Co-extensive surety liability bars guarantors from stopping recovery or auction until remedies against the principal debtor are exhausted.

A surety's liability is co-extensive with that of the principal debtor, so a creditor is not required to exhaust remedies against the principal debtor or the debtor's estate before proceeding against guarantors. Notice under the SARFAESI Act had been issued to both the debtor and the guarantors, and no independent legal basis was shown to restrain recovery or auction. The Court therefore rejected the contention that action had to be taken first against the principal debtor and held that the guarantors could not prevent recovery or auction.

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Issues: Whether the guarantors could restrain the creditor from proceeding with recovery and auction without first exhausting remedies against the principal debtor or his estate.

Analysis: The petitioners sought restraint against recovery and auction on the footing that they were only guarantors and that action should first have been taken against the principal debtor. The Court applied the settled principle that the liability of a surety is co-extensive with that of the principal debtor and that the creditor is not bound to exhaust remedies against the principal debtor before proceeding against the surety. The notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 had been issued to both the debtor and the petitioners, and the petitioners failed to show any legal basis to prevent recovery from the estate of the deceased debtor or to claim an independent right in the property.

Conclusion: The guarantors had no right to restrain the recovery or auction, and the claim that the creditor must first proceed against the principal debtor was rejected.

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