Rights of surety may be classified under three heads: Rights against the creditor Rights against the principal

debtor Rights against co-sureties Rights against the creditor In case of fidelity guarantee, the surety can direct a creditor to dismiss the employee whose honesty he/she has guaranteed, in the event of proven dishonesty of the employee. The creditors failure to do so will exonerate the surety from his/her liability. Rights against the principal debtor Right of subrogation Section 140 provides that where a surety has paid the guaranteed debt on the due date or has performed the guaranteed duty on the default of the principal debtor, he/she is invested with all rights that the creditor has against the debtor. In other words, the surety is subrogated to all rights that the creditor had against the principal debtor.