1986 (6) TMI 246

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..... ion to the amounts paid, the suit was filed by the plaintiff Bank for Rs. 8,644-08. Defendant 4 had stood surety for both the loans. 3. Defendants 1 to 3 did not contest the suit. It is only defendant 4 that resisted the suit. She raised a contention that as the plaintiff creditor allowed the hypothecated properties to be lost, her liability as a surety stood discharged the second contention urged is that the acknowledgement given by defendants 1 to 3 in order to keep their debts alive does not bind her as she has not signed the acknowledgement. 4. The trial court negatived all the contentions of defendant 4 and decreed the suit. 5. The material portion of condition No. 4 found in the surety bond reads as: - Moreover, though as between the .....

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..... rety can himself avoid consequences of such passivity by himself paying the debt and becoming subrogated to the rights of the creditor. In the absence of a contract to the contrary, the creditor is under no obligation of active diligence for the protection of the surety, so long as the surety himself remains inactive. Thus tested, the inaction on the part of the creditor-Bank would not, of itself, mitigate sureties liability. Therefore in view of this dictum laid down and also in view of the fact that the evidence does not disclose that the creditor had anything to do with the loss of the hypothecated properties, the argument of the learned counsel Shri Raghavan that the liability of the surety defendant 4 stood discharged on account of thi .....

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..... ter VIII. The liabilities of the rights created under Chapter VIII are entirely different from the rights and liabilities in Chapter X of the Contract Act. There is nothing in Chapter IX to indicate that the parties could contract out of the legal rights and liabilities. Therefore the said Gujarat ruling has no application to the facts of the present case. Therefore in view of the said undertaking given by the surety it is not open to her to contend that the said contract between her and the plaintiff is invalid land unenforceable. Therefore even though the property might have been lost still she is liable in law in view of the said contract entered between her and the plaintiff Bank. The trial court also has come to the same conclusion on .....

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