TMI Blog2018 (11) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. As seen from sub-rule (4), it does not provide for substitution of sureties. It only provides for the substitution of the bond, as one of many alternatives - In this case, the first bond has become unenforceable. If the Department's plea is to be accepted-that is, the second bond is to meet the additional demand on the dealer-then sub-rule (4) of Rule 19 remains unanswered. Even otherwise, Section 133 of the Contract Act may also come in the way of the Department’s defence. Without the surety’s consent, if the principal debtor and the creditor vary the contractual terms, then, that variation discharges the surety from the transaction and the liability. Viewed from either perspective, the Department's contention cannot be accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otices. Aggrieved, he has filed this writ petition. 3. Sri Aji V. Dev, the petitioner's counsel, has two-fold submissions. He first contends that the bond, as the proforma mandates, requires two sureties. If one surety withdraws, the bond becomes void. Here, Kathiru Pilla withdrew. In the alternative, he submits that the Department had a new bond executed by Ali with two other sureties. The Department, in fact, substituted that for the old one, in which Azeez alone remained a surety, if at all. Therefore, looked from either perspective, the Department's demand, Sri Dev concludes, cannot be sustained. 4. Dr. Thushara James, the learned Government Pleader, however, defends the Departmental action. First, she maintains that the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. Security to be furnished by certain dealers:- (1) Where the registering authority decides to demand security or additional security under Section 17, it may direct the dealer, in writing, to furnish, within a period, which shall not be less than fifteen days, as may be fixed by the said authority, security for such amount as may be specified in the notice in Form No.6D. In making the estimate of turnover for the purpose of fixing the quantum of security, the said authority shall take into account the taxable turnover of the dealer, if any, during the preceding year, the trend of business at the time the estimate is made, the nature of the goods dealt in by him, and such other factors as may, in the opinion of the said authority, assis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Form No.6 and that two sureties should sign it. If only one surety withdraws, then the bond remains with a single surety, though the Rule mandates it should contain two sureties. As seen from sub-rule (4), it does not provide for substitution of sureties. It only provides for the substitution of the bond, as one of many alternatives. In other words, even a single surety s withdrawal renders the bond unenforceable. So the dealer must execute, if he wants the same arrangement to continue, a new bond with two sureties-one of them could be the one that has not opted out of the first bond, however. 10. In this case, the first bond has become unenforceable. If the Department's plea is to be accepted-that is, the second bond is to meet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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