RIGHT TO INDEMNITY

Section-145 states that implied promise to indemnify surety.- In every

contract of guarantee there is an implied promise by the principal debtor
to indemnify the surety; and the surety is entitled to recover from the
principal debtor whatever sum he has rightfully paid under the guarantee,
but no sums which he has paid wrongfully.

The right enables the surety to recover from the principal debtor whatever
sum he has rightfully paid under the guarantee, but not sums which he
has paid wrongfully.*

CHEKKERAPONNAMMA V. A.S.THAMMAYYA:-
An example of wrongful payment in this case where a surety had
guaranteed the payment of four motor vehicles delivered on hire-
purchase. The surety contended that he had paid Rs.4000 in discharge of
his liability, but he failed to give an account of the price which the motor
vehicles might have realised on resale. He was not allowed to recover his
indemnity.

RIGHTS AGAINST CREDITOR

The surety enjoys the following rights against the creditor:-
1. Right to securities (section-141)
2. Right to share reduction
3. Right of set of

RIGHT TO SECURITIES
Section-141 provides right to securities to a surety.

Suretys RIGHT TO benefit of creditors securities.- A surety is entitled to

the benefit of every security which the creditor has against the principal
debtor at the time when the contract of suretyship is entered into,
whether the surety knows of the existence of such security or not; and, if
the creditor loses, or, without the consent of the surety, parts, with such
security, the surety is discharged to the extent of the value of the security.

CRAYTHORNE V. SWINBURNE:-
Section-141 recognises and incorporates the general rule of equity as
expounded in this case that the surety is entitled to every remedy which
the creditor has against the principal debtor, including enforcement of
every security.*

It is the duty of the creditor to keep the securities intact; not to give them
up or to burden with further advances.*

Where certain bills of exchange were given by way of collateral security

and they being dishonoured, the creditor made them useless by not doing
anything within the period of limitation, the surety was discharged to the
extent of their value.*
Hypothecation is only equitable charge:
The section is not applicable to hypothecation, it being only an equitable
charge. The goods remain with the borrower and normally the question of
their being lost by the creditor does not arise.*

RIGHT TO SHARE REDUCTION

HOBSON V. BASS*
J gave a guarantee to B in the following words: I hereby guarantee to
you the payment of all goods you may supply to E.H., but so as my liability
to you under is or any other guarantee shall not at any time exceed the
sum of 250.
E gave a similar guarantee. B supplied goods to E.H., to the amount of
657. E.H. became bankrupt. B proved the whole sum in the insolvency of
E.H. and then called on the guarantors who paid him 250 each.
Subsequently B received from the receiver a sum of 2s, and 1d in the
pound on 657.
It was held that each of the guarantors was entitled to a part of the
dividend bearing to the whole the same proportion as 250 to 657.*

Right against Co-sureties

Where a debt has been guaranteed by more than one person, they are
called co-sureties. Some of their rights against each other are:

1. Efect of releasing a surety.

2. Rights to contribution.

138.
Where there are co-sureties, a release by the creditor of one of them does
not discharge the others; neither does it free the surety so released from
his responsibility to the other sureties.

SRI CHAND V JAGDISH PARSHAD KISHAN CHAND

The creditor may at his will release any of the co-sureties from his
liabilities. But that will not operate as a discharge of his co-sureties,
however the releadsed cosureties will remain liable to the others for
contribution inn the event of default.*
Right to Contribution (SECTION 146-147)

According to section 146 co sureties are liable to contribute equally-where

2 or more persons are co sureties for the same debt or duty, either jointly
or severally, and whether under the same or diferent contracts and
whether with or without the knowledge of each other, the co sureties, in
the absence of any contract