In the light of judicial pronouncements, discuss Surety's Liability.
CS Professional · Drafting, Appearances and Pleadings · PYQS · June 2021
In the light of judicial pronouncements, discuss Surety's Liability.
Answer & Explanation:
According to Section 128 of the Indian Contract Act, 1872, the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. The surety's liability is not deferred until the creditor exhausts his remedies against the principal debtor. In the absence of some special equity the surety has no right to restrain an action against him by the creditor on the ground that the principal debtor is solvent or that the creditor may have relief against the principal debtor in some other proceedings. The liability of the surety being co-extensive with that of the principal debtor, is joint and several with the latter and, therefore, in the absence of a clear intention to the contrary it is at the option of the creditor, to decide whether he shall proceed against the surety or the principal debtor. Of course, a guarantor is prima facie entitled to have the debt proved as against him. In the case of V. Somanath Raju and Anr. vs Konchada Ramamurty Subudhi And Anr. AIR 1957 Ori 106, it was held that though the liability oi the principal debtor and his surety arises under the same transaction, still they are distinct, because the liability of the surety does not in all cases arise simultaneously. The question depends upon the terms of the guarantee by which the surety binds himself.
Topics: Indian Contract Act
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