1. A certain R.G. Kamath who was a resident of the town of Virajpet in the district of Coorg was the manager of a bank known as the Town Co - operative Bank, Limited, registered under the provisions of the Coorg Co - operative Societies Act 1936. On March 14, 1955, a certain Chandrasekhar Pal executed an indemnity bond rendering himself liable in the sum of Rs. 4,500/- as guarantee for the fidelity of Kamath in the performance of his duties as the manager of the bank.

2. On July 18, 1957, R.G. Kamath committed suicide. Before he died, he prepared a letter Exhibit A - 1 in which he confessed that he had misused a large sum of money belonging to the bank for which, according to him, no one else could be blamed. After Kamath committed suicide, there was an investigation into the affairs of the bank which revealed that as large a sum as Rs. 1,72,350-14 np. had been lost by the bank by misapplication of funds and falsification of accounts. In consequence of that revelation, the bank sued Chandrasekhar Pal for the recovery of a sum of Rs. 4,511-42 nP. consisting of the sum of Rs. 4,500/- which was the upper limit of his liability and a sum of Rs. 11-42 nP. representing the expenses incur