Under Section 128 of the Indian Contract Act, 1872, the liability of the surety is co-extensive with that of the principal debtor unless it is otherwise provided in the contract. This means that the bank can proceed against the guarantor directly without first exhausting remedies against the borrower. The guarantor is liable to the same extent as the borrower.
Foreclosure (Section 67 of the Transfer of Property Act ): The act contemplates six kinds of mortgage, namely simple mortgage , mortgage by conditional sale , usufructuary mortgage, English mortgage , mortgage by deposit of title deeds and anomalous mortgage. Simple mortgage: The mortgagee in such scenario does not get possession of the mortgaged property and therefore cannot exercise right of foreclosure. The remedy is either to proceed against the mortgagor personally or for sale of the mortgaged property. Mortgage by conditional sale: Mortgage by conditional sale provides in case of default of payment, mortgage will become a sale. The remedy in such a situation is not foreclosure but debarring mortgagor’s right of redemption. Usufructuary mortgage: Under this mortgage, mortgagee retains possession until repayment of money and receives rents and profits or part thereof in lieu of interest, or in payment of mortgage money or partly in lieu of interest and ...
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