Chapter VIII - Of Indemnity and Guarantee
Section 147
Section 147: Co-sureties with different liability limits
Co-sureties with different liability limits contribute equally so far as their respective limits permit.
On this page
Need advice on Section 147?
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
Co-sureties who are bound in different sums are liable to pay equally as far as the limits of their respective obligations permit.
Illustrations
(a)A, B and C, as sureties for D, enter into three several bonds, each in a different penalty, namely, A in the penalty of 10,000 rupees, B in that of 20,000 rupees, C in that of 40,000 rupees, conditioned for D’s duly accounting to E. D makes default to the extent of 30,000 rupees. A, B and C are each liable to pay 10,000 rupees.
(b)A, B and C, as sureties for D, enter into three several bonds, each in a different penalty, namely, A in the penalty of 10,000 rupees, B in that of 20,000 rupees, C in that of 40,000 rupees, conditioned for D’s duly accounting to E. D makes default to the extent of 40,000 rupees. A is liable to pay 10,000 rupees, and B and C 15,000 rupees each.
(c)A, B and C, as sureties for D, enter into three several bonds, each in a different penalty, namely, A in the penalty of 10,000 rupees, B in that of 20,000 rupees, C in that of 40,000 rupees, conditioned for D’s duly accounting to E. D makes default to the extent of 70,000 rupees. A, B and C have to pay each the full penalty of his bond.
Rule and business relevance
Equal contribution does not mean a surety must exceed the amount that surety undertook. Once a lower limit is reached, the allocation must respect the remaining sureties’ limits too.
Limits and related provisions
Do not simply divide every debt by the number of sureties or make contributions proportionate to the caps. Apply the statutory method and relevant agreements.
Hypothetical business example
Hypothetical example: With limits of 10,000, 20,000 and 40,000 and a covered default of 40,000, the statutory illustration allocates 10,000, 15,000 and 15,000 between the three sureties.
Practical decision flow
List each surety’s contractual maximum.
Determine the covered amount to be allocated between them.
Allocate equally as far as each limit permits and verify the total.
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
- List each surety’s contractual maximum.
- Determine the covered amount to be allocated between them.
- Allocate equally as far as each limit permits and verify the total.
Avoid
- Do not simply divide every debt by the number of sureties or make contributions proportionate to the caps. Apply the statutory method and relevant agreements.
Glossary
- Different sums
- Different maximum obligations undertaken by co-sureties.
- Equalisation within limits
- Equal contribution constrained by each surety’s liability ceiling.
Frequently asked questions
Is the allocation always proportionate to guarantee caps?
No. The statutory rule is equal payment as far as the respective limits permit.
Can a surety be allocated beyond its limit under this rule?
No. The limit constrains the contribution.
What happens in the 40,000 statutory example?
The sureties with caps of 10,000, 20,000 and 40,000 contribute 10,000, 15,000 and 15,000 respectively.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026