This appeal is directed against the judgment and decree dated 23.8.1976 passed by the Subordinate Judge II, Manipur, in Original (Money) Suit No. 114/73/10/74/13/74, dismissing the suit against the first defendant.

2. A brief narration of the facts leading to the present appeal as follows ; The appellant (plaintiff) is one of the Scheduled Banks engaged in banking business in different parts of the country. It has a Branch at Imphal, Manipur, The first defendant (second respondent) approached the appellant for a loan under the "Small Business Finance Scheme" for improvement of his business. The appellant Bank agreed to accommodate the said second respondent to the extent of Rs. 25,000/-as per the terms and conditions of the Bank.

3. On 20.3.70, the second respondent executed an agreement for cash credit covenanting that he would open a Cash Credit Account with the appellant (plaintiff) and be would draw money by cheques through such Cash Credit Account and would not require advance more than Rs. 25,000/-. He also agreed to repay the loan with interest at the rate mentioned in the agreement. The rate of interest prevalent at the time of execution of the agreement was 12% per annum.

4. The second respondent brought the first respondent on the same day to stand as a guarantor for his due repayment. He also executed a Pronote in favour of the first respondent for a sum of Rs. 25.000/- promising to pay the said amount on demand with interest. The Pronote, however does not learn any date. The appellant (plaintiff) further stated that the first respondent, in turn endorsed the said pronote in favour of the appellant. The first respondent also executed an agreement on the same day standing guarantor, of the second respondent and promised inter-alia, that she would be jointly and severally liable for the outstanding amount due to the appellant from the second respondent. She also promised that the appellant Bank at its discretion may realise the full dues from the guarantor. In pursuance of the agreement, a Cash Credit Account was opened in the name of the second respondent and he received the money by cheques. The appellant Bank used to send statement of accounts to the second respondent from time to time.

5. However, the second respondent failed to repay the loan and a sum of Rs. 28,704.97 stood as debit balance as on 30.1.73. This amount included principal, interest, insurance and other incidental charges. As the second respondent failed to repay the amount, the appellant Bank brought a suit (No. 114/73/10/74/13/74) against the respondents. The amount was actually received by the second respondent, but the suit was brought against both the respondents, for recovery of Rs. 28,704.97. The second respondent did not contest the suit, but the first respondent entered appearance and filed written statement and contested the suit.

6. In her written statement, she totally denied the averments made in the plaint. She specifically denied that she stood as a guarantor of the second respondent or executed any of documents or she was aware of any transaction between the appellant and second respondent. She also denied that she ever put her signature on any of the documents referred to.

7. On the pleadings, trial Court framed as many as 9 issues. During trial, the appellant Bank examined 8 witnesses on their behalf and the first respon­dent examined herself asDWl. Thereafter, the Second Subordinate Judge by his judgment dated 23 3.76 decreed the suit exparte in favour of the second respondent for recovery of Rs. 22.800/- alongwith interest and insurance char­ges etc. and dismissed the suit against the first respondent. Hence this appeal.

8. In this appeal the main point raised by the appellant is that the trial Court erred in law by dismissing the suit against the first respondent, who stood as a guarantor.

9 Mr. RK Sanajaoba Singh learned counsel appears on behalf of the appellant. None appears on behalf of any of the respondents. Mr. Sanajaoba Singh su

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