Mr. K.Kannan, J.:- The following substantial questions of law arise for consideration in this second appeal:-

i) Whether the appellate Court was not in error in finding that execution of documents-P12 to P16 which were in the nature of promissory note, declaration of liability, letter of continuity, hypothecation agreement of machinaries and goods constituted a novation of contract, as wrongly assumed, to discharge the liability of the guarantor as being not a party to the documents?

ii) Whether the courts below did not err in finding that the Branch Manager was not duly authorized to institute the suit and prosecute the appeal?

iii) Whether the lower appellate Court failed to apply the discretion to allow for a reception of additional evidence in proof of the authority given by the Board of Directors to one of the Directors to authorize any officer of the Bank to institute the suit?

2. There had been no representation on either side and I have proceeded to examine the case on the basis of the documents filed on behalf of the appellant-Union Bank. The suit for recovery of money against the defendants for the realization of amounts under cash credit limit to the tune of Rs.10,000/- and a term loan of Rs.7,500/- granted to the defendants 1 and 2 and guaranteed by the 3rd defendant was dismissed by the trial Court finding that the suit was barred by limitation. It also found that the Branch Manager had not been duly authorized to institute the suit and the document-a power of attorney, executed by the Director of the Bank was not sufficient proof of such authority, there being no proof that the Director himself was competent to give such a power without the other Directors joining in giving the power of attorney. The appellate Court reversed the finding regarding the limitation against the defendants 1 and 2 and found that the suit against the 3rd defendant was in any event barred by limitation since the fresh document of promissory note and acknowledgment of liability constituted a novation of contract that discharged the guarantor and, therefore, the suit filed beyond the period of 3 years from the date when the original promissory note and the guarantee letter had expired was barred by time against the guarantor. At the appellate Court, the plaintiff-Bank had filed the letter of authority to the Director passed by the Board of Directors empowering him to institute a suit through Branch Manager and allow for an authority to institute the suit. The additional evidence was rejected by the appellate Court, finding that there was no justification offered for not filing the same at the trial Court itself.

3. In this case, I find that the appellate Court had actually held that the liability of the defendants 1 and 2, who were the principal debtors, had been clearly established by the documents. However, the suit against the 3rd defendant came to be dismissed on the issue of limitation by observing that the renewal of liability made through fresh promissory note and the letter of continuity and hypothecation documents constituted novation of contract and, therefore, there was no basis for making the guarantor liable. From the examination of the documents, it is clear that cash credit hypothecation limit and the term loan had been granted to the 2nd defendant-Shri Surinder Maini, Proprietor of M/s Vee Jay Enterprises, on 25.08.1975. The 2nd defendant had executed a letter of confirmation of the outstanding balance on 30.12.1977 and again on 04.01.1978. He had executed a fresh document on 07.04.1979 which was the letter of renewal (Ex.P12); Ex.P13 which was the promissory note; Ex.P14 which was the letter of declaration; the letter of continuity was Ex.P15; and Ex.P16 was an agreement regarding hypothecation of machinery and goods. The suit had been filed on 31.01.1981. The Court had found that fresh promissory note was a novation and the other documents also constituted a fresh liability and this document did not avail against