XYZ were allowed certain credit facilities on the guarantee of G. Later on, the account was secured by equitable mortgage of the property. But for certain reasons, the bank released the equitable mortgage. When the account became difficult for recovery and money was demanded from G also, he took the plea that he stands discharged to the extent the value of mortgage, which has been released by the bank.

Renu Gupta and Another vs Debt Recovery Tribunal-II  The guarantor shall not be discharged from his liability by the bank's releasing the borrower or by any act or omission of the bank legal consequence of which may be to discharge borrower or by any act of the bank which would, but for this present provision, be inconsistent with the guarantor's right as surety or by the bank's omission to do any act which, but for this present provision, the bank's duty to the guarantor would have required the bank to do. Though as between the borrower and the guarantor, the guarantor is surety only, the guarantor agrees that as between the bank and the guarantor, the guarantor is the principle debtor, jointly with the borrower and accordingly the guarantor shall not be entitled to any of the rights conferred as surety by Section 133, 134, 135, 139 and 141 or any other relevant provision of the Contract Act.