Section 134 of ICA : Section 134: Discharge Of Surety By Release Or Discharge Of Principal Debtor

Explanation using Example

Imagine that John is a contractor who has taken a loan from a bank to purchase construction materials, with his friend Mike acting as a surety for the loan. If the bank later decides to forgive John's loan due to his financial difficulties, effectively releasing him from his obligation to repay, Mike would also be released from his responsibility as a surety. This situation is an application of Section 134 of The Indian Contract Act, 1872, where the surety's obligation is discharged when the principal debtor is released from their debt.