When the repayment of the debt is guaranteed by more than one person to the principal debtor, it is referred to as Co-sureties. According to Section 138, where there are co-sureties, the release by the creditor of one of them does not discharge the others, nor does it free the surety so released from his responsibility to the other sureties. Thus in other words, it can be said that when the principal debtor has defaulted in Mailing his obligation in the case where the payment of the debt or the performance of duty is guaranteed by the co-sureties, then the creditor may compel only one or more of the co-sureties for the performance of the whole contract. In this case.the co-surety sureties performing the contract become entitled to claim contribution from the remaining co-sureties.
Section 146 of the Indian Contract Act states that, in the absence of any contract to the contrary, the co-sureties are liable to contribute equally. This clearly states that unless otherwise expressed in an agreement by all the sureties they need to contribute equally for the payment of the debt.
For example: A, B, C and D are co-sureties for a debt of Rs. 2,000 Ient by Z to RR. defaults in repaying the loan. A, B, C and D are thus liable to contribute Rs. 500 each. Section 147 of the Indian Contracts Act states that, where the co-sureties have agreed to guarantee different sums, they have to contribute equally subject to the maximum of the amount guaranteed by each one. It is immaterial whether sureties are liable jointly or severally, under one contract or under independent contracts and with or without the knowledge, of each other.