AIR 2008 ANDHRA PRADESH 38 ::2008 (2) All LJ NOC 388 ::2008 (2) ALJ 388 ::2008 A I H C (NOC) 196 (AP) ::2008 (2) BankCLR 205 ::(2008) 3 BankCas 575 ::(2008) 2 ICC 803 ::(2008) 1 AndhLD 574 ::(2008) 1 Andh LT 795

Andhra Pradesh High Court

Hon'ble Judge(s): G. Yethirajulu , J

Contract Act (9 of 1872) , S.128— Surety's liability - Determination - Suit against principal debtor dismissed for default and that decision became final - No liability thereby was surviving against principal debtor - Effect - Surety's liability would automatically get terminated. A surety is a person who comes forward to pay the amount in the event of the borrower failing to pay the amount, unless it is held by a competent Court through a decree that he is not liable to pay the amount due to the creditor and when he denies the liability it becomes difficult for the creditor to realise the amount. In the event of a decree in favour of the creditor against the principal borrower, the wings of the decree can also be extended against the sureties as their liability is co-extensive with the principal debtor. When once there is a decree, the creditor is at liberty to proceed either against the principal borrower or sureties provided that the remedy of the surety is available for recovery of the amount against the principal debtor after payment of the amount to the creditor. But in the instant case, the suit against the principal debtor was dismissed for default and decision became final. Therefore, under law, there was no liability surviving against debtor for realization of amount due to the creditor. When once the liability of principal debtor was extinguished,....