Surety liability is reduced with the principal debt when statute scales down the debt, unless the contract says otherwise.

A surety's liability is co-extensive with the principal debtor's liability unless the contract provides otherwise. Where the Madras Agriculturists' Relief Act scales down the principal debt, the Act was treated as extinguishing the debt to that extent, with the decree amended and satisfaction capable of being entered. Because the surety's obligation is accessory to the principal obligation, the surety cannot remain liable for an amount that no longer subsists against the principal debtor. The contrary view, that statutory reduction of the principal debtor's liability leaves the surety liable for the whole debt, was rejected. A non-agriculturist surety is therefore liable only for the scaled down amount.

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Issues: Whether a non-agriculturist surety is liable for the entire debt or only for the scaled down debt when the principal debt is scaled down under the Madras Agriculturists' Relief Act.

Analysis: The liability of a surety is co-extensive with that of the principal debtor unless the contract provides otherwise. The Act was treated as effecting not merely a bar of remedy but an extinction of the debt to the extent scaled down, as shown by the language of discharge, the amendment of the decree under Section 19, and the power to enter satisfaction. Since the surety's obligation is accessory to the principal obligation, the surety cannot be made liable for a sum which no longer subsists against the principal debtor. The contrary view that a statutory reduction of the principal debtor's liability leaves the surety liable for the whole amount was rejected.

Conclusion: A non-agriculturist surety is not liable for the entire debt where the principal debt has been scaled down under the Madras Agriculturists' Relief Act, and liability is confined to the scaled down amount.

Ratio Decidendi: Where the principal debtor's liability is extinguished or reduced by statute, a surety's co-extensive and accessory liability is extinguished or reduced pro tanto unless the contract expressly provides otherwise.

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