Q. “Liability of the surety is co-extensive with that of the principal debtor.” Explain the statement.

 

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Answer

 

Section 128 of Indian Contract Act, 1872, states that any contract to the contrary, the liability of surety is co-extensive that of the principal debtor, that means the surety is liable to the same extent as the principal debtor.

For example, if the principal debtor is not liable for debt for some reason, then surety is also not liable for the same.  Also, the principal debtor is discharged from his debt by the creditor for some reason then surety will be discharged too.

 

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The liability of the surety is joint and connected with the principal debtor. It is the choice of the creditor to recover the amount either from the principal debtor after his default or from surety. He may file a suit against both the principal debtor and the surety, or may file a suit against the surety only, or the principal debtor only.

Put it simply, Surety’s liability is secondary and not primary, therefore, his liability arises immediately on default of the principal debtor:

In the case of Bank of Bihar v Damodar Prasad, it was held that the creditor does not have to exhaust all the remedies against principal debtor before suing the surety. It is the duty of the surety to pay the debt if principal debtor does not pay.

 

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