SITA RAM GUPTA versus PUNJAB NATIONAL BANK AND ORS.

SITA RAM GUPTA versus PUNJAB NATIONAL BANK AND ORS.

Where a guarantor expressly agrees under contract that a guarantee will remain operative as a continuing guarantee regardless of revocation notice, and such waiver is not unlawful or contrary to public policy, the statutory right to revoke under Section 130 of the Indian Contract Act, 1872 does not assist the guarantor. The guarantor remains liable for the decretal loan amount advanced after the guarantee and revocation notice.

Parties
Appellant/guarantor: Sita Ram Gupta; Respondents/bank & Others: Punjab National Bank and Ors.
Jurisdiction
India
Judgment Date
10 March 2008
Procedural Posture
Civil Appeal / Supreme Court Decision on Appeal From the High Court Judgment
Outcome
Appeal dismissed
Legal Topics
Continuing Guarantee, Revocation of Guarantee, Waiver Under Contract Law
Contract Law Continuing Guarantee Revocation of Guarantee Waiver Under Contract Law

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Parties

Sita Ram Gupta

Appellant/guarantor

Punjab National Bank and Ors.

Respondents/bank & Others

Procedural Posture

Civil Appeal / Supreme Court Decision on Appeal From the High Court Judgment

Legal Issues

  1. 1 Whether the appellant-guarantor is liable for the decretal loan amount under a continuing guarantee after notice of revocation, in view of Section 130 of the Indian Contract Act, 1872, when the agreement contains a clause making the guarantee continuing and irrevocable.

Ratio Decidendi

Where a guarantor expressly agrees under contract that a guarantee will remain operative as a continuing guarantee regardless of revocation notice, and such waiver is not unlawful or contrary to public policy, the statutory right to revoke under Section 130 of the Indian Contract Act, 1872 does not assist the guarantor. The guarantor remains liable for the decretal loan amount advanced after the guarantee and revocation notice.

Court Disposition

Appeal dismissed

Orders

  • No merit found in the appeal; the judgment of the High Court affirmed.
  • No order as to costs.