# < urhakJh Sing,h v. Nikka Singh

- **Citation:** [1963] Supp. 1 S.C.R. 63
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Case number:** ; Civil Appeal No. 131 of 1961
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/urhakjh-sing-h-v-nikka-singh-2735
- **Pages:** 21

## Headnote

l S.C.R.
SUPREME COURT REPORTS
63
"Entries with respect to the following Khasra
Nos. may be made in the revenue papers in the
name of Teja Singh, co-sharer No. 5 to the
tune of one share and Bhai Jhandha Singh
co-sharer No. 2,
to the tune of seven shares:
324/3.16, 328/5.06 etc.
The High Court was, therefore, right in holding that
there was a presumption in favour of the correctness
of the entry and the appellant had failed to rebut the
same. The judgment of the High Court is correct and
the appeal fails and is dismissed with costs.
Appeal dismissed.
M. S. ANIRUDHAN
v.
THE THOMCO'S BANK LTD.
(J. L. KAPUR, A. K. SARKAR AND
M. HIDAYATULLAH, .lJ.)
Guarantee-Surety-Alterat-ion of terms of letter of guarantee by principal debtor-Discharge of surety's liability.
The appellant agreed to stand surety for an overdraft
allowed by the respondent Bank to S. A blank form of guarantee
was given by the Bani< to S, who then had it filled up by the
appellant stating thc maximum amount which he guaranteed
as Rs. 25000/-.
When S brought the letter of guarantee duly
signed by the appellant and himself to the Bank the latter refused to accept the guarantee up to that limit as it was not
prepared to give S accommodation for a larger sum than
Rs. 20000/- and wanted it to be limited to Rs. 20000/-. S then
made alterations in the letter with the amount of the maximum
limit corrected to Rs. 20000/- and gave it to the Bank, In a suit
instituted by the Bank against the principal debtor, S, and the
appellant on the hasis of the contract of
guarantee for
lls. 20000/-, the appellant pleaded that as the document was
altered without his knowledge or consent, he was discharged
from his liability.
Held, (per Kapur aud Hidayatullah, lJ., Sarkar, J.,
dissenting), that the appellant was not discharged from his
liability under the contract of guarantee.
1962
< urhakJh Sing,h
v.
Nikka Singh
Subba Rao, J.
1962
Sr.ptrmbtr, 14
1962
M. S. Anirudhan
v.
The Thomco's Bonk
ltd.
Kapur, J.
64
SUPREME COURT REPORTS [1963] SUPP.
per Kapur, J.-S was actin.I{ for and on behalf of the
appellant since it was at his· i11stance that the appellant was
standing surety and the appellant handed over the deed of guarantee to S for the purpose of being given to the Bank. The plea
of avoidance of contract by material alteration was of no avail to
the appellant because the document was not altered while in
posse'5ion of the promisee but was altered by S who was at the
time acting as the agent of the appellant.
per Sarkar, J.-The suit against the appellant as framed
must fail. The altered document was not binding on the
appeilant, for the
alteration had not been made to carry
out the intention of the parties. If the alteration .is. ignored
ali immaterial,
then the document creates no liability in
the appellant, for the Bank refused to accept a guarantee on the
terms contained in it before it was altered and therefore there
was no contract made between the parties by the document.
Further, the contrad sued ·upon is different from the contract
which might have been made by acceptance of the document .as
it stood before the alteration. The unaltered document. cannot
establish the contract sued on.
per Hidayatullah, J.-The document in this case could not·
be said to have been materiallv altered because it was not altered in such a mai:iner as to change its nature. The alteration
was made by a co-executant who reduced not only his own
liability but that of the surety also.
The document was altered
while in the possession of S, the very person who, as the agent
of the surety, brought it to the Bank. The surety must be deemed
to have held out Sas his agent for this purpose and this created
an estoppel against the surety because the Bank believed that S
had the authority. Accordingly, the alteration of the document
did not save the surety from liability under it .
. CIVIL APPELLATE JURISDICTION; Civil Appeal
No. 131 of 1961.
Appeal from the judgment and decree dated
September 30.. 1957, of the Kerala

## Text

_Characters 0–39,901 of 43,458. This is a partial read: ask again with offset=39901 for what follows._

l S.C.R.
SUPREME COURT REPORTS
63
"Entries with respect to the following Khasra
Nos. may be made in the revenue papers in the
name of Teja Singh, co-sharer No. 5 to the
tune of one share and Bhai Jhandha Singh
co-sharer No. 2,
to the tune of seven shares:
324/3.16, 328/5.06 etc.
The High Court was, therefore, right in holding that
there was a presumption in favour of the correctness
of the entry and the appellant had failed to rebut the
same. The judgment of the High Court is correct and
the appeal fails and is dismissed with costs.
Appeal dismissed.
M. S. ANIRUDHAN
v.
THE THOMCO'S BANK LTD.
(J. L. KAPUR, A. K. SARKAR AND
M. HIDAYATULLAH, .lJ.)
Guarantee-Surety-Alterat-ion of terms of letter of guarantee by principal debtor-Discharge of surety's liability.
