Bank of Bihar v. Damodar Prasad (1969)

Contract II (Special Contracts) · Rights & Discharge of the Surety

Facts.

A guarantor was sued by the bank on the principal debtor’s default. He argued the bank must first exhaust its remedies against the principal debtor (and the securities) before coming to him.

Issue.

Must a creditor proceed against the principal debtor first before enforcing the guarantee against the surety?

Held.

No. The surety’s liability is immediate on default; unless the contract says otherwise, the creditor may proceed straight against the surety without first suing the principal debtor or realising securities.

Why it matters.

It fixes the practical meaning of “co-extensive” liability (s.128) and is the standard authority on the immediacy of a surety’s liability.

📄 Full Contract II (Special Contracts) notes + Question Bank (₹199) — every topic in depth, model answers to all past exam questions, in one printable PDF. Get the bundle · All landmark cases · All Contract II (Special Contracts) topics