NARAINDAS Vs. NENU

JUDGEMENT

(1.) THE question referred to the Bench is this: Whether the omission of a creditor to sue the principal debtor within the period of limitation prescribed for a suit against the debtor does or does not discharge surety Under Section 134, Contract Act.

(2.) IN a published ruling of this Court Mahomed Shareef v. Ghaitu [1906] 2 N.L.R. 42 the question has been answered in the affirmative. In that case Drake-Brockman, then A.J.C. gave full reasons for his decision and these reasons require careful consideration.

(3.) THE main basis of the decision of Mahomed Shareef v. Chaitu [1906] 2 N.L.R. 42 is that this view is correct and that it follows from the plain words of Section 134, Contract Act, that the surety is discharged. There are, however, very strong reasons for holding that the omission of the creditor to sue the principal debtor within the statutory period has not the legal consequence of his discharge. These reasons are well expressed in Subramania Aiyar v. Gopala Aiyar [1910] 33 Mad. 308, (at p. 310). It is there stated: Does the running of the statutory period of time extinguish the debt as well as bar the remedy? Mr. Mitra in his 'Tagore Lectures on Limitation,' 4th edition, says at p. 14, as to rights in personam, it has been held that a right to receive payment of a debt does subsist even after the remedy by action has been barred. The decisions in Mahesh Lal v. Busunt Kumaree [188l6 Cal. 340 are clear authority in favour of this view. See also the learned discussion of the question by Holloway, J. in Valia Tamburatti v. Vira, Rayan [1877] 1 Mad. 228, There is hardly any room for doubt in the face of the express language of Section 28, Lim. Act, I5 of 1877, which merely extinguishes the right to property when the period is determined for suits for recovery of such property. Whenever personal actions are barred, the rights themselves are not extinguished. That the principal debtor is not discharged by lapse of time may also be gathered from Section 25, Clause 3, and Section 60, Contract Act, 9 of 1872. A barred debt is a good foundation for a written promise to pay signed by the party liable to be charged therewith. It is impossible to regard a debt as discharged by limitation when Section 60, Contract Act, speaks of a barred debt as a lawful debt, actually due and payable to the creditor. Unless a law of limitation operates as well as a law of extinctive prescription, omission to sue cannot discharge the debtor. Limitation which merely bars the remedy is never spoken of in works of jurisprudence as a mode of discharging an obligation. Holland, enumerating the modes of termination of rights in personam, does not refer to limitation as one of them: see Holland's 'Jurisprudence,' 10th edition, pp. 306 to 311. Anson in his work on 'contracts' treating of the discharge' of contracts says: at common law lapse of time does not affect contractual rights. Such rights are of a permanent and indestructible character unless either from the nature of the contract, or from its terms, it be limited in point of duration. But though the rights possess this permanent character, the remedies arising from their violation are, by various statutory provisions, withdrawn after a certain lapse of time. The remedies are barred, though the rights are not extinguished: (see Anson's 'Law of Contract, 11th edition, p. 343).