The appellant agreed to stand surety for an overdraft
allowed by the respondent Bank to S. A blank form of guarantee
was given by the Bani< to S, who then had it filled up by the
appellant stating thc maximum amount which he guaranteed
as Rs. 25000/-.
When S brought the letter of guarantee duly
signed by the appellant and himself to the Bank the latter refused to accept the guarantee up to that limit as it was not
prepared to give S accommodation for a larger sum than
Rs. 20000/- and wanted it to be limited to Rs. 20000/-. S then
made alterations in the letter with the amount of the maximum
limit corrected to Rs. 20000/- and gave it to the Bank, In a suit
instituted by the Bank against the principal debtor, S, and the
appellant on the hasis of the contract of
guarantee for
lls. 20000/-, the appellant pleaded that as the document was
altered without his knowledge or consent, he was discharged
from his liability.
Held, (per Kapur aud Hidayatullah, lJ., Sarkar, J.,
dissenting), that the appellant was not discharged from his
liability under the contract of guarantee.
1962
< urhakJh Sing,h
v.
Nikka Singh
Subba Rao, J.
1962
Sr.ptrmbtr, 14
1962
M. S. Anirudhan
v.
The Thomco's Bonk
ltd.
Kapur, J.
64
SUPREME COURT REPORTS [1963] SUPP.
per Kapur, J.-S was actin.I{ for and on behalf of the
appellant since it was at his· i11stance that the appellant was
standing surety and the appellant handed over the deed of guarantee to S for the purpose of being given to the Bank. The plea
of avoidance of contract by material alteration was of no avail to
the appellant because the document was not altered while in
posse'5ion of the promisee but was altered by S who was at the
time acting as the agent of the appellant.
per Sarkar, J.-The suit against the appellant as framed
must fail. The altered document was not binding on the
appeilant, for the
alteration had not been made to carry
out the intention of the parties. If the alteration .is. ignored
ali immaterial,
then the document creates no liability in
the appellant, for the Bank refused to accept a guarantee on the
terms contained in it before it was altered and therefore there
was no contract made between the parties by the document.
Further, the contrad sued ·upon is different from the contract
which might have been made by acceptance of the document .as
it stood before the alteration. The unaltered document. cannot
establish the contract sued on.
per Hidayatullah, J.-The document in this case could not·
be said to have been materiallv altered because it was not altered in such a mai:iner as to change its nature. The alteration
was made by a co-executant who reduced not only his own
liability but that of the surety also.
The document was altered
while in the possession of S, the very person who, as the agent
of the surety, brought it to the Bank. The surety must be deemed
to have held out Sas his agent for this purpose and this created
an estoppel against the surety because the Bank believed that S
had the authority. Accordingly, the alteration of the document
did not save the surety from liability under it .
. CIVIL APPELLATE JURISDICTION; Civil Appeal
No. 131 of 1961.
Appeal from the judgment and decree dated
September 30.. 1957, of the Kerala High Court in
Appeal suit No. 19 of 1956 (T).
T. N. Svl!rarruini,a Iyer, R. Mahalingier and
M. R. Krishna Pillai, for the appellant.
V. A. Seyid Muhammed, for the respondent.
1962. September 14. The Judgment of the Court
was delivered by
KAPUR, J.-It is not necessary for me to give
the facts of this case as they are set out in detail in the
1 S.C.R.
SUPREME COURT REPORTS
65
judgments of my
learned
brethern Sarkar &
~id~yatullah, JJ. In my opinion this appeal should be
d1sm1ssed and my reasons arc these :
On the findings of the High Court it appears
that the Bank had agreed to allow an overdraft to
defendant No. 1 for Rs. 20,000/-, that the appellant
gave a surety bond for the repayment of Rs. 25,000/-
and when that was pointed out to defendant No. 1,
the principal debtor, he (the latter) made the alteration in the document by reducing the figure of
Rs. 25,000/- to Rs. 20;000/-.
·
The case of the appellant was not that he never
stood surety for defendant No. 1 but that he stood
surety for Rs. 25,000/- which was subsequently altered
to Rs. 20,000/- and that any change of figure was a
material alteration resulting in the avoidance of the
contract, even though the alteration might have been
advantageous to him, the obliger. It was argued that
howsoever innocent the obligee might be or howsoever
innocent the alteration might have been made so far
as it is material the non-accepting obliger-the appellant in this case-cannot be held liable on the obhga-
.tion in the altered form because he never made or
consented to such an obligation and he cannot be
held liable on the obligation in the original form because the obligation was never assented to by the
creditor-the respondent Bank.
Now an unauthorised
material alteration avoids a contract so that if a promisee after a written contract has been executed materially alters it without the consent of the promisor
whether by adding anything to the contract or striking
out any part of it or otherwise the contract is avoided
as against the person who was otherwise liable upon
it (Halsbury's laws of England, 3rd Edn., Vol. 8,
para 301, p. 176). It may also be taken to be the
law that even if the alteration is made by a stranger
without the knowledge of the promisee the other party
is discharged if the contrac_t is in possessi?n of the
promisee or his agent.
But 1f the contract IS altered
1962
M. S. Anirudhan
v.
The Tlwm&o's Bani:
ltd.
Kapur, J.
1Yli2
,\[, S. A.nirtulh•u
, ..
