Judgment : 1. The plaintiff which failed in its attempt to get decree against the defendants in the suit in O.S.No. 17 of 1982 on the file of the Sub-Court, Sivaganga, has filed the above Appeal. 2. The plaintiff filed the above suit on the basis that the 1st defendant sought for Cash Credit Facility to an extent of 12, 000 which was sanctioned by the plaintiff. The 2nd defendant had agreed to be the guarantor for the 1st defendant. The 1st defendant executed a demand promissory note in favour of the 2nd defendant for a sum of Rs.12, 000 on 22. 1975, promising to pay him or order at the State Bank of India, Tirupattur, the above sum of Rs.12, 000 with interest at half percent, over and above the advance rate with a minimum of 14% per annum with monthly rests. The 2nd defendant in turn had made and endorsement on the back of the promissory note ‘pay’ State Bank of India or order and handover the same to the plaintiff. The 1st defendant had also executed an agreement for the said facility on 22. 1975, on security of pledge of goods purchased and merchandised for the said sum of Rs. 12, 000. On the same date the 2nd defendant as guarantor for the 1st defendant had executed a deed of guarantee in favour of the plaintiff. The 1st defendant had also deposited the title deeds relating to the plaint schedule property with the plaintiff on 23. 1977 with intent to create an equitable mortgage over the same as collateral security for the loan granted to him by the plaintiff. According to the plaintiff, the 1st defendant had executed revival letters dated 21. 1978 and 21. 1981 acknowledging his debt due by him to the plaintiff. The 2nd defendant also has executed similar letters. In spite of demands, since the defendants did not re-pay the loan, the plaintiff has filed the above suit. 3. The 1st defendant submitted to the decree by filing a memo. 4. The 2nd defendant contested the suit by filing written statement and also additional written statement. The 2nd defendant in the written statement has stated that the deed of guarantee executed by the 2nd defendant is intended only to the extent of Rs. 12, 000. Moreover, since no demand was made against the 2nd defendant, the suit cannot be maintained against him. The 2nd defendant in the written statement has stated that the deed of guarantee executed by the 2nd defendant is intended only to the extent of Rs. 12, 000. Moreover, since no demand was made against the 2nd defendant, the suit cannot be maintained against him. It is also stated that since the amount advanced was over Rs. 12000, the contract of guarantee has become unenforceable. It is also stated that the revival letters were signed in blank papers and they were filled up subsequently, and so in view of such material alterations, they cannot be relied on. 5. The trial Court after elaborately considering the pleading, oral and documentary evidence found that Ex.A19 notice dated 4. 1982 was not sent to the 2nd defendant and so the suit filed without sending such notice cannot be sustained, as in the deed of guarantee such issuance of notice is specifically contemplated, that merely because the plaintiff sanctioned more loan on the said facility, it cannot be said that the deed of guarantee executed by the 2nd defendant has to be considered as cancelled, that the revival letters executed by the defendants are valid and binding on them and that the 2nd defendant is liable to pay the sum of Rs. 2, 000 with interest, but the suit cannot be maintained against the 2nd defendant in view of the fact that no notice was issued before filing the suit as per the clauses mentioned in Ex.A4. On the basis of the abovesaid findings, the trial Court passed the preliminary decree against the 1st defendant and dismissed the suit against the 2nd defendant. Aggrieved, the plaintiff has filed the above appeal. 6. The learned counsel appearing for the Appellant/plaintiff has submitted that the trial Court is not correct in dismissing the suit against the 2nd defendant only on the ground that no notice was issued before filling the suit as contemplated under Ex.A4. He has also pointed out that notice was issued under Ex.A24 dated 26. 1978 demanding the money. So, in view of the said notice, Though Ex.A.19 was not served on the 2nd defendant, it cannot be said that the suit is not maintainable. According to him, the said notice is only to enforce the said promissory note and not the guarantee even as per Ex.A4. 1978 demanding the money. So, in view of the said notice, Though Ex.A.19 was not served on the 2nd defendant, it cannot be said that the suit is not maintainable. According to him, the said notice is only to enforce the said promissory note and not the guarantee even as per Ex.A4. He has also submitted that the notices are only to inform the concerned party about his liability, which has to be done by issuing Ex.A24 and so the trial Court is not correct indismissing the suit on that ground. Relying on Ex.A.21 and A.22. the learned counsel has further submitted that the 2nd defendant has specifically consented to release the amount beyond the sanctioned limit of 12, 000 and so the 2nd defendant cannot now be allowed to contend that his liability should be restricted to Rs. 12, 000. 7. The learned counsel appearing for the 2nd respondent/2nd defendant has submitted that the plaintiff cannot enforce the guarantee against the 2nd defendant as they have not enforced the mortgage security, though the plaintiff obtained the decree in their favour. According to the learned counsel, no application for final decree was filed so far by the plaintiff and so they have failed to enforce the security, and, also, they have lost their right to enforce the said security. On that basis the learned counsel has further submitted that the plaintiff have lost their right to enforce the guarantee also. 8. Though the learned counsel appearing for the appellant argued on merits, challenging the findings of the trial Court, rejecting the case of the plaintiff as against the 2nd defendant, I am not inclined to go into the same, in view of the legal submission that has been raised by the learned counsel for the 2nd respondent. It is not in dispute that the trial Court has granted the preliminary decree on mortgage in favour of the plaintiff as early as on 210. 1982. The trial Court has granted three months time to the 1st defendant to pay the decree amount and thereafter the liberty has been given to the plaintiff to proceed with the final decree proceedings. The learned counsel for the appellant on instruction has submitted that so far no application for final decree was filed which fact has been denied. 