Q: 'A' signed a surety for his friend who obtained a loan from a nationalized bank. As his friend did not repay the loan the bank filed a suit for recovery against 'A'. 'A' objected on the basis that the bank had not exhausted its remedies against his friend - Decide.

Ans: As per Sec. 128 of the Indian Contract Act, 1872, the liability of the Surety is co-extensive with that of the Principal debtor unless it is otherwise provided for in the contract.

It means that the Creditor can recover the loan amount from the Surety directly without taking steps to recover from the Principal debtor; It also means that the liability of the Surety is the same as that of the Principal debtor.

 Thus, in the above case, the action of the nationalized bank in filing a suit for recovery against A, the Surety, for the repayment of the loan taken by his friend, is very well within their right to do so. A's objection on the basis that the Bank has not exhausted its remedies against his friend before filing a suit for recovery from him is not tenable as the Bank has no compulsion as per law to do so.

Both the Principal debtor and the Surety are jointly and severally liable.