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Section 144: Guarantee on contract that creditor shall not act on it until co-surety joins

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 143 All 266 Sections of Indian Contract Act Section 145

Legal Commentary & Landmark Judgments: Section 144

Section 144 of the Indian Contract Act, 1872 renders a guarantee legally invalid and unenforceable if it was executed upon the condition that the creditor would not act upon it until another named co-surety joined in the contract, and that prospective co-surety fails or refuses to execute the guarantee. This provision protects a surety whose agreement to assume joint liability was predicated upon sharing the risk and receiving statutory contribution from a specific co-guarantor.

  • Express or Implied Condition Precedent: The guarantee must be executed upon an understanding or contract condition that a named co-surety will join as a co-obligor.
  • Failure of Co-Surety to Join: If the designated co-surety dies, refuses to sign, or is never called upon to execute the guarantee deed, the condition precedent fails.
  • Absolute Invalidity: The failure of the co-surety to join does not merely reduce the signing surety's liability pro-tanto; it invalidates the guarantee altogether, leaving the creditor with no remedy against the signatory.
Key Landmark Precedents:
  • National Provincial Bank of England v. Brackenbury (1906) 22 TLR 797: Landmark common law authority codified in Section 144, where a guarantee intended to be joint and several was executed by three out of four named guarantors, and the fourth died without signing. Held that the three signatories were not bound, as the intended joint suretyship was never completed.
  • Patel Bhaichand v. Purushottamdas AIR 1935 Bom 389: The Bombay High Court held that where a guarantor signs a surety bond on the explicit faith and condition that another person will join as co-surety, the failure of that other person to join renders the bond invalid and unenforceable under Section 144.
Courtroom Practice & Strategic Litigation Guidance:

Check the execution page and recitals of multi-party bank guarantee deeds. If the sanction letter or preamble named multiple promoters as joint guarantors, but one promoter never signed the deed or was omitted by bank oversight, invoke Section 144 to establish that the condition precedent of joint suretyship failed, rendering the entire instrument void.

Section 143 All 266 Sections of Indian Contract Act Section 145