Section 139 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 139 discharges a surety where the creditor does something inconsistent with the surety's rights, or fails to do something his duty to the surety requires, and the surety's eventual remedy against the principal debtor is thereby impaired. If a guarantee claim involves conduct of the creditor of this kind, our legal dispute resolution service can help you review it.
If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged. Two kinds of conduct (an act or an omission) and one result (the surety's eventual remedy against the debtor is impaired) must be present.
The text
Section 139 reads: "If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged."
The terms surety, creditor and principal debtor come from section 126. The surety's remedy against the principal debtor, once he has paid, is in sections 140 and 145; see section 140.
Limb by limb
| Limb | Plain meaning |
|---|---|
| "any act which is inconsistent with the rights of the surety" | Something the creditor does that cuts across what the surety is entitled to |
| "omits to do any act which his duty to the surety requires him to do" | Something the creditor ought to have done for the surety, and did not |
| "the eventual remedy of the surety himself against the principal debtor" | The surety's own right to recover from the debtor after he pays |
| "is thereby impaired" | The act or omission must be the cause of the damage to that remedy |
| "the surety is discharged" | The surety's liability ends |
Both limbs end in the same requirement: the surety's remedy against the debtor must be impaired. The text does not say that every act inconsistent with the surety's rights discharges him; it must have that effect on the eventual remedy. The section does not list which duties a creditor owes to the surety; the Act's illustrations show some. Beyond them, the text is silent.
The Act's illustrations
- Illustration (a). B contracts to build a ship for C for a given sum, to be paid by instalments as the work reaches certain stages. A becomes surety to C for B's performance. C, without A's knowledge, prepays B the last two instalments. A is discharged by this prepayment.
- Illustration (b). C lends money to B on the security of a joint and several promissory note made in C's favour by B and by A as surety for B, together with a bill of sale of B's furniture, which gives C power to sell the furniture and apply the proceeds to the note. C sells the furniture but, owing to his misconduct and wilful negligence, realises only a small price. A is discharged from liability on the note.
- Illustration (c). A puts M as apprentice to B and gives a guarantee to B for M's fidelity. B promises that he will, at least once a month, see M make up the cash. B omits to see this done as promised, and M embezzles. A is not liable to B on his guarantee.
In (a), the prepayment is an act that gives away the creditor's own hold over the builder. In (b) and (c), the failure to sell properly and the failure to carry out the promised monthly check are omissions of what the creditor's duty required.
A modern example of our own
A manufacturer, Lakshmi Works, agrees to build a machine for a customer, to be paid in three stages as work progresses. Naveen is surety to the customer for the manufacturer's performance. Without telling Naveen, the customer pays the full price in advance. This resembles the Act's shipbuilding illustration: the customer's act is inconsistent with the surety's position because the payment-by-stages arrangement was the security that protected performance, and the surety is discharged on the reasoning of section 139.
Another: a lender holds Naveen's guarantee and also a pledge of the borrower's stock. The lender lets the stock be sold off carelessly for a small price. The Act's illustration (b) points to discharge of the surety where the creditor's misconduct and wilful negligence cause a poor realisation of a security.
Section 139 beside section 141
Section 141 is about the creditor losing or parting with a security without the surety's consent: the surety is discharged to the extent of the value of that security. Section 139 is the wider rule about acts and omissions that impair the surety's eventual remedy. See section 141.
What can the parties change?
Section 139 does not state "unless the contract provides otherwise". The text is silent on whether a guarantee may restrict the surety's protection, so a clause that does so should be read with care and advice.
What the section does not say
- It does not say what level of impairment is enough, only that the surety's eventual remedy must be "impaired".
- It does not list the duties of the creditor.
- It does not say whether the surety must give notice of the discharge.
Practical points
- Creditors: do not change payment arrangements, release security or relax agreed checks without considering the surety.
- Sureties: keep copies of any promises the creditor made to monitor or protect, as in the apprentice illustration.
- Keep a timeline: what the creditor did or failed to do, and what happened to the surety's chance of recovering from the debtor.
Need help with a dispute on a guarantee?
If you think the creditor's conduct has weakened your position as surety, or if you are a creditor facing that argument, the documents decide the outcome. Our legal dispute resolution team can examine the guarantee, the main contract and the creditor's actions against section 139. Bring all agreements and records of payments.
Key takeaways
- The surety is discharged if the creditor's act, inconsistent with the surety's rights, or the creditor's omission of a duty owed to the surety, impairs the surety's eventual remedy against the debtor (s.139).
- The Act's illustrations: prepaying instalments, a negligent sale of security, failing to carry out a promised monthly check.
- Illustration (c) shows that the surety is not liable when the creditor omitted what he promised to do.
Read next
- Section 140: rights of surety on payment or performance
- Section 141: surety's right to benefit of creditor's securities
- Indemnity and Guarantee: sections 124–147 overview
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.