According to the syllabus of B.com 1st year Prepared by- Ms. Neetu Kushwaha Research Scholar Department of Commerce

1. RIGHTS OF SURETY
Course Co-Ordinator:
Neetu Kushwaha

2. Surety gets various rights against the
following parties:
• Against the Creditor
• Against the Principal Debtor
• Against the Co-sureties

3. 1- Rights Against the Creditor:
• Right to get Securities: [Sec.
141]
If Surety makes payment to
creditor, surety can get all
securities into his possession from
creditor.

4. CONT…….
• Right to ask for Set-
off: Surety can give advice to
creditor to sell away the
security and to utilize the
amount thus realized for set
off.

5. • Rights of Subrogation: [Sec.140]
A surety steps in the shoes of the creditor. A
surety subrogate all the rights of the creditor
against the principal debtor. However, the
right is subject to the condition precedent that
the surety must have himself discharge
liabilities under the contract.
CONT……….

6. CONT….
• Right to Equities:
Upon discharge of the guarantee obligation, the
surety is entitled to all the equities available to
the creditor no only against the principal debtor
but also against all persons claiming through
him.

7. CONT………
• Right to Discharge:
A surety has right to be discharged from the
further obligation under the fidelity
guarantee, if the misconduct or dishonesty of
the employee is proved, for whom he has
given guarantee.

8. CONT…..
• Right to dismissal of employee:
In case of fidelity guarantee, a surety can
ask the employer to dismiss the employee
who has proved guilty of misconduct or
dishonesty.

9. • Right of Subrogation:
Upon the discharge of the guarantee obligation, a
surety steps into the shoes of the creditor. He gets
all the rights of the creditor against the principal
debtor. Thus, he is subrogated to all the rights of the
creditor against the principal debtor.
2- Rights Against Principal Debtor

10. CONT…….
• Right to Indemnity: [ Sec. 145]
In every contract of guarantee there is an implied
promise by the principal debtor to indemnify the
surety. Therefore, the surety is entitled to recover
from the principal debtor whatever sum he has
rightfully paid under the guarantee.