( 1 ) THE question which has been referred to this Bench is

"whether a surety is discharged when the creditor allows the execution of his decree against the principal debtor to be barred by limitation. "

( 2 ) THIS Court has consistently taken the view that a surety is discharged when a creditor allows his remedy against the principal debtor to become baried under the law of limitation, but a different view has been taken by the other High Courts in India and by the former Chief Court of oudh (see -- hajarimal v. Krishnarav, 5 Bom 647 (A); --bireshwar Chatterji v. Saidpur commercial Bank Ltd. , 41 Cal WN 1361 (B); -- subramania Aiyar v. Gopala Aiyar, 33 Mad 308 (C); -- nur Din v. Allah Ditta, AIR 1932 Lah 419 (D); -- jagdambika Pratap Narain Singh v. Tir Singh Bahadur Singh 1941 Oudh WN 473 (E)) and in -- mahant Singh v. U Ba Yi, AIR 1939 P. C. 110 (F) the Privy Council expressed its preference for the reasoning of the majority.

( 3 ) IN England a failure to sue the principal debtor until recovery is barred by the Statute of limitation does not operate as a discharge of the surety. In -- carter v. White, (1885) 25 Ch D 666 (G) Lindlay, L. J. , said,

"is it the law that a creditor who neglects to v sue his debtor till the Statute has run will thereby discharge his surety? There is no decision to that effect. On the contrary, the true principle is that mere omission to sue does not discharge the surety, because the surety can himself set the law in operation against the debtor. "

We think that this also is the law in India.

( 4 ) THE imporant sections of the Indian Contract Act are Sections 134 and 137. They read as follows:

"134. discharge of surety by release or discharge of principal debtor. The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any aet or omission of the creditor, the legal consequence of which is the discharge of | the principal debtor. "

"137. creditors forbearance to sue does not discharge surety -- Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety. "

( 5 ) THE leading case of this Court is -- radha v. kinlock, 11 All 310 (H ). In this case it was held by Edge, C. J. , and Tyrell, J. , that under Section 134, Contract Act the omission by the creditor to sue the principal debtor within the period allowed by the law of limitation produced the legal consequence of the discharge of the principal debtor, and that Section 137 applied only to a forbearance during the time a creditor can be said to be forbearing to exercise a right which still is in existence. That view was reaffirmed or followed in -- ranjit Singh v. Nanhat, 24 All 504 (I) and -- salig Ram v. Lachman Das, AIR 1928 All 46 (J ).

( 6 ) WITH great respect to the learned Judges who decided these cases, we are of opinion that the court erred in the meaning it has given to both Sections 134 and 137 of the Act. We think it now to be well established that the effect of the expiry of the period of limitation (except in the case of suits to establish a right to immoveable property) is to bar the remedy without extinguishing the right, and in our opinion the consequence is that the omission to sue a debtor within the period of limitation will not result in the debtors discharge. Section 25 (3) of the Act makes it clear that a barred debt is a good foundation for a written promise to pay signed by the persons to be charged therewith, or by his agent; and Section 60 speaks or a barred debt as a lawful debt actually due and payable to the creditor. As pointed out in 33 Mad 308 at p. 311 (C) unless a law of limitation operates as well as a law of extinctive prescription, omission to sue cannot discharge the debtor.

( 7 ) NOR do we think the Court was justified in placing a restriction upon the provisions of Section