liability of surety

Querist : Anonymous (Querist) 19 August 2010 This query is : Resolved
when a principal Judgement holder i.e the principal borrower has agreed to pay entire decree amount without the knowledge of the the surities and has been settled before the legal services authority what is the fate of the surities are sthe surities are bound by the decree awared by the lokadalat

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Devajyoti Barman (Expert) 19 August 2010
The principal liability to discharge the debt is always upon the borrower and when all the recourse through him to recover the debt fails then only the liability of the sureties/guarantors arises.
In your case the debtor has done the right thing and the order of the lok adalat is bound on the borrower and he alone is responsible for its execution.

adv. rajeev ( rajoo ) (Expert) 20 August 2010
When principal debtor is agreed to pay his debt in the lok adalat decree will be passed . as per the decree he is liable to repay it. If there is decree on the sureties then they will not be held liable.

s.subramanian (Expert) 20 August 2010
If such an undertaking has been given by the principal borrower and the same has been accepted by the lender and the lok adalat, the liability of the sureties stands discharged. Such an agreement amounts to novation of the contract and as such the surety's liability will stand totally discharged under Sec.133 Indian Contract Act.

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