JUDGMENT : In the instant case, various loans were provided to a group of people separately, based on a general contract of indemnity/guarantee/surety. On default of repayment of the amount so advanced, the creditor sued against the indemnifier without the juncture of principal debtors and it has resulted in a decree against the indemnifier/defendant, hence this appeal. 2. The learned counsel appearing for the respondent Adv.Sri.Paul Jacob advanced extensive arguments pertaining to the application of Order I Rule 10 C.P.C. and the expression “necessary party” and relied on the decisions rendered in (i) Mumbai International Airport Private Limited v. Regency Convention Centre and Hotels Private Limited & Ors [(2020) 7 SCC 417], (ii) Kasturi v. Iyyamperumal & Ors [ (2005) 6 SCC 733 ] (iii) State Bank of India v. M/s Indexport Registered & Ors [ (1992) 3 SCC 159 ], (iv) Bank of Bihar Ltd. v. Dr. Damodar Prasad & Anr. [ AIR 1969 SC 297 ] (v) SKS Power Generation (Chattisgarh) Ltd. v. Canara Bank [2021 SCC OnLine Bom 1835 (High Court of Bombay)] (vi) Tom Thomas Olassayil & Anr. v. State Bank of India & Ors. [2016 SCC OnLine Ker 28198 (High Court of Kerala)](vii) Tom Thomas & Anr. v. SBI & Ors [SLP (C) No.179/2017 (order dated 27.03.2017)] (viii) SICOM Ltd. v. Balkrishna & Ors [2005 (2) Mh.L.J.(High Court of Bombay)] and (ix) Subramania Aiyar v. Gopala Aiyar & Ors [1909 SCC OnLine Mad. 80 (High Court of Madras)]. 3. The principal debtors were not impleaded in the suit on the reason that by that time, the amount due became time barred as against the principal debtor. Thereon, based on the contract of indemnity executed by the defendant, a suit was filed for recovery of the said time barred debt against the guarantor claiming that the guarantee is a continuing guarantee and hence there is no question of limitation as against the guarantor/indemnifier. 4. On the nature of disputes involved, the following questions came up for consideration : (i) What actually amounts to “mere forbearance to sue” for the purpose of Section 137 of the Contract Act ? ii) Whether the omission or forbearance to sue against the principal debtor would discharge the guarantor/indemnifier from the liability ? (iii) Whether the surety will stand discharged when the debt became barred by limitation as against the principal debtor ? ii) Whether the omission or forbearance to sue against the principal debtor would discharge the guarantor/indemnifier from the liability ? (iii) Whether the surety will stand discharged when the debt became barred by limitation as against the principal debtor ? Is there any difference in the legal position when there is a continuing guarantee or indemnity as against the surety/guarantor/indemnifier ? (iv) What actually amounts to a “contract of continuing guarantee” or “contract of continuing indemnity” What would be the legal position as to the continuing guarantee or indemnity given by the surety/guarantor when there is forbearance to sue against the principal debtor ? (v) What would be the legal position when the eventual remedy was frustrated or impaired by the act of creditor or the principal debtor ? Whether such impairment or frustration would relieve and discharge the guarantor/indemnifier from the liability ? 5. The expressions “surety”, “principal debtor”, “creditor” and “contract of guarantee” are defined under Section 126 of the Contract Act (hereinafter referred to as 'the Act'). A contract of guarantee is a contract to perform the promise or discharge a liability of a third person in case of his default. The person, who gives the guarantee is called the “surety”; the person in respect of whose default the guarantee is given is called the “principal debtor”; and the person to whom the guarantee is given is called “creditor”. There are only three entities viz., “surety”, “principal debtor” and “creditor” in a “contract of guarantee”. A contract of indemnity is defined under Section 124 of the Act, but the expression “continuing contract of indemnity” is not recognized or explained or defined anywhere in the Act. Instead, the expression “continuing guarantee” is defined under Section 129 of the Act, which stands for a guarantee which extend to series of transactions. The series of transactions so as to constitute a continuing guarantee by its nature stands for in relation to a particular entity, a principal debtor and does not include several entities in relation to different transactions and it is clear from the language used in Section 129 of the Act and the illustrations (a) to (c) attached to it. In other words, in the case of a continuing guarantee, there can only be three set of people, the principal debtor, surety and creditor. In other words, in the case of a continuing guarantee, there can only be three set of people, the principal debtor, surety and creditor. It is not recognized anywhere in the Act, a continuing guarantee for several entities (several principal debtors), but it is permissible to constitute several principal debtors to a single unit with the common identical purpose, to which, a contract of continuing guarantee/surety can be given. Section 125 of the Act says that a contract by which one party promises to save the other from the loss caused to him by the conduct of the promisor himself or by the conduct of any other person is called a “contract of indemnity”. In its substance and nature, a contract of indemnity is also a contract of guarantee as defined under Section 126 of the Act. In fact, a contract of indemnity is a species under the contract of guarantee. The respective liability that can be fastened based either on a “contract of indemnity” or “contract of guarantee” will stand governed by the other provisions, including Section 134 of the Act, which is extracted below for reference: “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 act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.” 