SWAMI VIVEKANAND SUBHARTI UNIVERSITY,

MEERUT, U.P.

MEMORIAL

AMRIT LAL

v.

STATE BANK OF TRAVANCORE

SESSION :2016-17

SUBJECT: - Law of Contract

SARDAR PATEL SUBHARTI INSTITUTE OF LAW

MEERUT

SUBMITTED TO - SUBMITTED BY:-

MR. A.K AGGARWAL SHREYA SHANU
(PROFESSOR) (B.A L.L.B)

2nd Semester

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 ACKNOWLEDGEMENT

At the very outset, I would like to pay thanks to the almighty God. It gives me immense pleasure
to acknowledge and to say thanks to the ones who helped me throughout the course of my work.
I am really thankful to our respected subject teacher under whose learned and scholarly guidance
the present work has been completed. She helped us in a passive way. She gave me moral
support and guided me in different matters regarding the topic. She had been very kind and
patient while suggesting me the outlines of this Memorial and correcting my doubts.

I express my sincere gratitude’s to PROFESSOR A.K AGGARWAL granting permission

of proper under the above mentioned supervision.

I thank him for overall supports. Constructive suggestions have always been soothing and
desired effect, hence it my duty to express my gratitude for his constant support and
encouragement.

I want to pay my sincere thanks to Dean, Faculty of Law, all the teachers of Sardar Patel
Subharti Institute of Law, Swami Vivekananda Subharti University. I want to thank
all my friends who helped me in completing my work. Last, but not the least, my thanks to all
who have helped directly or indirectly in the completion of my work.

SHREYA SHANU

B.A. LL.B.

2nd Semester

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 IN THE HON’BLE SUPREME COURT OF INDIA

IN THE MATTER BETWEEEN

AMRIT LAL ...........................................................................PETITIONER

v.

STATEBANK OF TRAVANCORE ..........................................................RESPONDENT

MEMORIAL ON BEHALF OF RESPONDENT

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 TABLE OF CONTENTS

 LIST OF ABBREVIATIONS 5

 INDEX OF AUTHORITIES 6
(i) Books Referred
(ii) Cases Cited
(iii) Dictionaries Referred
(iv) Statutes Referred
(v) Web links Referred

 STATEMENT OF JURISDICTION 7

 STATEMENT OF FACTS 8

 ISSUES RAISED 9

 SUMMARY OF ARGUMENTS 10

 ADVANCED ARGUMENTS 11-12

 PRAYER 13

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 LIST OF ABBREVIATIONS

 AC – Appeal Cases
 A.I.R- All India Reporter
 Anr. - Another
 Art- Article
 Ed.- Edition
 E.g.- Example
 F.I.R- First Information Report
 HC- High Court
 Hon’ble- Honorable
 i.e.- that is
 Ltd- Limited
 Ors. – Others
 Pg.- Page
 r/w- Read with
 SC- Supreme Court
 SCC- Supreme Court Cases
 Sd/- Signed
 Sec- Section
 u/s- Under Section
 v.- Versus

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 INDEX OF AUTHORITIES

CASE REFERRED :-

 I.F.C.I. LTD V. CANNANORE SPG. AND WEARING MILLS LTD.

DICTIONARIES REFERRED: -

 Garner black’s Law Dictionary, 7th Ed. West Group.

 John Simpson & Edmund Weiner, the Oxford English Dictionary 4thed. 2015 Oxford
University Press London.

STATUTES REFERRED: -

 INDIAN CONTRACT ACT 2nd

 Constitution of India , 1950

BOOKS: -
 Contract 2nd (Dr. R. K. Bangia)
 Contract 2nd (Dr. Avatar Singh)

WEBLINKS REFERRED: -

 http://www.indiankanoon.com
 http://www.indlaw.com
 http://www.lawyerclubindia.com
 http://www.scconline.com
 http://www.vakilno1.com

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 STATEMENT OF JURISDICTION

The hon’ble SC is vested with the jurisdiction to hear the present matter u/A 1331 of the
Constitution of India ,1950 .

