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 incurred for the issue of notices. Chandrasekhar Pai resisted the suit principally on the ground that the loss occasioned to the bank was directly attributable to dereliction of duty on the part of the Directors. He also repudiated the truth of the allegation that there was any misapplication of the funds of the bank by Kamath.

3. The District Judge who came to the conclusion that there was some foundation for the charge made by Chandrasekhar Pai against the Directors of the bank that there was dereliction of duty on their part and disobedience to the provisions of the relevant bye - laws, pronounced in favour of the bank and gave it the decree which it wanted. Chandrasekhar Pai appeals.

4. In this appeal, Miss Lalithamma appearing for Chandrasekhar Pai made the submission that it was not possible for the District Judge after recording a finding that the misapplication of the funds of the bank by Kamath was accompanied by a dereliction of duty and transgression of the provisions of the bye - laws on the part of the Directors, to make a decree against Chandrasekhar Pai. The argument advanced by Miss Lalithamma was. that since such embezzlement or misapplication of the funds of the bank by Kamath having been assisted by the Directors themselves who neglected, the performance of their own duties enjoined by the bye - laws, the obligations of Chandrasekhar Pai under the deed of indemnity executed by him came to. an end and that he stood discharged. It is the correctness of this postulate that requires investigation - in this appeal.

5. On the second issue in the case which, covers the question whether Chandrasekhar Pal's - guarantee came to an end by reason of the conduct of the Directors, the District Judge recorded what I consider to be a colourless finding. That issue reads :
"2. Whether such misapplication was the result of the failure of the Directors of the plaintiff - Bank to adhere to its bye - laws ?"
In this issue is involved the plea contained in paragraph 3 of the written statement in which Chandrasekhar Pai asserted that the misapplication of the funds of the bank by Kamath was the natural and direct result of the failure of the bank to adhere to the rules laid down in the bye - laws of the bank that the bank allowed Kamath to retain with himself large sums of money without any let or hindrance and that there was a failure on the part of the bank to scrutinise the cash account maintained, by Kamath. On this issue this is what the District Judge observed in paragraph 7 of his judgment :
"I think that adherence to the bye - laws in respect of administration of the affairs of the plaintiff bank was not there to some extent on the part of its Directors consistent with the requirements of the bye - laws and that there was no check of the cash. in the han