A, B, and C act as co-sureties for a loan of 4,00,000/- taken by R from XYZ Bank. There are three bonds specifying different liability limits for…

Co-sureties liable to contribute equally (Section 146 of the Indian Contract Act,1872): Unless otherwise agreed, each surety is liable to contribute equally for discharge of whole debt or part of the debt remains unpaid by debtor. Liability of co-sureties bound in different sums (Section 147): The principle of equal contribution is, however, subject to the maximum limit fixed by a surety to his liability. Co-sureties who are bound in different sums are liable to pay equally as far as the limits of their respective obligations permit. In the instant case, (i) A, B and C act as co-sureties for a loan of 4,00,000 taken by R from XYZ bank. As per specific bonds by each of them, A’s liability is limited to 1,00,000, B’s liability is limited to 2,00,000 and C’s Liability is limited to 4,00,000. R makes the default of 4,00,000. Based on the above provisions, A, B and C were liable for contribution subject to maximum limit fixed as per their specific bonds. Therefore, A is liable to pay - 1,00,000 rupees, and B and C - 1,50,000 rupees each. (ii) If the loan amounts to 6,00,000, A is liable to pay - 1,00,000 rupees, B is liable to pay - 2,00,000 and C is liable to pay - 3,00,000.