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September 2009

Sureties — Co-sureties are liable to pay each an equal share of whole debt — Contract Act S. 146.

By Dr. K. Shivaram, Ajay R. Singh, Advocates
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  1. Sureties — Co-sureties are liable to pay each an equal
    share of whole debt — Contract Act S. 146.

[ Krushna Chandra Mallick v. Chief General Manager, SBI
and Ors., AIR 2009 Orissa 99]

The petitioner had filed a petition challenging the
impugned notice wherein the petitioner has been shown as one of three
guarantors for one principal borrower. The notice was issued pursuant to the
decree of the DRT providing for the joint and several liability of all the
three guarantors. The petitioner apprehended that his property would be put to
auction without touching the properties of other two guarantors who are family
members of the borrowers.

The Court held that liability u/s.128 of the Contract Act
is co-extensive to that of the borrower. S. 146 of the Contract Act provides
that co-sureties are liable to pay each an equal share of the whole debt. The
Court directed the Tribunal to dispose of the petitioner application after
hearing the legal and factual issues regarding application of the provision of
S. 146 of Contract Act and Rule 8(5) of the Security Interest (Enforcement)
Rule, 2002.

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