Meaning of Co-Sureties
When two or more persons jointly guarantee the same debt or duty for a principal debtor, they are called Co-Sureties. Under the Indian Contract Act, 1872, co-sureties share the same legal responsibility toward the creditor. Their relationship is based on mutual contribution and equality of liability unless there is a specific agreement to the contrary. Each co-surety undertakes to discharge the entire debt if the principal debtor defaults, but among themselves, the liability is divided equally. The principle ensures fairness and prevents one surety from bearing the whole burden alone. Hence, co-sureties stand in a position of joint and several liability, ensuring the creditor’s right to recover the entire debt while maintaining balance among sureties.
Legal Provision under Section 146
According to Section 146 of the Indian Contract Act, 1872, “Co-sureties are liable, as between themselves, to pay equally, unless there is a contract to the contrary.” This means that if the principal debtor defaults and one co-surety pays more than his share, he is entitled to recover the excess from the others. Their liability is joint toward the creditor, but equal and several among themselves. This section applies even when the co-sureties are bound in different amounts or by separate agreements, as long as they guarantee the same debt or duty. The law ensures that the burden of the guarantee is shared equally, promoting equity and protecting the rights of each co-surety involved.
Liability in Different Situations – Section 147
Section 147 provides that co-sureties bound in different sums are also liable to pay equally up to the limits of their respective obligations. For example, if three co-sureties guarantee different amounts but the debtor defaults, they must contribute equally until their maximum limit is reached. The principle of equality applies unless a contrary intention appears in the contract. Thus, the law balances both the creditor’s right to recover and the co-sureties’ right to equitable distribution of liability. It ensures that no co-surety is unfairly burdened, and each pays only their fair portion of the total debt. This reflects the equitable foundation of the law of guarantee.
Real-Time Example
Suppose A, B, and C act as co-sureties for D, who has borrowed ₹90,000 from a bank. D fails to repay the amount. The bank can demand the full ₹90,000 from any one of them, say A, since co-sureties are jointly liable to the creditor. However, under Section 146, A can later recover ₹30,000 each from B and C as contribution, because all co-sureties share equal liability. If C’s guarantee was limited to ₹20,000, then A and B would share the remaining ₹70,000 equally. This example demonstrates that co-sureties’ liability is shared equitably, even if the total amount or terms of their guarantee differ.
Easy Mnemonic
Use the mnemonic “E-Q-U-A-L” to remember the Liability of Co-Sureties:
- E – Equal contribution among co-sureties (Sec. 146)
- Q – Quota of liability may differ if contract says so
- U – Uniform obligation for the same debt
- A – Amount limited as per individual guarantee (Sec. 147)
- L – Legal right of reimbursement for overpayment
Think of “EQUAL” — because co-sureties share the liability equally unless the contract specifies otherwise. This mnemonic helps recall that under Sections 146 and 147 of the Indian Contract Act, 1872, co-sureties have joint liability to the creditor but equal contribution among themselves.
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