Co-surety's Liability in Execution: Can One Co-surety Be Forced to Pay Entire Decree Amount If Others Abscond Without Agreement with Decree Holder?

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In Indian contract law, suretyship plays a pivotal role in securing debts and obligations. When a debtor defaults, the creditor often turns to the surety or co-sureties for recovery. A critical question that arises in such cases is whether a single co-surety can be burdened with the entire liability, especially during execution of a decree. The answer depends on the interplay between Section 128 and Section 146 of the Indian Contract Act, 1872.

This article examines the extent of a co-surety’s liability, especially when other judgment debtors have absconded, and whether such liability can be limited by agreement—particularly one entered into with the creditor or decree holder.

Statutory Framework

🔸 Section 128 – Co-extensive Liability of the Surety

“The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.”

This means that in the absence of a contrary agreement, the surety is liable for the entire amount due from the principal debtor. The creditor can, at his discretion, recover the full debt from any one surety.

🔸 Section 146 – Contribution Among Co-sureties

“Where two or more persons are co-sureties for the same debt or duty… the co-sureties, in the absence of any contract to the contrary, are liable, as between themselves, to pay each an equal share of the whole debt…”

This section addresses the inter se liability between co-sureties. It implies that although one co-surety may pay the entire amount to the creditor, he is entitled to claim proportionate contribution from the others, unless a different sharing ratio has been agreed upon.

Practical Scenario

Let us consider the following real-world case example:

  • A decree is passed for recovery of ₹2,00,000 against four judgment debtors:

    • JD1 – Principal Debtor

    • JD2 – Surety

    • JD3 – Co-surety

    • JD4 – Co-surety

  • During execution proceedings, the decree holder files a petition to recover the entire ₹2,00,000 from JD4.

  • However, JD1, JD2, and JD3 have absconded, and only JD4 is traceable.

  • JD4 claims he is liable to pay only his share (e.g., ₹50,000), not the full amount.

This raises the question: Can JD4 be made liable for the full decree amount, or is he liable only to the extent of his share?

🔍 Legal Analysis

1.General Rule: Co-surety Liable for Full Amount

In the absence of any agreement with the decree holder, JD4 can legally be compelled to pay the entire decree amount. This is because:

  • Under Section 128, the creditor has the right to recover the entire sum from any one of the sureties.

  • This principle has been upheld in various judicial decisions. Courts have consistently held that the creditor need not exhaust remedies against the principal debtor first, nor is he obligated to proceed against all co-sureties.

Thus, in this case, the decree holder is within his rights to proceed against JD4 alone for the full amount.

2.Right of JD4 to Claim Contribution

Once JD4 pays the full amount, he has a statutory right under Section 146 to recover equal share (or agreed share) from the other co-sureties. That is:

  • If no special contract exists, JD4 can claim ₹66,666.67 each from JD2 and JD3.

  • If a contract existed that JD4 was liable for 25% only, then he can recover ₹75,000 from each of JD2 and JD3.

However, this right of contribution is a private remedy against co-sureties and does not affect the decree holder’s right to recover the full debt from JD4.

3.Effect of Agreement Among Co-sureties

Where the co-sureties have entered into an agreement among themselves regarding the apportionment of liability (e.g., JD4 – 25%, JD3 – 50%, JD2 – 25%), such an agreement is binding only inter se. It does not restrict the decree holder unless he was a party to the agreement.

Thus, if JD4 produces such an agreement not involving the decree holder, it does not absolve him from liability for the full amount.

4.Effect of Agreement with the Decree Holder

This is the crucial exception to the general rule.

If there exists a written or oral agreement between the co-sureties and the decree holder, specifying the extent of each surety’s liability (for instance, JD4 is liable for ₹50,000 only), then:

  • The decree holder cannot recover more than the agreed share from JD4.

  • Such a contract modifies the co-extensive liability under Section 128 by mutual consent.

  • Courts have recognized such limitations when explicitly agreed upon by the creditor.

In this case, JD4 can successfully resist execution for the balance ₹1,50,000 and limit his liability to ₹50,000.

Summary of Legal Position

SituationLiability of JD4 (Co-surety)
No agreement; creditor sues JD4 aloneLiable for full ₹2,00,000
Agreement among co-sureties onlyStill liable for full ₹2,00,000; can recover from others
Agreement with creditor (decree holder)Liable only for agreed share (e.g., ₹50,000)

Conclusion

The Indian Contract Act provides for equitable contribution between co-sureties but maintains the creditor’s right to recover the full amount from any one surety. This balances creditor protection with surety fairness.

Therefore, unless there is a clear, binding agreement with the decree holder limiting the liability of a co-surety, that co-surety can be made to pay the entire decree amount. The co-surety’s remedy lies in seeking reimbursement from other absconding sureties.

For any co-surety, especially those facing execution proceedings alone, the existence of an agreement with the decree holder limiting liability can be the key to resisting full recovery.

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