1941 (8) TMI 22

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..... first defendant was only partially discharged and the suit was filed. Against the first defendant, the plaintiff gave effect to the defences open to him as an agriculturist and claimed only ₹ 95-9-0. Against the second defendant the plaintiff claimed ₹ 157-14-4, the full amount due under the contract. In the lower Court the second defendant successfully claimed that he was entitled to the benefit of the reduction of the principal debtor's liability by reason of the terms of Section 128 of the Contract Act. It is contended in the revision petition that this decision is wrong. Section 128 of the Contract Act provides that the liability of the surety is co-extensive with that of the principal debtor unless it is otherwise provi .....

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..... ase that the creditor is entitled to prove for the value of the guarantee that the debtor has given. It is said that, because the principal debt is gone, therefore the liability under the guarantee to pay the interest on the debenture is also gone. I do not agree with that view. The principal debt is gone no doubt, but not by any act of the creditor. It is gone by operation of Jaw. The principal debt will never be repaid, but in my opinion the obligation of the debtor to pay the interest under his guarantee remains. 3. The same principle is laid down in Rowlatt On Principal and Surety at page 272. That the rule enunciated in Ex parte Jacobs (1875)10 Ch. App. C. 211 applies to India has been recognised by a Bench of this Court in Bombay .....

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..... ge to the principal debtor and the creditor has taken no part in releasing the principal debtor from his liability, the remedy of the creditor against the guarantor will not be affected. 5. It follows that the lower Court was wrong in restricting the relief as against the second defendant to the amount of the debt as scaled down in the Act. The lower Court has also found that even if the view taken on the effect of Section 128 of the Contract Act is wrong, the second defendant can be made liable only for interest at 15 per cent, by reason of the terms of the Madras Debtors Protection Act. This finding is not questioned before us. 6. In the result the revision petition is allowed with costs and the plaintiff will get a decree as agains .....

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