1. Defendant 2 is the appellant. The first respondent - Bank obtained a decree on 31st January 1964 against two defendants for a sum of Rs. 29,720-06. The first defendant accepted the decree and has not filed an appeal. The second defendant, however, has preferred this appeal challenging the correctness of the said decree against him.

2. The plaintiff - the Punjab National Bank Ltd. (which hereafter shall be referred to as the Bank) instituted O.S. No. 23 of 1959 in the Court of the Principal District Judge, Mysore, against two defendants to recover a sum of Rs. 38,203-01 due from them. It is the case of the plaintiff that it is a banking company, duly registered under the Indian Companies Act, having its head office at Delhi and two of its branches at Bangalore and Mysore. The defendants are merchants of Mysore and are also Directors of the Kapila Textile Mills, Ltd., Nanjangud, Mysore District (now in liquidation). The Kapila Textile Mills, Ltd., hereafter shall be referred to as the Mills.

3. The said Mills had two cash - credit accounts with the plaintiff - Bank, one on a pledge account secured on the pledge of raw cotton, yarn and other manufactured goods; and the other, a hypothecation account secured on die hypothecation of loose cotton, cloth in pieces and materials in process including cotton on the machines. In addition to the above securities, the plaintiff - Bank had also obtained the guarantee of two defendants, who by their separate letters of guarantee, dated 15th December 1956, personally guaranteed the payment of demand of all the monies or of any balance due by the said Mills. These two guarantees are individually liable to the plaintiff to pay the monies due by the said Mills and their liability so to pay is independent of the liability of the principal debtors.

4. The Mills were ordered to be wound up by the High Court by its order dated 19th January 1959.

5. The plaintiff states that after the realisation of the securities, the said Mills are now liable to the plaintiff - Bank in the sum of Rs. 38,203.01, and as the assets of the Mills are fully encumbered, the plaintiff is not likely to recover the balance due from the Mills, and the plaintiff, therefore after making a due demand, instituted the suit, out of which this appeal arises, claiming the said amount with future interest up to the date of payment.

6. Since the first defendant has accepted the decree, it is not necessary to refer to the written statement filed by him.

7. Defendant 2, by his written statement, contested the plaintiff's claim. He admits that he was one of the Directors of the Mills and that the Mills had two cash - credit accounts at the Mysore City Branch of the plaintiff - Bank and states that the loans were fully secured as could be verified from the Bank's periodical valuations of the pledged goods and securities and mortgages. He also admits that he had executed a letter of guarntee as stated by the plaintiff. He, however, denies the claim made by the plaintiff. He contends that it is not known how the plaintiff - Bank arrived at a consolidated figure when admittedly there are two separate and distinct accounts. This consolidation, according to him, is neither legal nor bona fide and is fraudulent.

8. He further states that the guarantee stands discharged as the plaintiff is not entitled to consolidate the two transactions. He also submits that since the plaintiff has parted with the securities without his consent, he is discharged. He also contested the correctness of the claim made by the plaintiff and stated that at any rate, it is not entitled to interest from the date of the order of winding up.

9. On these pleadings, the trial Court raised five issues, out of which issues 3, 4, 5 are relevant. They are as follows : -
"(3) Does the Rs. 38,203.01 nP. was the plaint ?
(4) Is the plaintiff not entitled to interest from the date of winding up the Mills ?
(5) What is the amount realised from the goods pledged and whether proper an