Chapter VIII - Of Indemnity and Guarantee
Section 138
Section 138: Release of one co-surety
Releasing one co-surety does not, by itself, release the others or erase the released surety’s responsibility to them.
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Need advice on Section 138?
This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Where there are co-sureties, a release by the creditor of one of them does not discharge the others; neither does it free the surety so released from his responsibility to the other sureties.
Rule and business relevance
The statute separates a creditor’s release from the co-sureties’ internal relationship. Contribution questions therefore cannot be decided solely by reading the creditor’s release of one person.
Limits and related provisions
Check the scope of the actual arrangement and sections 146–147 for contribution. This rule does not mean every co-surety always owes an identical uncapped amount.
Hypothetical business example
Hypothetical example: A creditor releases one of three co-sureties. The remaining two do not become released merely for that reason, and the released person’s internal responsibilities require separate assessment.
Practical decision flow
Read the creditor’s release and identify the person released.
Keep the claims against other co-sureties separate.
Review internal contribution terms and the applicable liability limits.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Read the creditor’s release and identify the person released.
- Keep the claims against other co-sureties separate.
- Review internal contribution terms and the applicable liability limits.
Avoid
- Check the scope of the actual arrangement and sections 146–147 for contribution. This rule does not mean every co-surety always owes an identical uncapped amount.
Glossary
- Co-surety
- A person sharing surety responsibility for the same debt or duty.
- Contribution
- The allocation of responsibility between co-sureties.
Frequently asked questions
Are all co-sureties automatically released together?
No. Section 138 expressly says otherwise.
Is the released person necessarily free from contribution?
No. The section preserves responsibility to the other sureties.
Where are contribution shares addressed?
Sections 146 and 147 address equal contribution and differing limits.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026