Surety's right to benefit of creditor's securities
Section 141 of the Indian Contract Act, 1872 deals with 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; The Act came into force on 01 Sep 1872.
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.
Illustrations
(a) C, advances to B, his tenant, 2,000 rupees on the guarantee of A. C has also a further security for the 2,000 rupees by a mortgage of B's furniture. C cancels the mortgage. B becomes insolvent and C sues A on his guarantee. A is discharged from liability to the amount of the value of the furniture.
(b) C, a creditor, whose advance to B is secured by a decree, receives also a guarantee for that advance from A. C afterwards takes B's goods in execution under the decree, and then, without the knowledge of A, withdraws the execution. A is discharged.
(c) A, as surety for B, makes a bond jointly with B to C, to secure a loan from C to B. Afterwards, C obtains from B a further security for the same debt. Subsequently, C gives up the further security. A is not discharged.
Section 141, The Indian Contract Act, 1872 (Act 9 of 1872).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Sureshkumar M vs Authorized Officer, State Bank of India
Court's Decision & Legal Precedent
Whether the bank lost, or parted with without the surety's consent, the hypothecated stock in trade of the principal debtor so as to discharge the guarantor under Section 141 is a question of fact arising out of contractual obligations which must be proved by evidence before the Debt Recovery Tribunal; the plea cannot be used to escape the statutory pre-deposit required for an appeal before the Appellate Tribunal.
On this section: Confines the Section 141 defence to the forum of trial, holding that a guarantor whose collateral is being sold under SARFAESI cannot obtain writ relief on an unproved claim that the creditor let the debtor's hypothecated stock disappear.
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Mr G A Mansoor Alam Khan vs State Bank of Mysore
Court's Decision & Legal Precedent
A surety cannot seek deferment of recovery against him until the bank exhausts its remedies against the principal debtor; following Bank of Bihar Ltd. v. Dr. Damodar Prasad, it is the duty of the surety to pay the decretal amount, upon which he is subrogated to the rights of the creditor under Section 140 and may then recover from the principal debtor.
On this section: Sets out the ingredients a guarantor must plead and prove to claim discharge under Section 141, and refuses the plea for want of any security lost or parted with by the bank.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… owed by the defendant No. l as demanded by the defendant No. 2, i.e., the Debit Amount, and upon the corporate guarantee (as enforceable against the plaintiff) having been released/cancelled against the plaintiff, the plaintiff stands subrogated into the shoes of the defendant No. 2, in terms of Section 140 and Section 141 of the Indian Contract Act, 1872 (" 1872 Act "). Subsequent to such payment by the plaintiff to defendant No. 2, the facilities sanctioned to the defendant No. 1 by the defendant No. 2 were cancelled, as also stated in the release letter. No payments under such facilities remain due and outstanding to defendant No. …
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… Irrespective of such contentions, the petitioner has mortgaged his property as a guaranty to the financial advances made by the Bank to the 3rd respondent. 9. The petitioner contends that as per Section 141 of the Indian Contract Act, 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. If the creditor loses or without the consent of the …
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… that the learned Trial Judge has erroneously decreed the suit as only against the first and second defendants as both the second and third defendants stood as guarantors for the loan availed by the first defendant. The learned Judge also erred that the second and third defendants had waived of their rights under Sections 134, 135, 139 and 141 of the Indian Contract Act and they cannot plead discharge under the ground that the plaintiff were negligent in securing the goods hypothecated by the first defendant. Therefore, he would pray that the third defendant is also equally liable to repay the amount due to the plaintiff bank as the first and second …
Questions about Section 141
What have the courts held on Section 141 of the Indian Contract Act?
Sureshkumar M vs Authorized Officer, State Bank of India (01 Dec 2023) is the leading judgment on this section among those set out below: Confines the Section 141 defence to the forum of trial, holding that a guarantor whose collateral is being sold under SARFAESI cannot obtain writ relief on an unproved claim that the creditor let the debtor's hypothecated stock disappear. Another 1 judgment on this section is set out below. They run from 2011 to 2023.
How do I find court cases under Section 141 of the Indian Contract Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Contract Act 141, section 141 Contract Act, section 141 of the Indian Contract Act. People searching for it also type 141 contract act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Sureshkumar M vs Authorized Officer, State Bank of India (01 Dec 2023).
When did Section 141 of the Indian Contract Act come into force?
Section 141 of the Indian Contract Act, cited as Contract Act 141, came into force on 01 Sep 1872, having been enacted on 25 Apr 1872. It is in force as at the date shown on this page.
Other sections of this Act
- 73. Compensation for loss or damage caused by breach of contract1822 words
- 23. What considerations and objects are lawful, and what not596 words
- 74. Compensation for breach of contract where penalty stipulated for577 words
- 28. Agreements in restraint of legal proceeding void512 words
- 25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law423 words
- 16. "Undue influence" defined397 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.