Section 141 The Indian Contract Act, 1872
Section 141 of the Indian Contract Act, 1872 relates to the rights of surety on payment or performance.
🔹 Section 141 – Surety’s right to benefit of creditor’s securities
"A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security."
🔍 Explanation:
This section protects the surety’s interests:
Surety's Right to Securities:
The surety gets the right to claim or use any security (like property, pledge, mortgage, etc.) the creditor holds against the principal debtor.
Whether Known or Unknown:
This right exists even if the surety was unaware of such securities when the guarantee was given.
Creditor’s Duty Not to Lose Security:
If the creditor loses or voluntarily gives up the security without the surety's consent, then the surety is discharged to the extent of that security’s value.
📌 Example:
A gives a guarantee for B’s loan from C.
B had mortgaged property to C as security.
If C later releases that mortgage without A’s consent, and B defaults:
A (surety) will be discharged from liability to the extent of the value of that mortgaged property.
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