The liability of the guarantor is limited to the agreed cash credit facility amount, and the guarantor is not bound by the over-drawals allowed by the plaintiff-Bank and made by the principal debtor.

( 1 ) BOTH the appeals bearing nos. 237 of 1995 and 271 of 1995 filed on behalf of the appellants namely bishwanath Agarwala and State Bank of india respectively, have arisen out of the same judgment dated 29th July, 1995 and decree dated 4th August, 1995 passed in m. S. No. 43 of 1989.

( 2 ) THE case of the plaintiff in brief is that defendant No. 1 Jaydeb Panja was running business of wholesale medicine and he approached the plaintiff-Bank lor cash credit facility for running his business up to the sum of Rs. 2,50. 000/- and the plaintiff-Bank sanctioned the loan on 7-3-1986 on usual documentation, and on acceptance of terms and conditions by the defendant No 1. The aforesaid loan was sanctioned on acceptance of terms and conditions by defendant No. 1 to the effect that loan amount with agreed interest at the rate of 17. 5% per annum with quarterly rest would be paid on demand and on creating security by the defendant No, 1 and. defendant No. 2 stood as guarantor for defendant No. 1 and agreed to pay the dues in case of default by the defendant No. 1 and thus the defendant No. 2 jointly and severally became liable with the defendant no. 1 for the due payment of the loan with interest and in pursuance to that, defendant no. 2 executed an agreement of guarantee in Form-1 (Special) and delivered the same to the plaintiff along with promissory note dated 7-3-1986 for a sum of Rs. 2,50,000/-and interest payable on demand made by the defendant No. 1 in favour of defendant no. 2. The defendant No. 2 endorsed the promissory note in favour of the plaintiff-Bank which was intended as guarantee to the extent of the loan limit and the interest from time to time payable by the defendant no. 1 and the remaining unpaid on account of the cash credit which for the purpose of such guarantee shall be considered continuing, notwithstanding it may at any time or from time to time be brought to credit, until the notice in writing that the same is closed is given by the plaintiff. Further case of the plaintiff is that defendant No. 1 availed cash credit facility from the plaintiff but failed to cany out the terms and conditions of the loan documents because he failed toadhere to the financial norms in not routing the cash credit account and also by committing other irregularities, the account thus became irregular and despite the repeated persuasion and request made by the officer of the plaintiff-Bank, the amount remained irregular, the defendant No. 1 by his letters dated 18-10-1986 and 5-1 -1987 approached the plaintiff-Bank for additional facility by way of over-drawal of rupees two lakh and three lakh on the cash credit account, since his business was running at a loss and the bills could not be retired and for the reasons he required further capital. The defendant no. 1 with such request gave definite and positive proposal in terms of repayment and considering this position and on assessment of the scope of his business, stocks, chance of recovery and other factors, the plaintiff-Bank allowed to the defendant No. 1 over-drawal of sums of rupees 1,53,180. 24 paise and Rs. 3,03,182. 10 palse on 20-10-1986 and 5-1-1987 in the said cash credit account as special case. The defendant No. 1 went on carrying on his business and ultimately failed to carry out his promises and the account became irregular. The plaintiff thereafter served advocates notice dated 23-1-1989 on the defendant Nos. 1 and 2 by registered post calling upon them to pay the outstanding amount with agreed interest. The defendant No. 2 acknowledged the aforesaid notice by a reply dated 31-1-1989 sent through his advocate admitted his liability to the extent of Rs, 2,50,000/- with a re quest to recover due by selling the hypothecated stock of defendant No. 1 and recover the remaining from him. The defendant No. 1 did not pay the demanded amount nor gave any reply to the advocates notice. But. defendant no. 1 deposited a sum of Rs. 4,000/ on 17-4-1989 in his cash credit a