Law: Contract Act, 1872

Section: 128, 129, 130

Law: Code Of Civil Procedure, 1908.

Section: 145, 3

SUMMARY: ontract Act, 1872 (IX of 1872) — Sections 128, 129, 130 & 133-139 — Code of Civil Procedure, 1908 — Section 145 — Execution proceedings — Surety bond furnished for satisfaction of decretal amount — Application for withdrawal of surety — Scope — Distinction between continuing guarantee and decree-specific surety. The undertaking furnished by the sureties was not a continuing guarantee within the contemplation of Sections 129 and 130 of the Contract Act, 1872. It did not relate to a series of future transactions but was furnished in relation to a specific and existing liability arising from a decree already passed by a competent Court. The liability was fixed, quantified and judicially determined. Consequently, Section 130 of the Contract Act had no application and the sureties could not unilaterally revoke or withdraw their undertaking. Sections 133 to 139 of the Contract Act enumerate the recognized grounds for discharge of a surety, but no provision confers an unrestricted right upon a surety to withdraw from a guarantee after it has been accepted and acted upon. (Paras 14, 15, 16 & 17) Contract Act, 1872 (IX of 1872) — Section 128 — Liability of surety — Co-extensive liability — Principal debtor and surety jointly and severally liable. Section 128 of the Contract Act expressly provides that the liability of a surety is co-extensive with that of the principal debtor unless otherwise provided by the contract. Once the appellants voluntarily undertook before the Executing Court that they would satisfy the decretal amount in the event of default by the judgment-debtor, their liability became co-extensive with that of the judgment-debtor himself. The decree-holder was not legally required to first exhaust every possible remedy against the judgment-debtor before seeking enforcement of the surety bond. (Paras 12 & 13) Code of Civil Procedure, 1908 — Section 145 — Surety furnished before Court — Enforcement of liability — Withdrawal of surety — No statutory right. Section 145, C.P.C. recognizes and enforces liabilities undertaken by sureties…