A continuing guarantee remains valid unless expressly revoked, even when the principal debtor and creditor vary their contract without the surety's consent.

ORAL JUDGMENT :

1 Heard learned counsel for the parties.

2 This Arbitration Petition challenges an award passed by a Sole Arbitrator under section 84 of the Multi-State Co-operative Societies Act, 2002 .

3 The Petitioner, who was original Opponent No.2 in the reference before the learned Arbitrator, was a Director of one Narendrajay Metal Converters Ltd., the principal debtor of the first Respondent-Bank, who is Respondent No.2 to this petition and was Opponent No. 1 in this reference. The Petitioner had guaranteed the advances made by Respondent No.1 to Respondent No.2 under the financial limits sanctioned in its favour. It is the Petitioner's case that after loan was granted by Respondent No.1 to Respondent No.2 inter-alia on the security of a guarantee by the Petitioner, disputes arose within the family of the Petitioner [the Petitioner, his brother and nephew, respectively, being Directors and Guarantors of Respondent No.2 Company] and as per a settlement agreed between the members of the family, it was decided that the Petitioner would resign as Director and the remaining Directors of the Company would take steps to get him discharged as a guarantor of Respondent No. 1-Bank and also for release of his residential bungalow at Chembur, Mumbai, given as a security for the financial limit sanctioned by Respondent No. 1 in favour of Respondent No.2. It is submitted that the Petitioner, accordingly, resigned as a Director of the Company and the requisite form in that behalf was filed with the Registrar of the Companies, Maharashtra. It is submitted that Respondent No.2 accordingly proceeded to inform Respondent No.1 about the Petitioner's resignation as Director and request it for discharge of the Petitioner, as a surety, and release of his bungalow as a security given for the sanctioned finance. It is submitted that while the Petitioner was thus awaiting discharge as a guarantor and release of the security, a letter was addressed by Respondent No.1, placing certain conditions for his release as Guarantor and also for release of the security of his bungalow. It is submitted that the conditions were fully complied with and, accordingly, the Petitioner stood discharged as guarantor and Respondent No. 1 was also liable to release his bungalow, as part of its security. It is submitted that Respondent No. 1-Bank proceeded to enter into a new contract with Respondent No. 2 and also granted further financial limits for which a fresh set of documents such as promissory note, guarantee bond, etc. were procured from the remaining Directors of Respondent No.2. It is submitted that neither the Petitioner's consent was obtained for this new contract nor an intimation was given to him of such fresh contract. It is, accordingly, the case of the Petitioner that after the new contract came into existence, the Petitioner stood discharged of his original obligations as a guarantor. Since the loan granted by Respondent No. 1 to Respondent No. 2 was outstanding, the former applied for reference under section 84 of the Multi State Co-operative Societies Act, arraigning both Respondent No.2, as the Principal Debtor, and the Directors of Respondent No.2, including the Petitioner herein, as Guarantors. The learned Arbitrator proceeded to pass an award in the reference against both - the Principal Debtor and the Guarantors. The Petitioner, as a guarantor, challenged this award, inter-alia on the ground that there was no service of arbitration proceedings on him. This court allowed the Petitioner's challenge and remanded the matter to the Arbitral Tribunal for a fresh hearing in accordance with law and after service of the proceedings upon the Petitioner. The matter was heard afresh on remand by the learned Arbitrator and thereafter, the award impugned in the present petition came to be passed.

4 The only ground of challenge pressed by learned counsel for the Petitioner against the award passed on remand is that, by reason of variation of the contract as be