Central Bank of India Vs. C.L. Vimla & Ors.
Indian Contract Act, 1872 - Section 128
Guarantor - Liability - Held that liability of the guarantor/surety is co-extensive with that of the debtor - Only exception to the nature of the liability of the guarantor is provided in the Section itself, which is only if it stated explicitly to be otherwise in the Contract - In the loan agreement, which is the contract, there is no clause which shows that the liability of the guarantor is not co-extensive with the principal debtor - Therefore Section 128 of the Contract Act will apply here without any exception - Guarantor cannot escape from her liability as a guarantor for the debt taken by the principal debtor - Since the auction purchaser has already paid the full amount of sale consideration and is in possession of the property in question for more than about 8 years, for equity and good conscience do not intend to interfere with his possession - Impugned order passed by the High Court setting aside the sale liable to be set aside.
Topic(s)-Contract - Guarantor - Liability - Auction sale valid
Important Decision(s)- Guarantor cannot escape from her liability as a guarantor for the debt taken by the principal debtor.