Tht Th~mr:.•~s B11nk
ltd.
Ji.i.jP.LY, J.
fifi
SUPREME COURT REPORTS [1963] SUPP.
by a stranger when the contract was not in the custody
of the promisee the promisor is not dischargeq.
(Halsbury's Laws of Et1gland, 3rd Edn., Vol. 8, para
:lO i, p. l i(l ).
There is also a further qualification
and that is that if a guarantor entrusts a letter of
guarantee to the principal borrower and the principal
borrower makes an alteration without the assent of
the appellant then the guarantor is liable because it
is due to the act of the guarantor that the letter of
guarantee remains with the principal debtor, in this
case defendant No. l, and what the principal debtcir
did will estop · the guarantor from pleading want of
authority (Vl'illiston on Contract, Vol. VI, para ]!) 14,
P· ;;:1r;4).
Thus the position in the present case comes to
this. The appellant agreed to stand surety for an
overdraft allowed by the respondent Bank to the
principal debtor, Shankaran. The Bank required a
guarantee in the form which was handed over to the
principal debtor, Shankaran. Shankaran got it filled
by the appellant for a sum of Rs. 25,000/-. The
Eank did not accept the guarantee up to that limit
but wanted the figure to be corrected i.e. by lmertion
of Rs. 20,000/-. The document was thereupon handed back to the principal debtor who, it is stated,
altered the document.
At that stage the principal
debtor was acting for an~ on behalf of the appellant
because it was at his instance that the appellant was
standing surety and the appellant handed over the
deed of guarantee to the principal debtor for the pi1rposes of being given to the bank, the respondent. In
these circumstances the avoidance of contract bv
material alteration is inapplicable because the doctimen t was not altered while in possession of the promisee or its agent but was altered by the principal
debtor who was at the time acting as the agent of the
guarantor, the appellant.
In these circumstances the pk;:t of matllrial
alteration is of no avail to the appelh1nt and the
'
l S.C.R.
SUPREME COURT REPORTS
Gi
appeal must therefore fail and is disn:isscd but no
order as to costs.
SARKAR, J.-This appeal arises out of a suit
filed by the respondent Bank against tlw appellant as
the guarantor and one Sankaran a·; the principal
debtor, to recover monevs advanced to the latter on
an overdraft account. The suit was decreed against
Sankaran by the trial Court and he never, appealed
from that decree. We will, therefore, be concerned
in this appeal
only with the claim against the
appellant.
The suit against the appellant was based on a
letter of guarantee dated May :?J., l!l4i. It was slated
in the plaint that bv this letter of guarantee the appcl·
!ant had undertaken to rq:ay to the Bank the balance
due on the overdraft account opened in favour of
Sankaran, up to a maximum of Rs. :?0,000/- which
was also the maximum amount for which the over·
draft had been arranged. The appellant's defrnce to
the suit "'as that he had agreed to guarantee the
liability of Sankaran on the overdraft up to Rs. ii,000/ ·
and had signed 1hc letter guaranteeing thereby 1:epay·
ment up to that sum but the le1ter had been altered
without his consent by substituting Rs. 20,000/. for
Rs. 5,000/-. The appellant contended in the courts
below that as this was a material alteration of the
instrument of guarantee. he was absolved· of all
liability on it.
The trial court found that the amount ,guaranteed had origina llv been mentioned in the letter as
Rs'. :2,),000 · and this had been altered without the
consmt of the appellant to Rs. 20,000/·. Ir obser\"rd
that as it was not dispulcd that the alteration was
material. the suit against the appellant had to be
dismissed and passed a decree accordingly. obviously
in the view that the alteration had avoided the
imtrument.
The respondent Bank then appealed io the High
C:onrt of Krrala, The High Court agreed with the tri;il
J.9(,J
;\[. S. Anin1dhan
, ..
1'/ie Thnmro 's /11111'.-
J.td.
Sarkar,
./.
1962
M. S. Animdhan
v.
The Thomco's Bttnk
Ltd.
Sarkar, ,f.
68
SUPREME COURT REPORTS [1963] SUPP.
court that the letter of guarantee originally mentioned
Rs. 25,000/- and this figure was later
altered to
Rs.20,000/- without the consent of the appellant. It
added that probably the alteration had been made by
the principal debtor, Sankaran. It however held that
the appellant had mentioned Rs. 25.000/- in the
place of Rs. 20,000/- in the letter probably by a
mistake and that the alteration had been made in order
to carry out the common intention of Sankaran, the
appellant and the Bank tha~ for the overdraft accommodation of Rs. 20,000/· allowed to Sankaran the
appellant would give a letter of guarantee to the Bank.
In this view of the matter the High Court, relying on
the principle contained in s. 87 of the Negotiable
Instruments Act, 1881, passed a decree against the
appellant.
The appellant has come up to this Court in appeal
against the judgment of the High Court. Unfortunately,
the Bank, for reasons unknown to us, has not appeared
in this appeal. Dr. Seiyid Muhammed argued the
case for the Bank at our request and has rendered us
great assistance.
