Question

After discharging the debt, the surety ________.

• A. Steps into the shoes of the creditor
• B. Is subrogated to all the rights of the creditor against the principal debtor
• C. (A) or (B)
• D. None of the above

Answer 1

Answer: (C)

(A) or (B)

Right of Subrogation: (Sec 140) – Right of a surety against principal debtor: Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all he is liable for, is invested with all the rights which the creditor had against the principal debtor. A surety is thus, upon the payment of the guaranteed sum or on performance of a guaranteed duty, subrogated or invested with all the rights which the creditor had against the principal debtor.

This arises on payment of the whole sum due or performance of the entire duty. Surety steps into the shoes of the creditor. Surety may now sue the principal debtor in as much as the creditor had the right to sue the principal debtor.