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Must a lender exhaust every remedy against the principal borrower before proceeding against the guarantor?
In this episode, Neha discusses Vineet Pandey v. State of Uttar Pradesh & Ors. and a connected petition before the Allahabad High Court, Lucknow Bench.
The Court reiterated the principle under Section 128 of the Indian Contract Act, 1872 that the liability of a surety is co-extensive with that of the principal debtor unless the contract provides otherwise.
A creditor may therefore proceed against the borrower, the guarantor, or both simultaneously. The guarantor cannot ordinarily dictate the sequence of recovery.
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