Now, the provision of the Negotiable Instruments
Act on which the High Court relied in terms applies
to a negotiable instrument which a letter of guarantee
is not. The principle of that provision may however
be of wider application. That principle has been
formulated in Ha!sbury's Laws of England, 3rd edn.,
vol. 11, p. 370, in the following words :
"An alteration made in a deed, after its
execution, in some particular which is not mat·
erial does not in any way affect the validity
of the deed; ........................................... ..
It appears that an alteration is not material
............ which carries out the intention of the
parties already apparent on the face of the
deed .. "
It is now well settled that, this principle applies
to instruments under hand also : see ibid
,
I S.C.R.
SUPREME COURT REPORTS
69
p. 380, f. n. (c) and Jlfasterv. Miller, (1791) 4 Term
Rep. 320. The question then is, was the alteration in
the letter of guarantee of the kind contemplated by this
principle.
The learned Judges of the High Court
thought it was and so held that the letter of guarantee
as altered could be enforced. I am unable to accede
to that view.
It seems to me that the intention to carry out
which an alteration is permissible under the rule on
which the High Court has relied, is the intention with
which the instrument was executed. That is why in
formulating the rule it has been stated in Halsbury's
Laws of England that the intention has to be "already
apparent on the face of the deed".
I need· only refer
to the observation of Le Blanc, J., in Knill v. Willia.ms(')
in support of this proposition,
"If I had
thought that
there was any
evidence on which the jury might have found
that the words afterwards added had been
originally intended to have have been inserted,
and were omitted by mistake, I should certainly
have left it to them so to find; the case of
Kershaw v. Cox(') being then fresh in my mind;
but. according to my recollection of the evidence,
it was impossible for them to draw that conclusion from it. The opinion which I delivered in
Karshaw v. Cox can only be supported on the
ground that the alteration there made in the bill
the day after it was negotiated was merely the
correction of a mistake made by the drawer of
it, in having omitted the words, 'or order', which
it was intended at the time should be inserted."
The two cases on which the learned Judges of the
High Court relied are also cases where the mistake
was in writing the instrument. In Lachmi Rai
v. ~rideo Rai(') it was found that "the omission regarding the payment of interest was accidental" and in
AnandaMohan Saha v. Ananda Chandra Naha(') where
(1) (1809) 10 East. 931; 103 E. R. 839.
(2) 3 Esp. N. P. Oas. 246.
(3) A. I. R. 1939 All. 2.W.
(4)
(1916) I. L. R. 44 Cal. 154.
1962
'''• S. Anirudhan
v.
1"l1 Thomco'.s Bank
Ltd.
Sarkar, J.
1962
JI. S. Anirudlu11i
v.
The 1 lwmco '.1 B11nk
Lid.
.._(..:arkar, J,
70
SUPREME COURT REPORTS [l!J63] SUPP.
the instrument originally provided for interest on a
loan of Rs. :WO/- at Re. 1/- per mensem and had been
altered by the addition of the words "per cent", it
was said ''that it 1vas the intention of the parties, as
it seems to me to be obvious upon reading the document, that interest was to be paid at the rate of one
rupee per cent. per menscm' . It seems to me that
if it were not so and the intention contemplated in
the rule could be gathered from a pre-existing agreement alone without caring to find out the intention
with which the instrument was executed, then there
would be no justification for the rule. lt would then
warrant the alteration of an instrument intentionally
written in variance with the pre-existing agreement
which a person was in law free to do, by tLe other
party to it. That would amount to making a new
contract out of a written instrument by unilateral
action and in disregard of the intention of the writer.
For such ;.1 position our lall'S 111ake no provision. It
may be that a person who writes a document in terms
which deliberately depart from the agreement pursuant
to which it is written, may be liable on that agreement
but he cannot be made liable on the document as
altered by the other party to the agreement alone even
though snch alteration makes the document consonant
with the agreement.
Now there is absolutely no evidence in this case
that in writing the letter of guarantee the appellant
had intended to mention the maximum amount of
gu;m111tcc as Rs. 20,000/- and had by mistake written
Rs. 25,000/- instead. In holding that there was such
a mistake, the High Court proceeded purely on the
basis of conjecture which is evident from the language
used by it.
It said, "probably defendent 2" (the
appellant) "made a mistake in Ext. C" (the letter of
guarantee). There was not the slightest warranty for
thL' conjecture. In fact the evidence indicates that
Rs. :!i'i,000/-had been mentioned intentionally in the
letter of guarantee. That evidence was given by the
1 S.C.R:.
SU.E'-lBME COURt RtPORTS
il
Banks agents too. He said that the overdraft arrangement commenced on February 24, 1947, when Sankaran executed a promissory note for Rs. 20,000/- in
favour :of the Bank.
At that time the appellant \\'as
not available to sign the letter or g-uarantcc. lhc
letter was typed by the Bank with blank spaces left
for entries to be made by the guarantor regarding th~
maximum limit of the account, the rate of interest and
the date. Sankaran brought this, letter back to the
Bank in May 194 7.
At that time the space for the
amount of the limit was filled up with the figure
Rs.25,000/-. Sankaran said that he required Rs.25,000/-
and would renew the promissory note for that amount.
The Bank was not prepared to advance to him morC'
than Rs. 20,000/- and so the letter of guarantee was
returned to Sankaran who then took it away and
brought it back some time later with the amount of
the maximum limit corrected to Rs. 20,000/-.
