Continuing personal guarantee remains enforceable where no lawful revocation or novation is shown, despite resignation and facility renewal.

A continuing and irrevocable personal guarantee remained enforceable because resignation from the corporate debtor did not, by itself, terminate the guarantee and no notice of revocation was issued to the creditor under Section 130 of the Indian Contract Act. The guarantee deed also preserved liability despite future variations in contractual terms. Renewal or alteration of the credit facilities did not amount to novation under Section 62, as there was no mutual substitution of the original contract by a new one. The surety was therefore not discharged, and the challenge to personal insolvency proceedings failed.

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Issues: (i) Whether the appellant stood discharged from the personal guarantee on account of resignation from the corporate debtor and alleged revocation of the continuing guarantee; (ii) Whether the subsequent renewal or alteration of the credit facilities amounted to novation or variance so as to discharge the surety.

Issue (i): Whether the appellant stood discharged from the personal guarantee on account of resignation from the corporate debtor and alleged revocation of the continuing guarantee.

Analysis: The guarantee deed was expressed to be continuing and irrevocable. It provided that the guarantor's liability would not be affected by future variations in the contractual terms, and revocation of a continuing guarantee under Section 130 of the Indian Contract Act, 1872 operates only for future transactions and only by notice to the creditor. No such notice of revocation was issued to the creditor. Resignation from the corporate debtor, by itself, did not terminate the contractual guarantee.

Conclusion: The appellant was not discharged from the personal guarantee on the ground of resignation or revocation.

Issue (ii): Whether the subsequent renewal or alteration of the credit facilities amounted to novation or variance so as to discharge the surety.

Analysis: Novation under Section 62 of the Indian Contract Act, 1872 requires substitution of the original contract by a new contract with mutual consent. The record did not establish such substitution. The renewal of facilities was treated as a continuation of the original lending arrangement, and the deed of guarantee covered continuing liability within the agreed framework. Any variance, in any event, would not absolve the surety from prior obligations, and the court found no legally sustainable basis to hold that the guarantee had been extinguished by novation or by the alleged enhancement of facilities.

Conclusion: The subsequent renewal did not amount to novation or a discharge of the appellant's liability as surety.

Final Conclusion: The challenge to the initiation of personal insolvency proceedings failed, and the guarantee remained enforceable against the appellant.

Ratio Decidendi: A continuing guarantee remains enforceable unless revoked in the manner prescribed by law, and renewal of the underlying credit facilities does not constitute novation unless the parties mutually substitute a new contract.

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