1999 (7) TMI 710

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....other, Plaintiff was a surety for the Defendant, her son for a loan of Rs. 75,000 availed of from a bank to purchase a Jeep. As security, the Plaintiff had to mortgage her property. The Defendant, the principal debtor committed default. This resulted in a suit filed by the bank. The suit was obviously decreed. That led to execution of the decree against the Defendant as well as the Plaintiff. The ....

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....rties that the guarantor was liable to pay the amount the suit was decreed. The decree was confirmed by the lower appellate Court. It is in the above circumstances, this S.A., mainly raising a substantial question of law centered around Section 140 of the Indian Contract Act, 1872. It is contended that as the amount claimed in the suit does not satisfy the entire liability, the Plaintiff is not en....

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....ed. In the second decision, it is held that a guarantor can get back the security only on payment of the entire amount due in terms of the transaction. That also is beyond doubt. The Supreme Court has held in the third decision that a guarantor will step into the shoes of the creditor when the guarantor discharges his obligations in terms of the contract. What is to be considered is whether these ....

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....any payment or performance of any obligation only to the extent the principal debtor has defaulted. If the principal debtor has paid a substantial portion of the loan amount, the guarantor need pay only the balance. In other words, all that a guarantor is liable for is, the reminder left after adjusting the payment made by the principal debtor. The decision cited by the Appellant as indicated abov....