1
Appellate jurisdiction of Supreme Court in appeals from High Courts in regard to civil matters

(1) An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High
Court in the territory of India if the High Court certifies under Article 134A
(a) that the case involves a substantial question of law of general importance; and
(b) that in the opinion of the High Court the said question needs to be decided by the Supreme Court
(2) Notwithstanding anything in Article 132, any party appealing to the Supreme Court under clause ( 1 ) may urge
as one of the grounds in such appeal that a substantial question of law as to the interpretation of this Constitution has
been wrongly decided
(3) Notwithstanding anything in this article, no appeal shall, unless Parliament by law otherwise provides, lie to the
Supreme Court from the judgment, decree or final order of one Judge of a High Court.

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 STATEMENT OF FACTS

 Respondents 3 to 6, as partners of Respondent 2 firm (R2), entered into an

agreement with a Bank (R1) to open a cash credit account to the extent of Rs.
100,000 to be secured by goods to be pledged with the Bank.

 The agreement provided that the borrowers shall be responsible for the quantity and
quality of goods pledged.

 The appellant (A) became surety for the borrowers w.r.t the account
upto Rs.100,000 and allowed the Bank to recover, notwithstanding any other security
the Bank may hold.

 The stock pledged was initially valued at about Rs. 99,991 but after verification
shortage of goods to the value of Rs. 35,690 was found.

 It was alleged that R2-R6 must have taken away the goods.

 They were granted time to make up the deficit but they failed to do so.

 After adjusting the money realized on the sale of the goods pledged and other
adjustments, a sum of Rs. 40,933.58 was found due to the Bank from R2-R6.

 The Bank filed a suit against them and A.

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 ISSUE RAISED

1) Whether the surety is discharged under sec -133 and 135 of Indian
Contract Act, 1872 ?

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 SUMMARY OF ARGUMENTS

ISSUE 1:

Whether the surety is discharged under sec -133 and 135 of Indian Contract
Act, 1872 ?
It is most humbly submitted that the surety is not discharged under sec-133 and 135 of
ICA,1872.

Further, the High Court has taken the view that the entry in the books of account of the Bank
might well be a private instruction to the Cashier that advances were not to be made by him
beyond Rs. 50,000 which instruction may not be legally binding upon the other respondents.

No inference may also be drawn from the withdrawal of Rs. 5,000 from the initial deposit of Rs.
10,000 by the appellant. The reason is that there is no obligation under Ex. P-4 imposed upon the
appellant to, make any deposit of money with the Bank and the circumstance that he made an
initial deposit of Rs. 10,000 to reinforce his guarantee or that he withdrew Rs. 5,000 out of the
deposit appears to be quite immaterial.

It is stated in Ex. P-1 that the borrowers have, declared and agreed that the goods pledged with
the Bank have not been actually weighed or valued in order to verify the quantity and quality of
the goods pledged. It is in the light of these clauses of the agreement that the act of giving time to
the principal debtor has to be considered.

The act of the Bank in giving time to the principal debtor to make up the quantity of the goods
pledged is not tantamount to the giving of time to the principal debtor for making the payment of
the money within the meaning of s. 135 of the Indian Contract Act. What really constitutes
giving of time is the extension of the period at which, by the contract between them, the principal
debtor was originally obliged to pay the creditor by substituting a new and valid contract
between the creditor and the principal debtor to which the surety does not assent.

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 ADVANCED ARGUMENTS

ISSUE 1:

Whether the surety is discharged under sec -133 and 135 of Indian Contract
Act, 1872 ?
It is most humbly submitted that the surety is not discharged under sec-1332 and 1353 of
ICA,1872 .