This
is all the evidence on the question.
I think it right to point out here that the Bank's
agent did not speak to any oral agreement with the
appellant, nor indeed to any interview with him concerning the overdraft arrangement or the guarantee. The
appellant in his written statement no doubt admitted
that he had agreed to guarantee the due repayment of
the overdraft up to Rs. 5,000/-.
He did not however
say that the agreement was verbal but mentioned the
letter of guarantee. The appellant's admission can of
course be taken against him but it must be taken as
made and not a part of it only.
Again, no verbal
agreement com::erning the guarantee had been pleaded
anywhere by the Bank, not even in the application that
it filed in answer to the written statement of the appellant alleging that the letter of guarantee having been
materially altered no suit lay on it.
Lastly, I have tn
observe that the trhd court did 11()t find that any such
oral agreement had been made. If there had been any
agreement, the letter of guarant~e as typed out would
have contained no bliililks.
.M. S • .-lniruilwi
v.
'[fie Th«11~'s &ik
Lti.
1962
M. S. Anirudhan
v.
TM Thomco'.s Bank
Ltd.
Sarkar, J.
72
SUPREMECOURTREPORTS[l963]SUPP.
In these circumstances it is impossible to hold
that there was any prior agreement about the guarantee
?r its limit, between the appellant and the Bank, and
1f there was not, the High Court's view that in the
letter of guarantee Rs. 25,000/- had been mentioned
bv mistake, would lose its foundation. But even
assuming a pre-existing verbal agreement-and in this
case the agreement, if any, could only be verbal-the
fact that Sankaran made a request that the amount of
the overdraft should be increased to Rs. 25,000/-
would rather indicate that the letter of guarantee h~d
intentionally stated Rs. 25,000/- as the amount of
guarantee and this figure had not been written by any
mistake. It would be impossible to hold on this evidence that there had been any mistake in writing the
letter of guarantee. The evidence does not prove any
pre-existing agreement and tends to prove that there
had been no mistake in writing the letter of guarantee
even if there was an agreement. Therefore it seems
to me that the High Court was in error in thinking
that the alteration in this case ·had been made to carry
out the intention of the parties. The principle underlying s. 87 of the Negotiable Instruments Act has
no application to the facts of this case.
Dr. Seiyid Muhammed, however, put the matter
from another point of veiw.
He said that in order
that an alteration in an instrument made without a
party's knowledge might be avoided against him that
alteration had to be material and in support of it he
referred us to a passage in Halsbury's Laws of England
3rd Ed., vol. 11, p. 380. He then said that no alteration could be material unless it was to the prejudice
of a party.
He pointed out that the alteration in the
present case had reduced the limit of the appellant's
liability from Rs. 25,000/- to Rs. 20,000/- and it was
not therefore a material alteration. Hence he contended that the letter of guarantee had not been avoided
by the atteration.
I do not think that this contention assists the
Bank at all. I will assume that an alteration in an
I S.C.R.
SUPREME COURT REPORTS
73
instrument which is not to the prejudic~ of a party to
it is not a material alteration and does not release him
from his liability uuder the instrument. This rule
however does not make the instrument as altered binding on that party. If it did, that would amount to
changing by unilateral action the terms of a contract
made by common consent or to changing the terms
of an offer made by one without his consent. As I
have earlier said, none c;if these things can be done
under our law. I may add that I have not been able
to find any authority laying down that in such a case
the altered instrument would be binding.
All that we would get in this case if Dr. Seiyid
Muhammed is right, is that the alteration might be
ignored and, the instrument in its original form might
be considered as existing unaffected by the alteration.
Jn the present case, therefore, we would have a letter
of guarantee wiitten by the appellant undertaking to
repay the balance due by Sankaran on the overdraft
account up to a limit of Rs. 25,000/-. What then '!The
suit is not on a contract to guarantee up to Rs. 2•3,000/-.
Indeed according to the Bank's pleading and evidence
there never was any agreement for such a guarantee
between it and the appellant. The letter, therefore
cannot be considered as evidence of such a contract.
Further the evidence to which I have already referred
proves that as an offer, the letter was not accepted
by the Bank. In fact the letter in its original form is
of nn assistance to the Bank at all in this case, it neither
proves a guarantee for Rs. 25,000/-
nor for Rs.
20,000/-.
But it is said that the letter contained an enforceable contract as it was supported bv consideration
which had already moved from the Bank, namely, the
advance made to Sankaran before the date of the letter
and the promise to make further advances. Ti.en it is
said that inadequacy of consideration does not avoid a
contract as stated in Explanation 2 of s. 25 of the Contract Act, 18i2, and therefore the Bank's undertaking
1962
M. S. Anirudlum
v.
The Tkomco's Bani(
Ltd.
Sarkar, I.
1962
,\_/, S. A1iirudha11
"·
I it;; I Jwmc·u ·.1 }Jank
Ltd.
!:Jarko.1, J.
