Question 2 OR (b)
Rights of a surety against the principal debtor, the creditor and co-sureties
6 marks
- Time to write
- About 12 minutes
From an older CBCS paper
Question
Question 2 OR (b) · 6 marksDiscuss the rights a surety has against the principal debtor, the creditor and co-sureties.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- DiscussEach point named and explained, not just listed.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Against the principal debtor 2½ marks 4 min
- 2 Against the creditor 1½ marks 3 min
- 3 Against co-sureties 2 marks 3 min
- Check: every ask answered, key terms underlined 1 min
Short on time? Trim steps 1–3 evenly rather than skip one: each is capped at its own marks.
Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
- Right of subrogation (s. 140). Where a guaranteed debt has become due, or the principal debtor has defaulted, the surety, on paying or performing “all that he is liable for, is invested with all the rights” the creditor had against the principal debtor.
- Right to indemnity (s. 145). In every guarantee the principal debtor is taken to have promised, by implication, to indemnify the surety; the surety can recover all that he has rightly paid under the guarantee, but nothing he paid wrongly.
Against the creditor. Benefit of securities (s. 141): the surety is entitled to the benefit of every security the creditor had against the principal debtor when the suretyship was entered into, whether or not the surety knew of it; if the creditor loses or, without the surety's consent, parts with it, the surety is discharged to the extent of its value. Set-off: if the creditor sues the surety, the surety may use any set-off the principal debtor had against the creditor. Reduction on the debtor's insolvency: if the principal debtor becomes insolvent, the surety's liability is reduced by what the creditor recovers from the insolvent's estate. Example: where a ₹1,00,000 loan is guaranteed and the creditor receives ₹30,000 from the borrower's estate in insolvency, the surety is liable for the remaining ₹70,000.
1Hariram pays the lender what the borrower owed—and steps into the lender's shoes.
Right of subrogationHe steps into the creditor's shoes.
2Receipt in hand, he knocks on the borrower's door to recover every rupee he paid.
Right to indemnityRecover from him any sum he has rightfully paid under the guarantee.
3Two sureties, one debt: across the table they split the burden equally.
Right to contributionThey are liable, in the absence of a contract to the contrary, to contribute equally to the whole debt or the unpaid part of it.
Against co-sureties. Right to contribution (s. 146): where two or more persons (co-sureties) guarantee the same debt or duty, each must, unless they have agreed otherwise, contribute an equal share.
Where the 6 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Against the principal debtor | 2.5 |
| 2 | Against the creditor | 1.5 |
| 3 | Against co-sureties | 2 |
| Total | 6 |
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