CONTENTION 1: The surety is not discharged under sec-133

It is humbly submitted that there is no written agreement between respondent no. 1 Bank on the
one side and the respondent-firm on the other side reducing the limit of cash credit
accommodation under Ex. P-1. In view of the formal record in the agreements, Ex. P-1 and Ex.
P-4 it is difficult to hold that the variation of the terms would have been made without any
written record.

The High Court has taken the view that the entry in the books of account of the Bank might well
be a private instruction to the Cashier that advances were not to be made by him beyond Rs.
50,000 which instruction may not be legally binding upon the other respondents.

No inference may also be drawn from the withdrawal of Rs. 5,000 from the initial deposit of Rs.
10,000 by the appellant. The reason is that there is no obligation under Ex. P-4 imposed upon the
appellant to, make any deposit of money with the Bank and the circumstance that he made an
initial deposit of Rs. 10,000 to reinforce his guarantee or that he withdrew Rs. 5,000 out of the
deposit appears to be quite immaterial.

2
. 133. Discharge of surety by variance in terms of contract.—Any variance, made without the surety’s consent, in
the terms of the contract between the principal 1[debtor] and the creditor, discharges the surety as to transactions
subsequent to the variance. —Any variance, made without the surety’s consent, in the terms of the contract between
the principal 1[debtor] and the creditor, discharges the surety as to transactions subsequent to the variance."

3
. 135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor.—A
contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises
to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract.
—A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or
promises to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such
contract.

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 In our opinion, the High Court was right in reaching the conclusion that there was no variation
of the contract between the creditor and the principal debtor without the consent of the appellant
and the provisions of S. 133 of the Indian Contract Act are not attracted. We accordingly hold
that, the Counsel for the appellant has been unable to make good his argument on this aspect of
the case.

CONTENTION 2: The surety is not discharged under sec-135

In our opinion, there is no warrant for the argument of the appellant. It is manifest that the act of
giving time to the borrowers to make up the quantity of the goods found to be short on
weighment by the Bank cannot be considered to be a "promise to give time" to the borrowers as
contemplated by s. 135 of the Indian Contract Act.

In this connection reference should be made to cl. 9 of Ex. P-1 which provides that the borrowers
shall be responsible for the quantity and quality of goods pledged and also for the correctness of
the statements and returns furnished to the Bank from time to time.

It is stated in Ex. P-1 that the borrowers have, declared and agreed that the goods pledged with
the Bank have not been actually weighed or valued in order to verify the quantity and quality of
the goods pledged. It is in the light of these clauses of the agreement that the act of giving time to
the principal debtor has to be considered.

The act of the Bank in giving time to the principal debtor to make up the quantity of the goods
pledged is not tantamount to the giving of time to the principal debtor for making the payment of
the money within the meaning of s. 135 of the Indian Contract Act. What really constitutes
giving of time is the extension of the period at which, by the contract between them, the principal
debtor was originally obliged to pay the creditor by substituting a new and valid contract
between the creditor and the principal debtor to which the surety does not assent.

In our opinion, the provisions of S. 135 of the Indian Contract Act are not attracted to the present
case and the argument of the appellant on this point must be rejected.

In the case I.F.C.I LTD. V. CANNANORE SPG. AND WEAVING MILLS LTD 4 ,there was
a contract for the supply of the textile goods to be manufactured by a certain textiles unit.

It was held that the surety was not discharged because the discharge of principal debtor was not
due to the voluntary act of the creditor .it was observed that the contract of guarantee has no co-
relation with the nationalization.

4
A.I.R 2002 S.C. 1841

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 PRAYER

Wherefore in the light of the issue raised, arguments advanced and authorities cited, it is humbly
requested that this hon’ble court may be pleased and adjudge and declare :

 The surety is not discharged under sec -133 and 135 of Indian Contract Act,
1872 .

AND/OR

Pass any order that deems fit in the interest of justice, equity and good conscious.

And for this ,the respondent as in duty bound ,shall humbly pray.

All of which is humbly submitted

Counsel for the respondent

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