Indian Contract Act, 1872 · Chapter VI: Of the Consequences of Breach of Contract · Of indemnity and guarantee
Section 140: Rights of surety on payment or performance
In plain words
Once a guaranteed debt is due or the principal debtor has defaulted, a surety who pays or performs everything they are liable for gets all the rights the creditor had against the principal debtor.
A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.
Official text
Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor.
Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.
Supreme Court judgments citing the section 140
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Brs Ventures Investments Ltd. v. Srei Infrastructure Finance Ltd. & Anr.
Whether the payment of Rs.38.87 crores to the financial creditor under the resolution plan of the corporate guarantor will extinguish the liability of the principal borrower/corporate debtor to pay the entire amount…
- Lalit Kumar Jain v. Union of India & Ors.
- United Bank of India v. Satyawati Tondon and Others
- Economic Transport Organization v. M/S. Charan Spinning Mills (P) Ltd. and Anr
- Industrial Finance Corporation of India Ltd. v. The Cannanore Spinning and Weaving Mills Ltd. and Anr.
- State Bank of India v. Indexport Registered and Ors.