The central legal point established in the judgment is the importance of proving the execution of guarantee-deed and the liability of the guarantor in a continuing guarantee, as well as the admissibility of evidence and the non-appearance of the guarantor in determining liability.

Vinod K. Sharma, J. - The present Regular Second Appeal has been filed against the judgment and decree dated 7.9.1983 passed by the learned lower Appellate Court vide which the suit filed by the appellant-plaintiff herein was ordered to be dismissed against defendant No. 3 i.e. guarantor.

2. The plaintiff-Bank filed a suit for recovery of Rs. 1,65,227/- against the defendants including defendant No. 3 Shri Banarsi Dass son of Bishna, as a guarantor. It was pleaded in the suit that under the Self Employment Loan Scheme defendant No. 1 was sanctioned an interim loan amounting to Rs. 69,000/-. The said loan was to be paid back with interest of 5% over the Reserve Bank of Indias rate of interest. To secure the loan, defendant Nos. 1 and 2 executed a Demand Promissory Note for a sum of Rs. 69,000/- letter of waiver, letter of interest, letter of non-encumbrance and letter of authority. In addition, hypothecation agreement was also executed whereby all tangible immovable properties such as Tractor, accessories etc. were hypothecated as security of the loan. An additional loan of Rs. 41,000/- was also sanctioned which was also secured by the documents referred to above. The said loan was also secured by a personal guarantee of defendant No. 3. Out of the sanctioned loan a sum of Rs. 49,500/- was released by defendant Nos. 1 and 2. However, on the failure to repay the loan, a suit for recovery of Rs. 1,65,227.09 was filed.

3. Whereas defendant Nos. 1 and 2 have admitted their liability. However, defendant No. 3 contested the suit, who denied having executed any guarantee deed in favour of the plaintiff-bank as security. It was further claimed that he stood discharged from liability, because extension was granted to defendant Nos. 1 and 2 for repayment of loan and further that acknowledgment of defendant Nos. 1 and 2 was not binding on him.

4. In replication, the stand taken by the plaintiff was reiterated and following issues were framed:-

"1. Whether defendant No. 3 stood guarantee for defendant Nos. 1 and 2 regarding the amount of loan in dispute as alleged ? OPP

2. Whether the suit is within limitation ? OPP

3. Relief."

5. The learned trial Court decided issue Nos. 1 and 2 in favour of the plaintiff-appellant and decreed the suit. Defendant No. 3 i.e. guarantor filed an appeal against the judgment and decree. The learned lower Appellate Court accepted the appeal on the ground that the plaintiff-bank had failed to prove due execution of the guarantee-deed by defendant No. 3. The evidence of hand- writing expert, which proved the execution of the guarantee-deed by defendant No. 3, was disbelieved for the reason that the hand-writing expert had not compared the signature on the guarantee-deed with one of the admitted signatures. The hand-writing expert had compared the signatures on the acknowledgment receipt signed by defendant No. 3. The learned lower Appellate Court also came to the conclusion that though Mr. Goel, was a Clerk in the Bank, but the plaintiff-Bank had failed to produce Mr. Goel, who is stated to have filled up the guarantee-deed. Thus by holding that the plaintiff-bank had failed to prove the execution of guarantee-deed, the finding on issue No. 1 was reversed. Even on issue No. 2 the learned lower Appellate Court came to the conclusion that as the loan was advanced in the year 1973 and there was a default committed by the loanee, the suit filed in the year 1979 was, therefore, barred by limitation.

6. Mr. R.K. Aggarwal, learned counsel appearing on behalf of the appellant- bank, has challenged the findings recorded by the learned lower Appellate Court on the plea that in spite of notice, defendant No. 3 failed to appear and contest the suit. Rather the suit was said to be contested through his attorney. The contention of the learned counsel for the appellant, therefore, was that it was not open to the attorney to depose qua the facts which were personal to Shri Banarsi Dass.

7. The learned counsel for the appe