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of <h1>Surety's Liability Upheld: Court Dismisses Revision, Affirms Defendant's Obligation Despite Loss of Hypothecated Assets.</h1> The HC dismissed the revision, affirming the trial court's decree holding defendant-4 liable as a surety. The court found that the surety's liability was ... - Issues:1. Liability of a surety when the hypothecated properties are lost.2. Contractual obligations of a surety under the Contract Act.3. Effect of acknowledgment on limitation period.4. Interpretation of a continuing guarantee.Analysis:1. The case involved a revision against a judgment decreeing a suit against all defendants, including defendant-4, who stood surety for credit facilities granted to defendants 1 to 3 by the plaintiff bank. Defendant-4 resisted the suit, claiming discharge of liability as surety due to the loss of hypothecated properties by the creditor. However, the trial court decreed the suit, holding defendant-4 liable as a surety.2. The surety bond contained a clause stating that the surety agreed not to claim the benefits conferred by certain sections of the Contract Act. The court referred to Section 141 of the Contract Act, which outlines a surety's entitlement to the creditor's security against the principal debtor. The court held that the creditor's passive negligence in realizing debt from collateral security does not discharge the surety, especially when the surety could pay the debt and subrogate the creditor's rights. Therefore, the court rejected the argument that the surety's liability was discharged due to the loss of hypothecated properties.3. The surety bond empowered defendants 1 to 3 to give consent on behalf of defendant-4, making any acknowledgment given by them binding on defendant-4. This principle was supported by legal precedent, establishing that defendant-4, as the surety, would be legally bound by acknowledgments made by defendants 1 to 3, even if she did not personally participate in them.4. The court also addressed the issue of limitation, stating that the surety bond constituted a continuing guarantee. As per legal precedent, in cases of continuing guarantees, the question of limitation does not arise. Citing relevant case law, the court concluded that the decree passed by the lower court was legal, dismissing the revision and upholding defendant-4's liability as a surety.In conclusion, the court dismissed the revision, emphasizing that defendant-4's contractual obligations as a surety, including the continuing nature of the guarantee and the empowerment of defendants 1 to 3 to act on her behalf, bound her to the suit despite her contentions.
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