Surety :

Whenever surety bond is executed it is to be ensured that both the obligor and surety sign the bond. Field officers will ensure that surety is financially sound and have been verified from time to time. Whenever bank guarantee is accepted for security, care should be taken to get the guarantee renewed before expiry from time to time, so as to enable the enforcement of liability as and when such need arises. Execution of B17 Bonds is optional and if the assessee does not wish to avail of this facility, he may execute individual bonds prescribed for different purposes.

A partner or a director of a limited company can also stand as surety in his individual capacity to guarantee the performances of the firm or a company as the case may be. Since, in law, a limited company is a distinct legal entity and the member of the company including directors are distinct from the company, there should be no objection to allow the directors of the limited company to stand as surety for the companies provided they fulfill all the other conditions applicable to sureties. (F. No. 8/10/16/CX II dt 5/8/1960)