Discharge of surety

kalpana (Querist) 15 March 2016 This query is : Resolved
A bank had given loan to a company and the company defaulted in payment of the debt. one of the directors gave guarantee for the said loan. now the director is coming forward to clear the loan however insists that original title deeds of the property mortgaged ( which is in the name of the company) be given to him without the consent of the principal debtor. He is relying on section 140 and 141 of indian contract act. Is it permissable ?

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ROHIT SHARMA (Expert) 15 March 2016
1. His reliance on s. 140 & 141 of the Contract Act, 1872 will be held sustainable and he has not to seek the consent of the principal creditor to get back the document of the title deed deposited with the bank. The Director has independently provided the surety and hence his rights provided u/s 140 & 141 of C.Act, 1872 will entitle him to be considered as surety.

Sudhir Kumar, Advocate (Expert) 16 March 2016
agreed with Mr Rohit SHarma

Rajendra K Goyal (Expert) 16 March 2016
If the guarantor repays the loan, he enters into the shoes of creditor.

Kumar Doab (Expert) 16 March 2016
The surety/guarantor can proceed to recover from principle debtor.

However he/she may proceed and tread carefully under expert advise of an able counsel.