Unauthorised alteration of a guarantee does not necessarily discharge the surety where the change is immaterial and the instrument remains enforceable.

An unauthorised alteration of a surety bond or guarantee does not automatically discharge the surety unless the change is legally material and made without authority. Where the alteration is not shown to have been made by the creditor while in custody, or is attributable to the guarantor's agent, discharge is not established. A reduced alteration may still be enforceable if it reflects the parties' intended obligation or the accepted instrument, and an immaterial or beneficial change does not void the guarantee merely because the reduced amount was not separately pleaded as the original contract.

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Issues: (i) Whether the alteration in the surety bond and letter of guarantee discharged the surety from liability on the ground of material alteration. (ii) Whether the altered document could be enforced as a valid guarantee where the alteration reduced the amount and was said to accord with the parties' intention or the Bank's acceptance of the document.

Issue (i): Whether the alteration in the surety bond and letter of guarantee discharged the surety from liability on the ground of material alteration.

Analysis: A material alteration of a written instrument, if made without authority, may avoid the document against the party otherwise liable. But the rule does not apply where the alteration is not shown to be material in the legal sense, or where the alteration was made by a person acting as the guarantor's agent in circumstances that bind the guarantor. On the facts found, the document was not altered by the Bank while in its custody, and the alteration was not proved to have been made against the guarantor's authority in a manner that would automatically discharge him.

Conclusion: The surety was not discharged merely because of the alteration.

Issue (ii): Whether the altered document could be enforced as a valid guarantee where the alteration reduced the amount and was said to accord with the parties' intention or the Bank's acceptance of the document.

Analysis: The principle invoked from section 87 of the Negotiable Instruments Act, 1881 and analogous doctrine of immaterial alteration applies only where the alteration merely corrects the instrument to reflect the intention already apparent from the document or the execution itself. The evidence did not establish any prior agreement that the guarantee was originally intended to be for the reduced amount, and the altered document could not be treated as creating a different contract from the one pleaded. The contention based on reduced prejudice and consideration did not make the altered instrument binding on the surety, though the Bank's acceptance of the altered document and the surrounding circumstances supported enforceability against him.

Conclusion: The altered guarantee was enforceable against the surety, and the plea that the reduction made the instrument void failed.

Final Conclusion: The appeal failed and the decree against the surety stood affirmed, with no order as to costs.

Ratio Decidendi: An unauthorised alteration does not discharge a surety where the alteration is immaterial or beneficial and the instrument, as accepted, still represents the obligation intended to bind the surety; a reduced alteration made in the circumstances of agency and acceptance may remain enforceable.

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