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Binita has taken a loan of ₹2,00,000 (rupees two lakh) from Chitra and Ananya is surety for the debt.…

Ananya can recover both the Rs 2,00,000 principal debt and the costs she paid. Section 145 implies a promise by Binita, the principal debtor, to indemnify the surety for…

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Binita has taken a loan of ₹2,00,000 (rupees two lakh) from Chitra and Ananya is surety for the debt. Chitra demands payment from Ananya and on her refusal sues her for the amount. Ananya defends the suit, having reasonable grounds for doing so, but she is compelled to pay the amount of debt with costs. Ananya can recover from Binita:

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Correct answer C

Ananya can recover both the Rs 2,00,000 principal debt and the costs she paid. Section 145 implies a promise by Binita, the principal debtor, to indemnify the surety for sums rightfully paid under the guarantee. Because Ananya had reasonable grounds to defend the suit, the statutory illustration includes those costs in the recovery.

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