Chapter VIII - Of Indemnity and Guarantee
Section 146
Section 146: Equal contribution between co-sureties
Co-sureties for the same debt or duty normally share the unpaid burden equally between themselves, unless they have agreed otherwise.
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Need advice on Section 146?
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 two or more persons are co-sureties for the same debt or duty, either jointly or severally, and whether under the same or different contracts, and whether with or without the knowledge of each other, the co-sureties, in the absence of any contract to the contrary, are liable, as between themselves, to pay each an equal share of the whole debt, or of that part of it which remains unpaid by the principal debtor.
Illustrations
(a)A, B and C are sureties to D for the sum of 3,000 rupees lent to E. E makes default in payment. A, B and C are liable, as between themselves, to pay 1,000 rupees each.
(b)A, B and C are sureties to D for the sum of 1,000 rupees lent to E, and there is a contract between A, B and C that A is to be responsible to the extent of one-quarter, B to the extent of one- quarter, and C to the extent of one-half. E makes default in payment. As between the sureties, A is liable to pay 250 rupees, B 250 rupees, and C 500 rupees.
Rule and business relevance
The default applies whether the undertakings are joint or several, under the same or different contracts, and with or without knowledge of each other. It concerns their internal contribution.
Limits and related provisions
Distinguish internal shares from the creditor’s enforcement rights and from differing caps under section 147. The relevant amount is the debt or part left unpaid by the principal debtor.
Hypothetical business example
Hypothetical example: Three co-sureties cover the same unpaid debt without a different contribution agreement. The default equal-sharing rule applies between them, subject to their obligations and applicable limits.
Practical decision flow
Confirm the guarantees cover the same debt or duty.
Calculate the amount unpaid by the principal debtor.
Check any different contribution agreement and each surety’s liability limit.
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
- Confirm the guarantees cover the same debt or duty.
- Calculate the amount unpaid by the principal debtor.
- Check any different contribution agreement and each surety’s liability limit.
Avoid
- Distinguish internal shares from the creditor’s enforcement rights and from differing caps under section 147. The relevant amount is the debt or part left unpaid by the principal debtor.
Glossary
- Contribution share
- The part of the common burden allocated internally to a co-surety.
- Contract to the contrary
- An agreement replacing the equal-sharing default.
Frequently asked questions
Must all sureties have signed one document?
No. The section expressly includes different contracts.
Must they have known about each other?
No. The rule includes guarantees given without that knowledge.
Can they agree unequal shares?
Yes. The default applies in the absence of a contract to the contrary.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026