Q: B owes to C, a debt guaranteed by A. The debt becomes payable. C does not sue B for a year after the debt has become payable. B becomes insolvent. Thereafter C sues A for the debt. A pleads C's forbearance to sue B for a year as a defence. Is this a good defence?

Ans: No, A can not plead C's performance to sue B for a year as a defence to exonerate his liability. 

As per Sec. 128 of the Indian Contract Act, 1872, the liability of the Surety is co-extensive with that of the Principal Debtor unless it is otherwise provided for in the Contract.

As decided under Bank of Bihar Vs. Damodar

Prasad, AIR 1969 SC 297, the Surety has no right to dictate terms to the Creditor and ask him to pursue remedies first against the Principal Debtor.

A discharge of the Principal Debtor by the operation of law does not discharge the Surety. Further, the law states that even if the Creditor does not sue the Principal Debtor within the period of limitation, if the limitation period is available against the Surety, then he can independently proceed against the Surety.

Thus, in the above case, even though C does not sue B for recovery of the debt for a period of one year after its becoming due, he could very well proceed against the Surety, A, which he has done. B having been declared an insolvent, it is now upon the Surety A, to repay the debt guaranteed by him. He cannot plead C's forbearance to sue B for recovery of his debt.