INDUSTRIAL FINANCE CORPORATION OF INDIA LIMITED Vs. CONNANORE SPINNING AND WEAVING MILLS LIMITED

JUDGEMENT

(1.) The general rule of equity expounded by Sir Samuel Romilly as counsel and accepted by the Court of Chancery in Craythorne v. Swinburne (1807) 14 Ves 160, that the surety will be entitled to every remedy which the creditor has against the principal debtor, including the enforcement of every security stands statutorily recognised and incorporated in Section 141 of the Indian Contract Act as regards the discharge of a surety from liability, when the creditor parts with or loses the security held by him with, however, an insignificant variation to the effect that the surety is entitled to the securities given to the creditor, both before and after the contract of surety.

(2.) It is on this score thus Section 141 of the Act ought to be noticed at some length more so by reason of the same being the sheet-anchor in support of Respondents' presentation before this Court in the instant appeal to the effect that the surety is entitled to the securities given to the creditor, both before and after the contract of surety and in the event the same stands dissipated then and in that event there is cessation of liability to the extent of such dissipation or extinction. An indeed bold proposition but the same stands accepted by the High Court and hence the appeal before this Court. Before, however, adverting to the issue as above, it would be rather convenient to note certain decisions of this Court as well as of the English Court for further appreciation of the matter.

(3.) In State of Madhya Pradesh v. Kaluram [1967(1) SCR 266 : AIR 1967 SC 1105] this Court pointedly stated that the expression "security" in the Section is not used in any technical sense; it includes all rights which the creditor has against the property on the date of contract. In Kaluram (supra) this Court also lent its approval of Hannen, J., Wulff and Billing v. Jay, (1872 (7) QB 756), wherein the learned Judge stated the law as follows:-