Section 128 The Indian Contract Act, 1872
Section 128 – The Indian Contract Act, 1872
📜 Title: “Surety's liability”
Text of Section 128:
"The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract."
🔍 Explanation of Section 128 – Surety's Liability:
Section 128 deals with the liability of a surety (guarantor) in a contract of guarantee.
🧠 Key Points:
Co-extensive Liability:
The surety is equally liable as the principal debtor.
The creditor can demand the repayment of the entire amount from the surety without first proceeding against the principal debtor.
Unless Otherwise Provided:
This default rule can be modified by specific terms in the contract.
For example, the contract can limit the surety’s liability to a fixed amount or time.
⚖️ Illustration:
A owes ₹50,000 to B.
C agrees to be a surety for A.
A fails to pay the debt.
B can directly sue C (the surety) for ₹50,000 without first suing A.
🧑⚖️ Important Case Law:
🔹 Bank of Bihar Ltd. v. Damodar Prasad (1969)
The Supreme Court held that the creditor can sue the surety directly without exhausting remedies against the principal debtor.
🔹 State Bank of India v. Indexport Registered (1992)
Reaffirmed that the surety's liability is immediate and co-extensive with that of the principal debtor.
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