A surety's liability is discharged if the creditor fails to enforce the security held against the principal debtor, resulting in the impairment of the surety's eventual remedy against the principal debtor.

1. The plaintiff which failed in its attempt to get decree against the defendants in the suit in O.S.No. 17 of 1982 on the file of the Sub-Court, Sivaganga, has filed the above Appeal.

2. The plaintiff filed the above suit on the basis that the 1st defendant sought for Cash Credit Facility to an extent of 12, 000 which was sanctioned by the plaintiff. The 2nd defendant had agreed to be the guarantor for the 1st defendant. The 1st defendant executed a demand promissory note in favour of the 2nd defendant for a sum of Rs.12, 000 on 22. 1975, promising to pay him or order at the State Bank of India, Tirupattur, the above sum of Rs.12, 000 with interest at half percent, over and above the advance rate with a minimum of 14% per annum with monthly rests. The 2nd defendant in turn had made and endorsement on the back of the promissory note ‘pay’ State Bank of India or order and handover the same to the plaintiff. The 1st defendant had also executed an agreement for the said facility on 22. 1975, on security of pledge of goods purchased and merchandised for the said sum of Rs. 12, 000. On the same date the 2nd defendant as guarantor for the 1st defendant had executed a deed of guarantee in favour of the plaintiff. The 1st defendant had also deposited the title deeds relating to the plaint schedule property with the plaintiff on 23. 1977 with intent to create an equitable mortgage over the same as collateral security for the loan granted to him by the plaintiff. According to the plaintiff, the 1st defendant had executed revival letters dated 21. 1978 and 21. 1981 acknowledging his debt due by him to the plaintiff. The 2nd defendant also has executed similar letters. In spite of demands, since the defendants did not re-pay the loan, the plaintiff has filed the above suit.

3. The 1st defendant submitted to the decree by filing a memo.

4. The 2nd defendant contested the suit by filing written statement and also additional written statement. The 2nd defendant in the written statement has stated that the deed of guarantee executed by the 2nd defendant is intended only to the extent of Rs. 12, 000. Moreover, since no demand was made against the 2nd defendant, the suit cannot be maintained against him. It is also stated that since the amount advanced was over Rs. 12000, the contract of guarantee has become unenforceable. It is also stated that the revival letters were signed in blank papers and they were filled up subsequently, and so in view of such material alterations, they cannot be relied on.

5. The trial Court after elaborately considering the pleading, oral and documentary evidence found that Ex.A19 notice dated 4. 1982 was not sent to the 2nd defendant and so the suit filed without sending such notice cannot be sustained, as in the deed of guarantee such issuance of notice is specifically contemplated, that merely because the plaintiff sanctioned more loan on the said facility, it cannot be said that the deed of guarantee executed by the 2nd defendant has to be considered as cancelled, that the revival letters executed by the defendants are valid and binding on them and that the 2nd defendant is liable to pay the sum of Rs. 2, 000 with interest, but the suit cannot be maintained against the 2nd defendant in view of the fact that no notice was issued before filing the suit as per the clauses mentioned in Ex.A4. On the basis of the abovesaid findings, the trial Court passed the preliminary decree against the 1st defendant and dismissed the suit against the 2nd defendant. Aggrieved, the plaintiff has filed the above appeal.

6. The learned counsel appearing for the Appellant/plaintiff has submitted that the trial Court is not correct in dismissing the suit against the 2nd defendant only on the ground that no notice was issued before filling the suit as contemplated under Ex.A4. He has also pointed out that notice was issued under Ex.A24 dated 26. 1978 demanding the money. So, in view of the said notice, Though Ex.A.19 w