STATE OF MADHYA PRADESH vs KALURAM

The Supreme Court held that under Section 141 of the Indian Contract Act, a surety is discharged if the creditor loses or parts with the security without the surety's consent. In this case, the Forest Officer allowed the contractor to remove forest produce without receiving full payment, thereby impairing the State's charge and rights under the contract. The Court ruled that the surety was discharged from liability due to the loss of security, affirming the decisions of the lower courts.