Under Section 138 of the Indian Contract Act, what is the effect of a creditor releasing one co-surety?
1
It discharges all other co-sureties from their obligations.
2
It does not discharge the other co-sureties; however, the released surety is freed from liabilities towards the creditor but remains responsible to the other co-sureties.
3
It increases the liability of the remaining co-sureties.
4
It automatically transfers the released surety's obligations to the remaining co-sureties.