74
SUPREME COURT REPORTS [1963];StJPl\
to advance upto Rs. 20,000/- could support th11
appellant's promise to guarantee up to Rs. 25,000/·,
Bul it is not the Bank's case that there was such a c~Ii
tract of gLtarantcc. Its case was that lhc contract of
guarantee was for Rs. 20,000/-. Thal contract is nut
supported by the letter on which alone the suit is
based. If there was no contract as stated in the letter.
then no question of consideration to support it can
possibly arise. Therefore it seems lo me that the contention that the alteration was immaterial and di<l not
affect the instrument so far as the appellant is concerned is to no purpose in the present case.
The position may then be thus stated. We ha,ve
a suit against the appellant based on a written contract to guarantee repayment of Sankaran's dues to
the Bank up to Rs. 20,000/-. There is no evidence of
any verbal contract of guarantee. 'the appellant
wrote a letter guaranteeing repayment of those dues
up to Rs. 25,000/-.
Sankaran also signed this letter
but that signature is of no consequence to the question
of guarantee which alone arises in this appeal for
Sankaran could not guarantee his own debt and his
signature would therefore on! y be evidence of his
liability for the amount advanced to him by way of
overdraft.. Such liabili~y, however, ?e had already
undertaken by executmg a promissory note for
Rs. 20,000/'- in favour of the Bank.
His sign;iture on
the letter of guarantee therefore made no difference in
'the legal relations that have to be comidercd · ln this
a#JJeal.
Returning· now to the letter of guarantee
written by the appellant, the Bank refused to accept
that letter and, tperefore, on the Bank's o\Mn case
no
contract on .its terms was ever made. That
letter was altered without the consent of the appellant
pi:obably by Sankaran by substituting Rs. 20,000/- for
Rs. 25,000/-. If the alteration was without the appellant's consent, it could not have been authorised
by him ; if it had be<:n, consent would he implied.
Theri: is further neither evidence, nor pleading oor
1 S.C.R.
SUPREME COUlU- l'.EPORTS
75
finding of any such authority. The altered document
is not binding on the appellant for the alteration had
not been made to carry out the intention of the parties.
If the al lcration is ignored, then the document . creates
no liabiliL y in the appellant, for the Bank ref used to
accept a guarantee on the terms contained in the
document before it was altered.
Further, the contract
sued upon is different from the contract which might
have been made bv the document as it stood before
the alteration. Th~ unaltered document cannot establish the contract sued upon.
.
The conclusion to which I arrive then is that the
suit against the appellant as framed must fail. I
would, therefore, allow the appeal with costs here and
below and dismiss the suit against the appellant.
·
HnJA YA'JTLLAH, J.--I have had the advantage
uf reading the judgment prepared by my brother
Sarkar. In my opinion, and I say ic with great respect,
this appeal must fail. I shall give my reasons brief!)~.
The facts of the case arc simple. The suit, out
of which this appeal arises, was filed by the Thomco's
Bank Ltd, Trivandrum, (to be called in this judgment
the 'Bank') against V. Sankaran (the principal Debtor)
and N. S. Anirudban (the surety and appellant before
us).
The suit was based against V. Sankaran on a
promissory note executed by him in favour of the Bank
on February. 24, 1947, (Exhibit B) and against the
present appellant on a letter of guarantee dated May
24, 194 7.
In so far as Sankaran has not appealed
against the decree passed against . him we need not
mention the facts leading up to the promissory note
which was prior in time.
Anirudhan in defending
himself stated that the letter of guarantee was for
Rs. 5,000 and that 'it had been altered without his
knowledge and consent in a sum of Rs. 20,000/.. The
letter of guarantee is Exhibit C and the original does
show two corrections in the figures as well as the written
words mentioning' the amount. Figure "5" in the
amount 6f Rs. 25,000/- in figures appears to have been
. .1\1. S. Anirzulha'!.
v.
171e 7"/wmco'~ Ban~
Ltd.
Sark«r, J.
Hida)'8tullsh, J.
1962
M. S. Anirudhan
v.
The Thomco's Bank
Ltd.
Hidavalullah, J.
76
SUPREME COURT REPORTS [1963] SUPP.
altered to "0"; and in the words' "Rupees twenty five
thousand" the word "five" has been struck out. The
appellant's case that 5,000 in figures was altered to
20,000 by the addition of the figure "2" and the
alteration of the figure "5" into "0" and the corresponding change in the words by the addition of the
words "twenty" and the scoring out of word "five"
has not been believed. Thus the case made out by
Anirudhan has not been accepted. The correction,
however, is patent and the question that has arisen in
this case is whether bv the alteration of the letter of
guarantee the surety i~ discharged.
The finding of the High Court is that there was
no prior oral agreement between the Bank and
Anirudhan. This letter, as is obvious from the dates,
was given after tl1e loan had already been made. The
contention of the Bank was that when Sankaran
brought this letter and asked for additional loan of
Rs. 5,000 the Bank refused to advance any further
amount and declined to accept this letter of guarantee
for Rs. 25,000 lest the Bank might be compelled to
loan a further sum of Rs. 5,000. Sankaran then took
back the letter and after some time brought it back
with the figure "5" changed into "0" and the word
"five" scored out. These corrections were not initialled either by Sankaran or by Anirudhan. The Bank,
however, accepted this letter and kept it and sued
Anirudhan upon it.
The
question is whether
Anirudhan's liability is discharged by the alteration in
the document which alteration is not proved to have
been made either by him or with his knowledge or
consent.
