Continuing guarantee liability runs from breach, not the original loan date, and suit against guarantors alone was maintainable.

A civil suit on continuing guarantees was maintainable against the guarantors alone because the claim was based on the contractual guarantee, not on any independent statutory liability of the principal debtor or the Central Government. The absence of the principal debtor was not a fatal non-joinder, and the action was not premature. The court also held that limitation for a continuing guarantee runs from breach of the guarantee, when the guarantor refuses performance, not from the original loan or transaction. As the guarantees were invoked within three years before suit, the claim was within time and the decree against the guarantors was sustained.

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Issues: (i) Whether the suit against the guarantors alone was maintainable and whether the absence of the principal debtor or the Central Government rendered the suit premature or bad for non-joinder. (ii) Whether the suit on the continuing guarantees was barred by limitation.

Issue (i): Whether the suit against the guarantors alone was maintainable and whether the absence of the principal debtor or the Central Government rendered the suit premature or bad for non-joinder.

Analysis: The liability sued upon was founded on the deeds of guarantee executed by the guarantors and not on the statutory liability arising under the nationalisation enactment. The principal debtor had not been impleaded, but the contractual undertaking of the guarantors created an independent basis for recovery. The statutory liability of the Central Government under the nationalisation law was not the foundation of the suit, and the earlier proceedings before the Commissioner of Payments did not make the civil action premature.

Conclusion: The suit against the guarantors alone was maintainable, the Central Government was not a necessary party, and the suit was not premature.

Issue (ii): Whether the suit on the continuing guarantees was barred by limitation.

Analysis: The guarantees were expressly continuing guarantees covering a series of transactions and remaining in force until the liabilities were fully discharged. In such a case, limitation does not begin to run merely from the original advance or the date of creation of the debt. It begins when the guarantee is broken and the guarantor refuses to perform the obligation. The accounts remained live, the guarantees were invoked in 1979 and 1982, and the suit was filed within three years of such invocation. The claim therefore fell within the period prescribed for enforcement of the contractual obligation under Article 55 of the Limitation Act, 1963.

Conclusion: The suit was not barred by limitation.

Final Conclusion: The decree against the guarantors was sustained and the dismissal of the suit by the trial court was reversed.

Ratio Decidendi: A continuing guarantee remains enforceable until the guaranteed liability is discharged or the guarantor refuses performance, and limitation for enforcing such guarantee runs from breach of the guarantee, not from the date of the underlying loan or transaction.

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