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Section 565
A condition in which the surety is released from liability

(1) Except as otherwise provided in the contract, the guarantor shall be released from his liability in any of the following cases to the following extent:
(a) If the person liable to pay the debt or fulfill the obligation alters the terms of the contract without the consent of the guarantor in a manner that materially affects the contract, in the transaction after such alteration,
(b) If there is an agreement in which the person to be discharged from the liability for which the surety has been given,
(c) If the debtor is discharged or the debt is waived by the action of the creditor,
(d) If the creditor agrees to release the liability by taking less than the amount due from the debtor or to give him more time to repay the debt or not to prosecute,
(e) If any action of the creditor adversely affects the legal treatment of the person who has to pay the debt or fulfill the obligation of the guarantor,
(f) if any security taken from the debtor is lost, damaged or returned to the debtor by the creditor to the extent equal to the value of such security,
(g) The amount to be paid to the creditor according to the contract or the obligation to be fulfilled to the extent that the person to whom such payment or fulfillment has been paid or fulfilled.
(2) Notwithstanding anything written in sub-section (1), unless otherwise provided in the contract, the guarantor shall not be released from his liability merely because the creditor has not taken legal action against the guarantor in time or has not attempted to collect the amount due.
(3) If there are two or more guarantors, if the creditor releases one of the guarantors from liability, the other guarantors will not be released from their share of liability.
(4) Notwithstanding anything written in sub-section (3), in the case where the liability of the persons giving surety cannot be separated, even if the creditor releases any person giving surety, he shall not be deemed to have been released from his liability.
(5) Otherwise in agreementApart from the provision, the guarantor shall not be released from fulfilling the obligations under the guaranty agreement just because there is a dispute between the parties regarding the guaranty agreement for the fulfillment of the obligations.