TaxTMI Login
AI Drafter - (New and Powerful) ✕
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Just a moment...
AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: Whether a surety remains liable under a contract of guarantee when the principal debtor's liability is reduced or partially discharged by operation of law, and whether the surety can claim the same statutory reduction.
Analysis: Section 128 of the Indian Contract Act, 1872 states that the liability of the surety is co-extensive with that of the principal debtor unless the contract provides otherwise. The principal debtor's discharge in this case was not brought about by any act or omission of the creditor, but by a statutory operation affecting the principal debtor alone. The principle recognised in English authority and applied in Indian insolvency law is that where the debt disappears by operation of law, the surety is not necessarily released. The insolvency provisions also proceed on the basis that a surety's liability may survive the discharge of the principal debtor. On that footing, a statutory scaling down of the principal debtor's liability does not, by itself, curtail the creditor's remedy against the surety.
Conclusion: The surety remained liable for the full contractual amount, and the creditor was entitled to recover the principal sum due from the surety, subject to the separate finding on interest.
Ratio Decidendi: A discharge or reduction of the principal debtor's liability by operation of law does not, without creditor participation or a contractual stipulation to the contrary, discharge or reduce the surety's co-extensive liability under Section 128 of the Indian Contract Act, 1872.
TaxTMI 
