in view of the fact that the plaintiff had wasted a lot of time, his liability as a guarantor has been discharged. It was further stated that in view of the fact that the defendant no. 3 was allowed to ply the said vehicle and further was allowed to deposit the monthly instalment, the same caused a substantial variation in the terms of the contract by and between the plaintiff and the defendant no. 2 as a guarantor and subsequently his liability under the guarantee bond has been discharged. It was further stated" that the arrangement between defendant nos.1 and 3 was made with the consent of the plaintiff-Bank.

11. In view of the pleadings of the parties, the learned court below framed the following issues :

"1. Is the suit as framed maintainable?

2. Has the plain