Section 140 The Indian Contract Act, 1872
Section 140 of the Indian Contract Act, 1872 relates to the rights of a surety on payment or performance.
🔹 Section 140 – Rights of surety on payment or performance:
"Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor."
✅ Explanation:
When the surety fulfills the obligation (either pays the debt or performs the duty), he steps into the shoes of the creditor.
This is known as the right of subrogation — the surety can now recover from the principal debtor everything he had to pay.
📌 Example:
A takes a loan of ₹50,000 from B. C stands as a surety.
A fails to repay, so C pays ₹50,000 to B.
Now, C has the right to recover ₹50,000 from A, just like B could have.
🔁 Key Concept: Subrogation
After the surety pays, all rights, remedies, and securities that were with the creditor pass to the surety.
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