6. Section 134 of the Act says that the surety will stand discharged when a contract was entered into between the creditor and the principal debtor by which the principal debtor is released or by any act or omission of the creditor, the legal consequences of which is the discharge of the principal debtor. The question whether mere forbearance to sue against the principal debtor would amount to discharge of the principal debtor or it will have the effect of or legal consequence of discharge of the principal debtor has to be addressed in relation to provisions governing the area viz., 135 and 137 of the Act. Section 135 says that when there is an agreement not to sue against the principal debtor, it will discharge the surety unless the surety assents to such contract. Section 135 says that when there is an agreement not to sue against the principal debtor, it will discharge the surety unless the surety assents to such contract. In contrast to Section 135, Section 137 says that mere forbearance on the part of creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of provision in the guarantee to the contrary, discharge the surety. Necessarily, there should be an idea as to what actually amounts to “mere forbearance to sue” from that of an act of principal debtor and creditor not to sue. The main criteria and the test that can be applied is to find out whether any “forbearance to sue” will have any consequences affecting the contractual obligations arrived at by the parties. If it is affirmative, it cannot be brought under the purview of “mere forbearance to sue” as incorporated under Section 137 of the Act. The expression “mere forbearance to sue” as incorporated under Section 137 of the Act shall not be the one or the consequences arising from a contractual obligation. The question whether any particular act on the part of the creditor constitutes “mere forbearance to sue” or constitutes an act by which the creditor discharges the principal debtor or having the effect and legal consequences of which the principal debtor will stand discharged, has to be ascertained and will stand depend on the nature of “forbearance” and the attending circumstances in relation to the contractual obligations or any leverage granted by the creditor. Any forbearance or leverage granted by the creditor to the principal debtor, if it is for a temporary period or by way of temporary adjustment granting some more time than what is agreed into to discharge the liability without affecting any contractual obligation or period of limitation, such grant would fall within the ambit of “mere forbearance to sue” and there cannot be any discharge of the surety or the indemnifier. The test that can be applied so as to ascertain whether it is a “mere forbearance to sue” or constitute an act of discharge or having the legal consequences, which would discharge the principal debtor, is resting on the question whether such leverage or grant or act of the creditor with the principal debtor would relieve and discharge the latter either in part or in whole the liability covered. In other words, the leverage or forbearance to sue if it is for a limited period within the permissible period of limitation which would not affect any of the contractual obligation or cause of action for a suit without altering either partially or wholly the liability of the principal debtor, it can safely be brought under the purview of “mere forbearance to sue”, wherein the surety or the guarantor will not stand discharged. Granting a leverage to the principal debtor by the creditor to pay off or discharge the liability within the period of limitation would fall within the safe realm of “mere forbearance to sue”. In other words, grant of some more time to perform the contract or discharge the liability by the creditor to the principal debtor to a period not later than the period of limitation would not discharge the surety or the guarantor as it will come under the purview of “mere forbearance to sue”. But, if it is for a longer period than the period of limitation available, the surety will stand discharged and omission to sue within the period of limitation cannot be brought under the purview of “mere forbearance to sue”. 7. In the instant case, admittedly, the amount due from the principal debtor became time barred and as such, the principal debtor was not sued. But under the guise of continuing guarantee, a suit was filed against the surety/guarantor/indemnifier, which has resulted in a decree. It cannot be brought under the purview of “mere forbearance to sue”. Hence, the surety/guarantor/indemnifier will stand discharged and the decree granted by the trial court cannot be sustained. 8. Further, in the matter of limitation, both the surety and the principal debtor will stand governed by the very same provisions. Once the debt became unenforceable against the principal debtor due to bar of limitation, the same legal position would apply as against the surety/guarantor and there cannot be a separate law or legal position as against the surety/guarantor for getting extension of period of limitation in contrast with the limitation available to the principal debtor. Their liability is co-extensive and will stand governed by the very same period of limitation unless the surety makes an acknowledgment of liability in that behalf individually, which would fall under the purview of either Section 18, 19 or 20 of the Limitation Act. Their liability is co-extensive and will stand governed by the very same period of limitation unless the surety makes an acknowledgment of liability in that behalf individually, which would fall under the purview of either Section 18, 19 or 20 of the Limitation Act. The contract of indemnity is conditional and would operate on the happening of a specific event, in which the guarantor would stand liable to indemnify the person, who had suffered the loss or damages, wherein the period of limitation would start from the date of happening of such incident. But, when it comes to a loan transaction, though the agreement is styled as a contract of indemnity, it would fall within the ambit of a contract of guarantee or surety. There may not be change in the legal position as to a continuing guarantee in a loan transaction. Necessarily, the very same principle of contract of guarantee would apply to a contract of indemnity in a loan transaction. 