Law: Contract Act, 1872

Section: 128, 129, 131

Law: Transfer of Property Act, 1882

Section: 100

Law: Code of Criminal Procedure, 1898

Section: 514(6)

Law: Limitation Act, 1908

Section: 2(3)

Law: THE STAMP ACT, 1899

Section: 2(5)

 Summary

The Higher Education Commission (HEC) challenged the trial court's order declaring that the suit against the guarantor (defendant No.2) had abated because he had died before the institution of the suit. HEC argued that the guarantee and surety bond bound the guarantor's legal heirs and that they should be impleaded.

The High Court dismissed HEC's petition and held that:

• The guarantor had died before the suit was filed, therefore no cause of action could continue against him.
• The guarantee and the surety bond were separate legal instruments and could not be treated as one document.
• The guarantee did not expressly bind the legal heirs of the guarantor.
• Merely mentioning that the bond would bind the guarantor's "heirs, executors and administrators" does not create liability against legal heirs, as they were never parties to the contract.
• The scholarship guarantee was not a continuing guarantee under Sections 129 and 131 of the Contract Act because it related to one scholarship transaction, although payments were made in installments.
• The declaration of assets submitted by the guarantor did not create a charge over his property, since no express language creating a charge existed.
• Consequently, the guarantor's estate and legal heirs could not be proceeded against, and the suit rightly abated against him.

The petition was dismissed.