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PETITIONER: M. S. ANIRUDHAN

       Vs.

RESPONDENT: THE THOMCO’S BANK LTD.

DATE OF JUDGMENT: 14/02/1962

BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. SARKAR, A.K. HIDAYATULLAH, M.

CITATION:  1963 AIR  746            1963 SCR  Supl. (1)  63  CITATOR INFO :  R          1967 SC1634  (6)

ACT: Guarantee--Surety--Alteration  of terms of letter  of  guar- antee by principal debtor--Discharge of surety’s liability.

HEADNOTE: 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 Bank to S, who then had it filled up  by  the appellant stating the 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 basis  of  the contract of guarantee for  Rs.  20000/-,  the appellant  pleaded that as the document was altered  without his  knowledge  or  consent,  he  was  discharged  from  his liability. Held,   (per  Kapur  and  Hidayatullah,  JJ.,  Sarkar,   J., dissenting), that the appellant was not discharged from  his liability under the contract of guarantee. 64 per  Kapur,  J.-S  was  acting for  and  on  behalf  of  the appellant  since it was at his instance 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 possession 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 appellant, for the alteration had not been made to carry out the intention of the parties.  If the alteration, is ignored

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as 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 contract 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 materially altered because it was not  al- tered  in  such  a  manner 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 S as  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.

JUDGMENT: 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.  Subramania  lyer, 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 65 judgments of my learned brethern Sarkar & Hidayatullah,  JJ. In my opinion this appeal should be dismissed and my reasons are 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, lie (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  appel- lant in this case-cannot be held liable on the obligation in the altered form because he never made be consented to  such an  obligation  and  he  can  not  be  held  liable  on  the obligation  in the original form because the obligation  was never  assented to by the creditor 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

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(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  contract is  in possession of the promisee or his agent.  But if  the contract is altered 66 by  a stranger when the contract was not in the  custody  of the  promisee  the promisor is not  discharged.  (Halsbury’s Laws  of  England,  3rd Edn., Vol. 8, para  301,  p.  ’176). 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. 1, and what the principal  debtor did will estop the guarantor from pleading want of authority (Williston on Contract, Vol.  VI.  para 1914, P.5354). 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  Bank  did not  accept  the guarantee up to that limit but  wanted  the figure  to be corrected i.e. by insertion of Rs.  20  000/-. The  document  was there upon handed back to  the  principal debtor  who,  it is stated, altered the document.   At  that stage  the principal debtor was acting for and 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  pur- poses of being given to the balik, the respondent.  In these circumstances   the  avoidance  of  contract   by   material alteration  is  in applicable because the document  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 plea of material alternation  is of no avail to the appellant and the 67 appeal must therefore fail and is dismissed but no order  as to costs. SARKAR,  J.-This  appeal arises out of a suit filed  by  the respondent  Bank against the appellant as the guarantor  and one  Sankaran  as the principal debtor,  to  recover  moneys 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 24, 1947.  It was stated in the  plaint that   by  this  letter  of  guarantee  the  appellant   had undertaken  to  repay  to the Bank the balance  due  on  the overdraft  account  opened in favour of Sankaran,  up  to  a maximum  of Rs. 20,0001/- which was also the maximum  amount for which the overdraft had been arranged.  The  appellant’s defence to the suit was that he had agreed to guarantee  the liability of Sankaran on the overdraft up to Rs.  5,000/-and had  signed the letter guaranteeing thereby repayment up  to that  sum  but  the letter 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

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material alteration of the instrument of’ guarantee. he  was absolved of ill liability on it. The  trial  court  found, that  the  amount  guaranteed  had originally been mentioned in the letter as Rs. 25,000/-  and this  had been altered without the consent of the  appellant to  Rs. 20,000/-.  It observed that as it was  not  disputed 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 instrument. The  respondent  Bank  then appealed to the  High  Court  of Kerala, the High Court agreed with the trip 68 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 that 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 Halsbury’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               material  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 69 p. 380, f. n. (c) and Master v. 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. Williams(1) in support of this proposition,               "If I had thought that there was any  evidence

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             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(2) 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. Srideo Rai(3) it  was  found that  "the  omission regarding the payment of  interest  was accidental"  and  in  Ananda Mohan Saha  v.  Ananda  Chandra Naha(4) where (1)  (1809) 10 East. 931; 103 E. R. 839. (2)   3 Esp.  N.  Cas. 246.    (3) A. I. R. 1939 All. 248. (4)   (1916) 1. L. R. 44 Cal. 154. 70 the  instrument originally provided for interest on ’a  loan of  Rs. 200/- at Rs. 1/- per mensem and had been altered  by the addition of the words "per cent",’ it was said "that  it was  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  mensem".   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.   It  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 the 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 a position our laws  make 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 such 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 guarantee as Rs.  20,400/- 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;  this conjecture.   In  fact  the  evidence  indicates  that   Rs. 25,000/-had  been mentioned intentionally in the  letter  of guarantee.  That evidence was given by the 71 Banks  agents too., He said that the  overdraft  arrangement commenced  on  February 24, 1947, when Sankaran  executed  a

