Uganda Commercial Co. v Uppal (CA. 3/1932.) [1932] EACA 4 (1 January 1932)

COURT OF APPEAL FOR EASTERN AFRICA:

Before Sir JACOB BARTH, C. J. (Kenya), Sir CHARLES GRIFFIN, C. J. (Uganda), and SHERIDAN, C. J. (Tanganyika).

THE UGANDA COMMERCIAL CO. (Kampala), LTD. (Appellants) (Original Plaintiffs)

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JAMAL DIN UPPAL (Respondent) (Original second Defendant). C. A. $3/1932$ .

Guarantee-Variation of contract in relation to guarantor-Implied variation by conduct of parties.

Held (26-3-32): - That variation of the terms of an agreement by conduct of creditor and debtor impliedly releases guarantor if he is not party to such variation.

Pricetly for Appellants.

Johnstone Davies for Respondent.

Priestly argued that S. 137 of the Indian Contract Act applied, that any forbearance shown was by appellants, and that the evidence showed that respondent knew of the financial position of the debtor and was not thereby prejudiced by the leniency shown by the appellants.

Indian Contract. Act, S.

137.

Bills of Exchange Act, S.

64.

Kermali v. Alladitta bin Imandin, 1 Uganda L. R.

31. Pooley v. Harradine, 7 El. & Bl.

431.

Johnstone Davies relied on SS. 133 & 139, Indian Contract Act.

Priestly, in reply, submitted there had been no variation. but merely forbearance.

SIR JACOB BARTH, C. J.—This is an appeal from the judgment of the High Court of Uganda in a suit to recover Sh. 10,675/16 on a guaranty given by the respondent to the appellants whereby. he undertook to secure the payment by Din Mohamed, the first defendant in the action, of the instalments provided for in anagreement between the parties, dated 31st. August, 1929. The instalments were fixed at Sh. 400 per mensem. In July, 1930, the debtor paid Sh. 300 instead of Sh. 400 and the appellants. threatened action. The respondent intervened and nothing was, done. After that month the instalments varied, the August instalment being Sh. 300 followed by irregular payments of Sh. 500 to June, 1931, when payments ceased, vide the Annex. ure B to the plaint. Nothing was paid between September, 1930. and May, 1931, according to the debtor's evidence. He also stated that the writer of Ex. 1 told him he could pay at his

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convenience. The facts amply support the finding of the learned trial Judge that the plaintiff's lenience involved a definite acquiescence in the payment by the first defendant under conditions which were entirely at variance with those which had been agreed to by the second defendant, and with regard to which variance he was not consulted. This I agree amounts to a great deal more than neglect or forbearance on the part of the appellants.

In my judgment the appeal should be dismissed with costs.

SIR CHARLES GRIFFIN, C. J.-I concur.

SHERIDAN, C. J.—This appeal relates to a claim made by a creditor against a surety. An agreement (Ex. A in the Lower Court) was executed by the Uganda Commercial Company (Kampala), Ltd., the appellant creditor, the respondent surety, Jamal Din Uppal, and one Din Mohamed, the debtor. Under clause 1 of the agreement it was provided that " the debtor shall pay the company Sh. 14,732/70 in monthly instalments of Sh. 400 (shillings four hundred) payable on the last day of each month, commencing on the 31st day of August, 1929, until the whole amount, together with interest thereon be paid." Clause 6 provided, "the surety in consideration of time for payment being granted to the debtor hereby guarantees payment of the said amount in the time and manner aforesaid." The learned trial Judge held that the appellants had so altered the agreement entered into between the parties without consulting the surety that the latter was discharged. It was argued for the appellants that any leniency extended to the debtor was as a result of a letter written to the creditor by the surety. That letter might perhaps be accepted as an intimation by the surety that he was prepared to approve of time being given to pay a sum of Sh. 100 in respect of a particular instalment, but I cannot read into the letter his approving of the instalments thereafter being paid in a manner otherwise than that provided by

the agreement. We have been referred to the case of Vasanji Gokaldas v. Jeraj Merali, Civil Appeal No. 20 of 1929, in which this Court decided that inasmuch as the contract was entirely altered and the debtor was allowed to pay as and when he could without there having been any reference to the surety as to the altered conditions, the surety was discharged. In the present case it is sought to distinguish the two cases, but the principle in both cases appears to me to be the same. The surety undertook to guarantee the payment of a debt by instalments as and when they fell due, and without reference to the surety and without his consent the manner of payment of the instalments was departed from. I agree with the learned Judge that the letter to which I have referred cannot be regarded as an acquiescence on the part of the surety in the payment of instalments in a manner otherwise than that provided for in the agreement.

I would dismiss the appeal with costs.