Section 137 of the Indian Contract Act, 1872: Creditor's Forbearance to Sue Does Not Discharge Surety

Section 137 deals with a creditor's mere delay or forbearance in suing the principal debtor. The rule is that such inaction, by itself, does not release the surety unless the guarantee provides otherwise.

Text and meaning of Section 137

Section 137 - Creditor's 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.

In practical terms, a surety cannot ordinarily claim discharge merely because the creditor waited before filing proceedings against the principal debtor. The statutory rule distinguishes simple inaction from a binding arrangement that changes the creditor's legal position.

What does "forbearance to sue" mean?

Forbearance means refraining from immediately exercising a legal remedy. Under Section 137, mere delay in suing the principal debtor, or mere failure for a period to enforce another available remedy, does not by itself discharge the surety.

Difference between Sections 135 and 137

Section 135 concerns a contract by which the creditor compounds with, promises to give time to, or agrees not to sue the principal debtor, subject to the statutory conditions. Section 137, in contrast, addresses mere forbearance or inactivity. The distinction is therefore between a legally operative agreement and simple delay or non-enforcement.

Illustration under Section 137

B owes C a debt which A has guaranteed. The debt becomes payable, but C does not sue B for one year. A is not discharged from the suretyship merely because C delayed the suit.

Key legal points

  • The provision applies to a contract of guarantee and the relationship among creditor, principal debtor and surety.
  • Mere delay or inaction by the creditor does not automatically release the surety.
  • The terms of the guarantee remain important because Section 137 expressly recognizes a contrary provision in the guarantee.
  • The section should be read with Section 126, Section 128, and Sections 133 to 141 dealing with the liability, discharge and rights of sureties.

Official legal source

For the current official text of the Indian Contract Act, 1872, refer to India Code. The Act is Central Act No. 9 of 1872.

Frequently asked questions

Does delay in suing the principal debtor discharge the surety?

No. Under Section 137, mere forbearance by the creditor to sue the principal debtor or enforce another remedy does not, by itself, discharge the surety, unless the guarantee provides otherwise.

Can the guarantee itself change the position?

Yes. Section 137 expressly makes its rule subject to any provision in the guarantee to the contrary. The actual terms of the guarantee should therefore be examined.

Is an agreement not to sue the same as mere forbearance?

No. A binding agreement involving the principal debtor may fall for consideration under Section 135, whereas Section 137 deals with mere forbearance without such an agreement.