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promissory note for Rs. 20,O00/- in favour of the Bank.   At that time the appellant was not available to sign the letter of  guarantee.  The letter was typed by the Bank with  blank spaces  left  for  entries  to  be  made  by  the  guarantor regarding  the  maximum limit of the account,  the  rate  of interest,  and the date.  Sankaran brought this letter  back to  the  Bank in May 1947.  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 more 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 concerning 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 to observe that the trial court  did  not find,that any such oral agreement  had  been made.   If  there ’  had been any agreement,  the  letter of guarantee as typed. out would have contained no blanks. 72 In  these circumstances it is impossible to hold that  there was  any prior agreement about the guarantee or  its  limit, between  the appellant and the Bank, and if there  was  not, the  High Court’s view that in the letter of  guarantee  Rs. 25,000/-  had  been  mentioned by mistake,  would  lose  its foundation.    But  even  assuming  a   preexisting   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  had 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 ha 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

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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 alteration. I do not think that this contention assists the Bank at all. I will assume that an alteration in an 73 instrument which is not to the prejudice of a party to it is not a material alteration and does not release him from  his liability under 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 of 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.  In the present case, therefore,  we would have a letter of guarantee  written  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. 25,000/-.  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 no 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 by  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.  Then it is said that inadequacy  of consideration  does  not  avoid  a  contract  as  stated  in Explanation  2  of  s. 25 of the  Contract  Act,  1872,  and therefore the Bank’s undertaking 74 to  advance upto Rs. 20,000/- could support the  appellant’s promise to guarantee up to Rs. 25,000/-.  But it is not  the Bank’s  case  that there was such a contract  of  guarantee. Its  case  was that the contract of guarantee  was  for  Rs. 20,000/-.   That contract is not 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  to  me that the. contention that the alteration was immaterial  and did  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  have,  a  suit against  the  appellant  based  on  a  written  contract  to guarantee repayment of Sankaran’s dues to the Bank up to Rs. 20,060/-.   There is no evidence of, any verbal contract  of guarantee.   The  appellant’  wrote  a  letter  guaranteeing repayment  of those dues up to Rs. 251000/-.  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  debit  and

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his  signature  would  therefore only  be  evidence  of  his liability  for  the  amount  advanced  to  him  by  way   of overdraft.    Such  liability,  however,  he   had   already undertaken  by executing a promissory note for Rs.  20,000/- in  favour  of  the Bank.  His signature on  the  letter  of guarantee   therefore  made  no  difference  in  the   legal relations  that  have  to  be  considered  in  this  appeal. Returning now to the letter of guarantee Written  by the appellant, the Bank refused to  accept  that letter and, therefore, on the Bank’s own case no contract on its  terms was ever made.  That letter was  altered  without the  consent  of  the  appellant  probably  by  Sankaran  by substituting   Rs.  20,000/-  for  Rs.  25,600/-.   If   the alteration was without the appellant’s consent, it could not have  been authorised by him; if it had been, consent  would be implied.  There is further neither evidence, nor pleading nor 75 finding of any such authority.  The altered document is  not binding  on tile appellant, for the alteration had not  been made  to  carry  out the intention of the:  parties  in  the alteration   is  ignored,  then  the  document  creates   no liability in the appellant, for the Bank refused 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  by  the document  as it stood before the alteration.  The  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. HIDAYATULLAH,J.   I have had the advantage of’  reading  the judgment prepared by my brother Sarkar.  In my opinion,  and I say it with great respect, this appeal must fail.  I shall give my reasons briefly. The  facts of the case are 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. Anirudhan  (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, 1947.  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 of Rs. 25,000/- in figures appears  to  have been 76 altered  to  "O";  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 "O" 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

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arisen  in  this case is whether by the  alteration  of  the letter of guarantee the surety is 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 give after the  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 "O" 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 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  an amount  of Rs. 25,000/- which was reduced to Rs. 20,000/-  1 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 open 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 78 liability  is strictissimi juris.  Lord Westbury,  L.C.,  in

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Blest  v. Brown (1) stated this liability in  the  following words:-               "It must always be recollected in what  manner               a surety is bound.  You bind him to the letter               of  his engagement.  Beyond the proper  inter-               pretation of that engagement  you have no hold               upon  him.   He  receives no  benefit  and  no               consideration.  He is bound, therefore, merely               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  whether  the               alteration be innocently made, he has a  right               to  say, "’The contract 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 ail 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 turn had  undertaken to  supply  bread  to  Government.   The  case  turned  upon stipulations  by  the Government and their  breach  and  the decision cannot be regarded a ,direct authority, apart  from the general observation, in   the    present   case.     The statement of the law in Blest v. Brown (1) Was considered by the Court of Appeal in   Holme v. Brunskill (2) in an appeal from a judgment of  Denman, J. (later Lord Denman).  Cotton, L.J., stated the law in these words:--               "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 be consulted, and that, if  he               has not consented to the alteration,  although               in  cases where it is without inquiry  evident               that the alteration is unsubstantial, or  that               it cannot be otherwise than beneficial to  the               surety, the surety may not be discharged; ),               Yet, that if it is not self-evident that (1)   (1862) 4 De G. F. & J. 365 ; 45 E. R. 1225. (2)   (1877) 3 Q.B.D. 495. 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 lie 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  are to the benefit of the surety  do  not discharge the surety from the liability.  Of course, if  the alteration  is  to the disadvantage of the  surety,  or  its unsubstantial  character is not self-evident the surety  can claim  to  be discharged.  The Court will not  then  inquire whether it in fact harmed the surety.  That dictum of Cotton L. J., was quoted with approval by the Judicial Committee in ward  v.  The National Bank of Neu  Zealand.   Limited  (1). Other  cases  in which a similar liberal view is  taken  are mentioned in these two decisions. Before  I examine the position of Anirudhan with  regard  to the  law applicable to sureties, I wish to refer to the  law