It is conceded and indeed it is the law that only
a material alteration makes a document void. It is
also the law that if the custodian of the document
makes or allows an alteration to be made while the
document is in his custody he cannot sue upon it
because it is his duty to preserve the document in the
state in which he got it. In the present case, the
1 S.C.R.
SUPREME COURT REPORTS
77
document was not altered by Bank nor with the Bank's
consent or connivance while the document was in its
custody. The document was apparently altered either
by Anirudhan or by Sankaran or by both. If it was
altered by Anirudhan, or by him and Sankaran together, the document still remains the document of Anirudhan and the suit of the Bank based upon it is competent against him. If it was altered by Sankaran
the question is whether the alteration was a material
alteration to make it void against Anirudhan. The
High Court is of the opinion that it was not material.
I am inclined to accept the conclusion of the High
Court. Anirudhan by the letter to the Bank wished to
guarantee an overdraft of Sankaran not exceeding
Rs. 25,000/·· His case that it was Rs. 5,000/- and not
Rs. 25,000 has been disbelieved. The document was
originally written for a'n amount of Rs. 25,000/- which
was reduced to Rs. 20,000/- I will assume, by Sankaran
and the letter of guarantee was accepted by the Bank.
The question is whether by the reduction of the amount
of the guarantee Anirudhan can say that the document
executed by him has been materially altered and his
liability is at an end. In my judgment, in the present
case it cannot be said.
The document still continues
to represent what was intended by Anirudhan. That
intention was to guarantee a loan up to Rs. 25,000/-
which includes the sum for Rs. 20,000/- for which the
guarantee now stands.
The question is whether
Anirudhan can say that this guarantee is at an end.
There are really two defences c.pen to Anirudhan
the surety. The first is that he had offered to stand
surety on certain terms and as those conditions have
been altered he is discharged from any liability. The
second also depends on the alteration and it is that a
document executed by him has been materially altered
and is therefore void. This is a plea of non est factum.
Both the arguments rest upon the alteration of the
contract into which Anirudhan wished to enter.
A
surety is considered a '.'favoured debtor" and his
1962
At. S. Anin1dlU
v.
Tht Tlwmco's Ba
ltd.
Hida_yatutlah,
1962
.'AJ; S. Anirudhnn
v.
~ht Thm1rco's Bank
Ltd.
Hidayatul/0/1, J.
78
SUPREME COURT REPORTS [1963] SUPP.
liability is Btrictissimi juris. Lord Westbury, L.C., in
Rlest v. Rrrnrn (')stated this liability in the following
words:~
"It must alwavs be rocollected in what manner
a surety is bound. You bind him to the letter
of his engagement. Beyond the proper interpretation of that engagement you have no hold
upon him.
He receives no benefit and no
consideration. He is bound, therefore, merelv
according to the proper meaning and effect of the
written engagement that he has entered into. If
that written engagement is altered in a single
line, no matter whrthcr the alteration be innocently made, he has <: right to say, "The i;ontract is no longer that. for which I engaged to be
surety; you have put an end to the contract that
I guaranteed, and my obligation, therefore, is at
an end."
It is not necessary to go into the fact of that case
where the
surety
guaranteed
fulfilment
of a
contract for the supply of flour to a banker who in his
tum had undertalwn to supply bread to Government.
The case turned upon stipulations by the Government
an<l their breach and the decision cannot be regarded a
dfoect authority, apart from the general observation,
in the. present cas0. The statement of the law in Blesl
v. Brown (1) was considered by the Cqurt of Appeal
in flolme v. Brwnskill (')in an appeal fmm ,q.jllQgment
of Denman, J. (later Lord Denman). Cotton, L.J.,
stattid ,the! law '11 these wqrds:~
"The true rule in my opinion is, that if there is
any agreement between the ·principals with reference to the contract guaranteed, the surety ought
to he consulted, and that if he has not consented
to the alterati<'ln, although in cases where it is
without inquiry evident tll.at the alter.ation is
unsubstantial, or that it cannot be otherwise than
beneficial to the surety. 1he surety may not be
discharged; yet, that if it is not self-evident that
en, (i862) • De G. F. &J. 365; 45 E. R. 1225.
{2
(1817) 9 q. B. J), f9;.
l S.C.R.
SUPREME COURT REPORTS
79
the alteration is unsubstantial, or one which
cannot be prejudicial to the surety, the Court
will not, in an action against the suerty, go into
an inquiry as to the effect of the alteration ...... "
To this statement of the law, must be added the
dissent of Brett, L.J., who stated that the surety in that
case was not raleased observing that the doctrine of
release of sureties was carried far enough and that he
would not carry it any further.
There is noticeable a
difference between the strict rule stated by Lord
Westbury and that stated by Cotton L. J., and the law
now accepts that unsubstantial alteration which arc to
the benefit of the surety do not discharge the surety
from the liability. Of conrsf'., if the alteration is to the
disadvantage of the surety, or its unsub~tantial character is not self-evident the surety can claim to be
discharged.
