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Indian Contract Act, 1872 · Chapter VI: Of the Consequences of Breach of Contract · Of indemnity and guarantee

Section 135: Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor

In plain words

If the creditor agrees with the principal debtor to compound the debt, give more time, or not to sue, the surety is discharged unless they agree to it.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Read the in-depth explanation, with key Supreme Court rulings ↓

Official text

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.

Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Understanding this section

Section 135 discharges the surety if the creditor, by contract with the principal debtor, makes a composition with him, promises to give him time, or promises not to sue him, without the surety's consent.

Contract with the principal debtor required

The discharge arises only from a binding contract between creditor and principal debtor. Mere forbearance to sue, without a contract, does not discharge the surety (section 137). An agreement with a third person to give time to the principal debtor does not discharge him either (section 136).

Reason

Giving time or compounding alters the surety's position, because his right to pay and sue the principal debtor at once is affected.

Common mistakes

  • Treating mere delay in suing as discharge.
  • Overlooking that the agreement must be with the principal debtor.

Read with: Section 136 Indian Contract Act, 1872, Section 137 Indian Contract Act, 1872

Prepared with AI assistance as a study aid. Every ruling listed was checked against the Supreme Court's own judgments on this site, and quoted words appear in those judgments; linked names open the full judgment. Read the judgments themselves before relying on them. Not legal advice.

Supreme Court judgments citing the section 135