livelawpk.com - In a significant ruling, the Lahore High Court, Multan Bench

The Liability of a Surety is Co-Extensive with that of the Judgment Debtor and must be Strictly Construed According to the Surety Bond's Terms --- Lahore High Court

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The Liability of a Surety is Co-Extensive with that of the Judgment Debtor and must be Strictly Construed According to the Surety Bond's Terms --- Lahore High Court

Islamabad 11-07-2024: In a significant ruling, the Lahore High Court, Multan Bench, has set aside an Appellate Court’s decision that extended the liability of a surety beyond the amount specified in the surety bond. The judgment, delivered by Mr. Justice Ahmad Nadeem Arshad, restored the original order of the Executing Court, thereby discharging the petitioner, from any further financial responsibility beyond the Rs.400,000 he had already paid.

The case originated from a suit filed by respondents for the recovery of maintenance allowance and dowry articles. The Trial Court decreed the suit ex-parte on June 29, 2015, due to the non-appearance and non-payment by the respondents. Subsequently, an execution petition was filed, leading to the arrest of respondent No.5. The petitioner, stood as surety for the respondent and submitted a surety bond of Rs.400,000 to secure his release.

Despite the surety bond, the judgment debtor failed to satisfy the decretal amount, leading to the attachment of the petitioner’s property. The petitioner made several attempts to stay the auction of his property by paying partial amounts and committing to further payments. The Appellate Court, however, ruled that the petitioner was liable for the entire remaining decretal amount based on his statements and affidavit.

Mr. Justice Ahmad Nadeem Arshad, in his judgment, emphasized that the liability of a surety is co-extensive with that of the judgment debtor and must be strictly construed according to the surety bond's terms. The petitioner was only liable for the Rs.400,000 specified in the bond, which he had paid. The Appellate Court’s decision to hold the petitioner responsible for the entire decretal amount was found to be erroneous in law.

The Lahore High Court's ruling underscores the importance of adhering to the explicit terms of surety bonds and limits the financial liability of sureties to the amounts they have committed. The Court restored the Executing Court's order, effectively relieving the petitioner of any further payment obligations beyond the Rs.400,000 surety amount.

This judgment reaffirms the principle that a surety's liability cannot exceed the expressly stated amount in the surety bond, providing clarity and protection for individuals who stand as sureties in legal proceedings.