9. In the instant case, no suit was instituted against the principal debtors on the reason that the recovery of respective amounts due has become time barred as against the principal debtors. Necessarily, the recovery of the amount as against the surety who is having co extensive liability with the principal debtor will stand barred by limitation. Hence, the suit instituted against the surety/guarantor would stand hit by the bar of limitation. A continuing guarantee executed either at the time of the transaction or prior to it cannot be brought under the purview of an acknowledgment in writing for the purpose of saving limitation, though the continuing guarantee may have its own legal impact in the alleged transaction. As discussed above, a continuing guarantee would be a guarantee pertaining to series of transactions i.e. more than one transaction either to a single entity, a principal debtor or to a unit of persons (several principal debtors having the unique character), to which, there may be extension of period of limitation when the transactions are in series, one after another. But, when it has become time barred as against the principal debtor, as discussed earlier, the co-extensive liability would stand barred as against the guarantor also. There cannot be any separate existence or liability that can be fastened against the surety even going by the continuing guarantee. But, when it has become time barred as against the principal debtor, as discussed earlier, the co-extensive liability would stand barred as against the guarantor also. There cannot be any separate existence or liability that can be fastened against the surety even going by the continuing guarantee. The concept of continuing guarantee as discernible from Section 129 of the Contract Act recognizes only guarantee given to series of transaction between the same creditor and principal debtor. There cannot be a continuing guarantee to several persons/several principal debtors, unless the principal debtors themselves constitute a class of unique nature pertaining to its purpose or the goal to be achieved. But, in that case also, the individual liability of the principal debtor would stand co-extensive with the surety. Several transactions done by the principal debtor can be secured by a single indemnity or guarantee by executing a single document of continuing guarantee/indemnity instead of executing several independent contract of guarantee/indemnity. 10. Yet another reason is also available to non-suit the plaintiff that it is not permissible to impair or destruct the eventual remedy available to the surety. Section 139 of the Act is extracted below for reference: “139. Discharge of surety by creditor's act or omission impairing surety's eventual remedy – If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged.” Unless the principal debtor is in the party array of the suit, or the decree that may be passed in that suit, it will not stand binding on him. Consequently, the eventual remedy available to the surety from the principal debtor to recover the decree amount on its payment to the creditor would stand frustrated, destructed and impaired. Necessarily, the eventual remedy available to the surety will stand destructed and on that count, the surety will stand discharged by the said act of creditor i.e. the non impleadment of principal debtor in the suit. The civil suit as against the surety/guarantor hence cannot be sustained. 11. Necessarily, the eventual remedy available to the surety will stand destructed and on that count, the surety will stand discharged by the said act of creditor i.e. the non impleadment of principal debtor in the suit. The civil suit as against the surety/guarantor hence cannot be sustained. 11. The decisions rendered by the Apex Court in Mumbai International Airport Private Limited v. Regency Convention Centre and Hotels Private Limited & Ors [(2020) 7 SCC 417], Kasturi v. Iyyamperumal & Ors [ (2005) 6 SCC 733 ], State Bank of India v. M/s Indexport Registered & Ors [ (1992) 3 SCC 159 ], Bank of Bihar Ltd. v. Dr. Damodar Prasad & Anr. [ AIR 1969 SC 297 ] are pertaining to the stage in which the decree is sought to be executed. It is settled law that the right and liabilities of parties are settled, adjudicated and consolidated in the form of a decree and when there is joint and several liability, the decree can be executed at the option of the decree holder as against one among the judgment debtors or against all, wherein the principle of easy execution governs the area. The said principle cannot be invoked at the stage of trial of the suit or in maintaining a suit validly. The decision rendered by the High Court of Bombay is also standing on a different pedestal as to the application of Order I Rule 10 CPC. It is settled law that the dispute or challenge pertaining to the non-joinder of necessary party should be raised and agitated at the earliest opportunity at the court of first instance. Order I Rule 10 CPC is resting on the principle that without impleading a particular person, there cannot be a fair disposal or adjudication of the dispute involved in the matter. Even going by the principle embodied under Order I Rule 10 C.P.C., it can be seen that the principal debtor is a necessary party in the suit as the principal debtor alone will have the knowledge and right of defence about the original transaction and the payment made or the default committed and all other attending circumstances. It may not be known to the person, who had executed guarantee or indemnity. Further, no effective decree can be passed by impairing or destructing the defence available. It may not be known to the person, who had executed guarantee or indemnity. Further, no effective decree can be passed by impairing or destructing the defence available. Denial of such right of defence available may adversely affect the person who holds co extensive liability. The decree and judgment rendered by the trial court hence cannot be sustained and will stand set aside and the suit will stand dismissed. Considering the nature of dispute and having regard to the submission made by the learned counsel for the respondent, the parties are directed to suffer their respective costs.