The Corporation's right of action against the surety is preserved unless the discharge of the principal debtor is through the act of the creditor without the consent of the surety.

Permod Kohli, J.

A Company, under the name and style of Punjab Malt Private Limited came to be incorporated on 1st December, 1973 having been promoted by the petitioner and her husband, namely, Ranjit Singh along with Mr. L.M. Thapar and late Kanwar Shamsher Singh who were also Directors of the Company along with the petitioner and her husband. The name of the Company was later on changed as "Punjab Malt Limited" (hereinafter referred to as "the Company"). The Company was set up as a heavily export oriented plant for the manufacture of malt from barley at Panchkula in Haryana, respondent No. 1 agreed to advance a loan of Rs. 30.00 lacs to the Company. The loan was secured by respondent No. 1 witty the mortgage of the assets and properties of the Company along with personal guarantee of the petitioner and her husband as also personal guarantee of Kanwar Shamsher Singh and another Director of the Company. The Company also secured loan from IFCL, Syndicate Bank and New Bank of India (now merged into PNB). The pari passu charge was created in favour of IFCI. It is admitted factual position that the unit did not take off and production never commenced. It is alleged that even though respondent No. 1 agreed to pay loan of Rs. 30.00 lacs, however, only one-third amount was disbursed. With a view to make its financial requirements and overcome other related problems, the petitioner floated a public offer by issuing 2,04.000/- shares of Rs. 1000/- each for cash at par. Despite that the Company could not go into production and became defaulter in payment of its dues to all the Financial Institutions referred to above respondent No. 1 vide letter dated 7th March, 1979 recalled the entire loan from the Company. It is alleged that at the time of recall, total outstanding amount was Rs. 11,23,229.65. The Company objected to the recall. In view of default, the Financial Institutions formed a consortium with IFCI as the lead partner and decided to take over the management and control of the Company by superseding the existing Board of Directors to be substituted by their own nominees. An understanding was arrived at between the management of the Company and the Financial Institutions. It is stated that under the said understanding the petitioner and her husband were to sell their shares in favour of Kanwar Shamsher Singh, nominee of the Financial Institutions and Banks at a consideration of Rs. 7,25,420/- and also to relinquish the management and control. It is further alleged that in view of the understanding, the personal guarantees given by the petitioner were to be released. The petitioner tendered her resignation from the Board of Directors vide letter dated 9th July, 1979 which was accepted by the then Board of Directors. An intimation in this regard was given by the petitioner to the financial institutions vide her letter dated 16th July, 1979. It is further alleged that the petitioner wrote communications to all the Financial Institutions to release personal guarantees on the basis of alleged package deal between the Financial Institutions, Kanwar Shamsher Singh, on the one hand and the petitioner and her husband on the other hand. Some of such communications have been placed on record as Annexure P-9 (collectively). It is also the case of the petitioner that after the exit of the petitioner and her husband, the Board was reconstituted with the nominees of respondent No. 1 as is evident from the Director's report dated 7th September, 1979 (Annexure P-10). To substantiate that the outstanding amount of respondent No. 1 upto 31st December, 1978 was only Rs. 9,67,215.95, reference made to the balance sheet dated 25th August, 1979 as it stood on 31st December, 1978 (Annexure P-11). A letter dated 25th February, 1980 was received whereby petitioner's husband was informed by IFCI that he is still liable for the payment of the Corporation dues on the basis of the bond of guarantee. The petitioner claims to have revoked her personal