The Court will not ti1en inquire whether
it in fact harmed the surety. That dictum of Cotton
L. J., was quoted with approval by the Judicial
Committee in llnrd v. The >latimwl Bank of Neir
Zwlmul. Limited (1 ). Other ca~es in which a similar
liberal view is taken are mrntioned in these two
deci~ions.
Before I examine the position of Anirudhan ·with
regard to the law applicable to sureties. l wish to refer
to.the law relating to the alteration of documents.
These two matters really go together in this case.
Here, again. the strict rule at one time was
t~at the
slightest alteration makes the document void.
The
leading case for a long time was Piyot's cri.•e ('r where
Lord Coke stated the doctrine as follows:-
"These points were resolved: 1. When a lawful
de~d is raised, wherebv it becomes void, the
obli~@r may plead non est jc!GIUm, and gJve the
matter in evidence, because at the time l!>f the
plea pleaded, it is not his deed . .,
"Secondly, it was resolved, that when arw deed
is altered in a point material, by the plaintiff
himself, or by any stranger, without the privity
(I) (1883) 8 App. CaL 7~.
(2) II Co. Rep. 26 b; 77 E. R. 1177.
1962
M. S. Aninulun
v.
The Thomea
1s Bank
Ltd.
H;da)'lltullah, J.
1962
M. S. Anirudhan
v.
The Thomco' s Bank
Ltd.
80
SUPREME COURT REPORTS [1963) SUPP.
of the obligee, be it by interlineation, addition,
raising, or by drawing of a pen through a line,
or through the midst of any material word, that
the deed thereby becomes void ... so if the obligee
himself alters the deed by any of the said ways,
although it is in words not material, yet the deed
is void: but if a stranger, without his privity,
alters the deed by any of the said ways in any
point material, it shall not avoid the deed."
The passage is also to be found in an article
"Discharge of Contracts by Alteration" by Williston in
18 Harvard Law Review, p. 105. The strictness of
this rule was tempered in subsequent cases and was
departed from in Altious v. Corn1.bell (')where Lush, J.
(speaking for Cockburn, C. ]., Blackbum, J., and
himself), after referring to numerous authorities,
observed-
"This being the state of the authorities, we think
we are not bound by the doctrine of Pigot's
case or the authority cited for it; and not being
bound. We are certainly not disposed to lay it
down as a rule oflaw that the addition of words
which cannot possible prejudice any one, destroys
the validity of the note. It seems to us repugnant to justice and common sense to hold that
the maker of a promissory note is discharged
from his obligatioi;i to pay it because the holder
has put in writing on the note what the law
would have supplied if the words had not been
written."
What is said here about an addition or alteration
of a promissory note was prior to the enactment of
the rule in Bills of Exchange Act in England which
has altered the law with regard to negotiable instru·
ments but the observations apply forcefully to a
document of the type we have where there were two
executants (one being the debtor and the other his
surety) and the debtor has not increased but rt:duced
the amount of his own liability as well as .that of his
(1)
(1868) 3 Q. B. 573.
1 S.C.R.
SUPREME COURT REPORTS
81
surety.
That immaterial alterations do not matter is
borne out by the observation of Swinfen Eady, J ., in
Bishop of Credi ton v. Bishop of Rxeter (')where Pigot's
cape(') and the earlier statement of the law in Sheppard's Touchstone, 7th ed. (Preston's), p. 55, were not
accepted. During the course of the argument Swinfen
Eady, J., referred to cases in which corrections in the
t<ttimonium of documents to accord them with existing
facts were held not to be material alterations. The
question before me is whether a document jointly
executed by two persons creating a liability equal
for both is to be regarded as materially altered if the
liability is reduced equally for both but the alteration
is made only by one of them. In my opinion, such
an alteration must be regarded as unsubstantial and
not otherwise than beneficial to the suretv and it cannot
attract the strict rule stated by Lord Coke or that
stated by Lord Westbury in the cited cases.
Let. me give an example: If A places an order
with a trader for supply on credit of ten bags of wheat
and B endorsed the order by writing, "I guarantee
payment up to ten bags", can it be said that the
guarantee by B is dissolved when A takes the note and
finding that the tradesman has only six bags of wheat
in stock, corrects his order as well as the endorsement by altering 'ten' into 'six'? In my opinion, to
such a correction neither the one rule nor the other
can apply. The strict rule of law which W<\S brought
to our notice from the well-known
S1~f!ell's Case("),
where a Bank of England note was mutilated and its
number destroyed, depended upon its special· facts.
The number of the Bank of England note was considered its vital part and the alteration a material
alteration. Suffell's Case(1) was not followed by the
Privy Council in a case where a bank note issued by
bank which was only a contract and not currency, as
in the other case, was destroyed because the owner
had forgotten that the note was in the pocket of a
q;irment and the garment had been washed. The
(1) (1905] 2 Cb. 48.5.
(2)
11 Co. Rep. 26b; 77 E. R. 1177.
(3)
(1882) 9 Q. B. D. 555.
1962
. M S. An irudha1
v.
The Tlwmco's BanJ
Ltd.
Hidayatullah, J,
1962
M. S • .A.nirudhan
v.
TIM T!wmco's Bank
Ud.
Hidayatul/ah1 J.
82
SUPREME COURT REPORTS [1963] SUPP.
note was reconstructed and showed the contract but
not the number.