Section 146 of ICA : Section 146: Co-Sureties Liable To Contribute Equally

Explanation using Example

Imagine that three friends, Rahul, Priya, and Nikhil, decide to act as joint sureties for a loan of ₹90,000 that their mutual friend, Arjun, has taken from a bank. They do not make any special agreement among themselves about the distribution of liability.

Arjun fails to repay the loan, and the bank approaches Rahul, Priya, and Nikhil for the recovery of the debt. According to Section 146 of the Indian Contract Act, 1872, in the absence of any contract stating otherwise, Rahul, Priya, and Nikhil are each liable to pay an equal share of the debt to the bank. This means each of them would be responsible for paying ₹30,000 to settle the debt.