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relating to the alteration of documents.  These two  matters really  go together in this case.  Here, again,  the  strict rule at one time was that the slightest alteration makes the document void.  The leading case for a long time was Pigot’s case (2) where Lord Coke stated the doctrine as follows:-               "These points were resolved: 1. When a  lawful               deed  is raised, whereby it becomes void,  the               obligor  may plead non, est factum,  and  give               the matter in evidence, because at the time of               the plea pleaded, it is not his deed."               "Secondly, it was resolved, that when any deed               is  altered  in  a  point  material,  by   the               plaintiff himself, or by any stranger, without               the privity (1) (1883) 8 App, Cas. 755, (2) 11 Co.Rep.26 b;77E.R.177. 80               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 Aldous v. Cornwell (1) where Lush, J. (speaking for Cockburn, C. J., Blackburn, 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 of law  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               obligation  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 instruments 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 reduced  the amount of his own liability as well as that  of his (1)  (1868) 3 Q. B. 573. 81 surety.  That immaterial alterations do not matter is  borne out  by  the observation of Swinfen Eady, J., in  Bishop  of Creditor  v. Bishop of Exeter (1) where Pigot’s case(2)  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

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in  which  corrections in the testimonium  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 surety 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 was  brought  to  our notice  from the well-known Suffell’s Case(3), 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 Cage(3) 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 garment  and the garment had been washed.  The (1) [1905] 2 Ch. 485.  (2) 11 Co. Rep. 26b; 77 E. R. 1177. (3) (1882) 9 Q. B. D. 555. 82 note  was reconstructed and showed the contract but not  the number.  The Privy Council held the bank liable even  though the  contract had been Altered by eraser (see Hong Kong  and Shanghai Banking Corporation v. Lo Lee Khi(1). These  cases establish that both the limbs of  the  argument which Anirudhan can raise are not vali in the  circumstances of  this case.  In my judgment, the particular  document  in this,  case cannot be said to have been materially  altered, because.  it  has not been altered in such a  manner  as  to change its nature.  The alteration does not save the  surety from liability arising under it.  The alteration was made by a  co-executant who reduced not only his own  liability  but that  of the surety also. indeed, the surety himself  under- stood  the law to be this because he set up- the  case  that the  document  originally guaranteed  an  overdraft  of  Rs. 5,000/-  but  was altered to guarantee an overdraft  of  Rs. 20,000/-.  This case has been proved false and he never set- up  the case that the document was void because  the  amount was reduced from Rs. 25,000/- to Rs. 20,000/-.  It does  not lie  in  the  mouth of Anirudhan. to say the  he  meant.  to guarantee  25,000/- but. not Rs. 20,000/- because  he  never went to the Bank and made this a condition of the agreement. Now he cannot say that the document has; become void against him  or  that the contract which had emerged by  the  Bank’s acceptance of the document as altered does not bind him. There  is no need, in my opinion, to consider whether  there was  a  prior oral agreement or not.  I agree  there  is  no proof of such an agreement.  The letter of Anirudhan to  the Bank was based on a consideration which had already moved to Sankaran  and which Anirudhan wished to guarantee.  Even  if treated  as  an offer by Anirudhan to the  Bank,  the  Batik accepted  the amended offer and Sankaran must be  deemed  to

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have had the authority to reduce the amount, (1)  [1928] A. C. 181. 83 though  not to increase it.  The document was altered  while in  the possession of the very person who, as the  agent  of Anirudhan,  brought  it to the Bank on both  the  occasions. Anirudhan  must be deemed to have held out Sarikaran as  his agent for this purpose and this creates an estoppel  against Anirudhan,  because the Bank believed that Sankaran had  the authority.   The offer thus remains in its amended  form  an offer of Anirudhan to the Bank and the Bank by accepting  it turned  it into a contract of guarantee which was backed  by the  past consideration on which the offer of Anirudhan  was originally based. In  my opinion, the appeal must fail.  I  would,  therefore, dismiss it. By  COURT : In accordance with the opinion of the  majority, the  appeal  is dismissed.  There would be no  order  as  to costs.                                 Appeal dismissed.