The main legal point established in the judgment is the discharge of the surety under the Contract Act due to the failure of consideration and variance in contract terms without the surety's consent.

Leach, C.J.

1. The appeal arises out of a suit filed by the appellant in the Court of the Subordinate Judge of Dindigul to recover a sum of Rs. 77,770 with interest from K.S.N. Periathambi Nadar, who was sued as the principal debtor, and from U.P.A. Pachayappa Nadar, who was sued as his surety. They were defendants 1 and 6 respectively, and as it will be necessary in the course of this judgment to mention them frequently, it will be convenient to refer to them here as defendants 1 and 6. Defendant 6 died during the pendency of the suit and the respondents are his legal representatives. The appellants are a firm of produce merchants with their head office at Bombay. In 1915, they opened a branch at Bodinaickanoor in the Madura District, where they carried on business in coffee and cardamoms under the style of M.N. Bodiwala and Company. In the course of their business at Bodinaickanoor, they became associated with defendant 1, who, they say, pressed them to open a branch at Pattiveeranpatti and to allow him to become a working partner so far as the business at Pattiveeranpatti was concerned. Whether the suggestion came from defendant 1 matters not, but the suggestion was made and carried into effect on 15th July 1926. The arrangement was that the appellants were to provide the capital and were to share the profits or losses with defendant 1 in the proportion of ten annas and six annas respectively. It is the appellants case that defendant 6 undertook to guarantee the payment of defendant 1s share of any loss that might result from the business and that the partnership was formed on this basis. They say that on. 15th July 1926, three documents were executed, namely a vartamanam letter by defendant 1, embodying the terms of the partnership (Ex. A); a counterpart vartamanam letter executed by Manchand Hathi Chand, the appellants agent in Bodinaickanoor (Ex. A-1); and a vartamanam-letter by defendant 6 in which he undertook to make good to the appellants "the loss pertaining to defendant 1s share" and also any amount which might be found to have been misused by him out of the moneys provided by the appellants. This last letter is Ex. Rule Defendant 1 by his written statement admitted the appellants case so far as the formation of the partnership was concerned and also admitted the genuineness of the three documents to which I have just referred, but defendant 6 denied that he had ever Undertaken to guarantee defendant 1 and averred that Ex. B was a forgery.

2. It is an undisputed fact that defendant 1 carried on business in partnership with the appellants at Pattiveeranpatti on the basis of the vartamanam letters, Exs. A and A-1, and that the appellants advanced consider, able sums of money for the purpose. The business was conducted on behalf of the appellants by Manchand. The market, however, proved to be a falling one and by the end of August 1927 heavy losses had been sustained. The appellants allege that on 2nd September 1927 it was agreed between them and defendant 1 that the latter should take over all the assets and liabilities of the Pattiveeranpatti business and pay to them a sum of Rs. 70,000. They further allege that defendant 6 agreed to guarantee the payment of this sum and that the arrangement was embodied in three other documents, Exs. D, E and XXVI, all dated 2nd September 1927. Ex. D is a promissory note payable on demand for Rs. 70,000, bearing interest at is 3/4 per cent, per mensem executed by defendant 1 in favour of the appellants. According to its terms Ex. B is a vartamanam letter addressed by defendant 6 to the appellants in which he undertook to pay the amount due on the promissory note within one year in the event of defendant 1 failing to do so. Ex. XXVI is a vartamanam letter executed by Manchand on behalf of the appellants and addressed to defendant 1. It reads as follows:

Today I checked all the accounts relating to the coffee and cardamom business which you in partnership with our Company were c