1982. The trial Court has granted three months time to the 1st defendant to pay the decree amount and thereafter the liberty has been given to the plaintiff to proceed with the final decree proceedings. The learned counsel for the appellant on instruction has submitted that so far no application for final decree was filed which fact has been denied. It cannot be disputed that application for passing final decree, after the expiry of three years cannot be maintained. I seek support to the said conclusion from the decision in Kumbakonam Municipal Council v. Poonachi, 1980 (II) M.L.J. 378 , wherein it has been held as follows: “A preliminary decree for partition merely defines the shares of the parties in the properties and the division by metes and bounds and allotment of properties has to be done only under the final decree for which an application has to be filed. But till the final decree is passed, the suit itself is pending and any such application can be construed to be an application in a pending suit for which there is no time limit prescribed. But in the present case, clause (iii) of the decree referred to earlier p rovides for the filing of an application for the passing of a final decree. Under the preliminary decree in the present case, no amount has been declared and the time within which that amount has to be paid has also been fixed and the consequence of non-payment within that time have also been indicated, in that it would be open to the petitioner to take out an application for final decree and bring the property to sale for the realisation of the amount due to it. Thus, the preliminary decree in the present case has not left any matter untouched or pending in the sense that a partition suit keeps alive most of the matters even after the preliminary decree. The only thing that remained under the decree in the present case was to file an application for a final decree and proceed thereafter with the sale of the property and, therefore, such an application cannot be characterised as strictly an application in a pending suit belonging to the category of a partition suit as was the case in K.S. Doraiswami Nadar (died) and others v. Vinayaka Ratnaswami Nadar and others, 1969 (1) M.L.J. 392 . Even this decision, therefore, does not in any way assist the petitioner. The learned Counsel for the petitioner placed very strong reliance upon the decision in Sivan Pillai v. Anbayyan and others, 1976 (1) M.L.J. 385 . In that case, the proceedings arose out of a suit to enforce a mortgage and a preliminary decree was passed on 30th January, 1958. Thereafter, the appellant filed an application in I.A.No. 126 of 1969 purporting to be under Order 34, rule 5, Code of Civil Procedure, for passing a final decree. An objection was raised by the respondent that since the preliminary decree had been passed on 30th January, 1958 and no application had been filed within three years from the date of the preliminary decree, the application for final decree filed in 1969 was barred by limitation. The Courts below accepted this contention and dismissed the application. Ismail, J. (as he then was), held that the application for the passing of the final decree was not barred. In that case, the preliminary decree itself was not passed in accordance with the provisions contained in Order 34, Code of Civil Procedure, in that no time limit was fixed for the payment of the amount. Under those circumstances, the learned Judge held that the consequences, of an omission by the Court to do its duty cannot be visited on a litigant and, therefore, the petition would be within time. That is not the situation in the present case. It is not the case of the petitioner that the preliminary decree passed in the present case was not in accordance with the provisions of Order 34, Code of Civil Procedure. Indeed, the decree accords completely with the requirements of Order 34, Code of Civil Procedure, and provides for the payment of the amount by the respondent herein within a prescribed time and also as to what further remedies would be available to the petitioner in the event of default. Consequently, the considerations which weighed with Ismail, J., (as he then was), in that case to hold that the application was in time cannot apply in the present case. Consequently, the considerations which weighed with Ismail, J., (as he then was), in that case to hold that the application was in time cannot apply in the present case. If the preliminary decree in the present case contemplated the filing of an application by the petitioner in default of payment by the respondent within the time prescribed, then the right to apply for the final decree accrued on the date when the payment was not made as provided for under the decree, and as stated earlier, old Article 181 corresponding to Article 137 of the Limit ation Act, 1963, would be applicable and an application has to be filed within three years from the date when the right to apply for final decree accrued in favour of the petitioner, that is, on the non-payment by the respondent of the amount decreed on or before 22nd September, 1974. In this view, the application sought to be filed in the present case on 5th April, 1978 is clearly out of time and the rejection thereof by the Court below was quite correct.” In view of the above, the plaintiff cannot now file any petition for final decree and thereby the plaintiff has lost his right over the mortgage security. 9. Under Section 139 of the Contract Act, if the creditor omits to do any act which is his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged. Section 139 of the Contract Act reads thus: “139 Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy: If the creditor does any act which is inconsistent with the right of the surety , or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged Illustrations: (a) B contracts to build a ship for C for a given sum, to be paid by instalments as the work reaches certain stages. A becomes surety to C for B’s due performance of the contract. C, without the knowledge of A, repays to B the last two instalments. A is discharged by the prepayment. A becomes surety to C for B’s due performance of the contract. C, without the knowledge of A, repays to B the last two instalments. A is discharged by the prepayment. .(b) C lends money to B on the security of a joint and several promissory note made in C’s favour by B’ and by A as surety for B, together with a bill of sale of B’s furniture, which gives power to C to sell the furniture, and apply the proceeds in discharge of the note. Subsequently, C sells the furniture, but, owning to has misconduct and wilful negligence, only a small price is realised. A is discharged from liability on the note. .(c) A puts M as apprentice to B, and gives a guarantee to B for M’s fidelity B promise to his part that he will at least once a months, see M make up the cash. B omits to see this done as promised, and M embezzles. A is not liable to be on his guarantee”. From the abovesaid provisions and illustrations it is clear that in view of the fact that the plaintiff has not enforced the mortgage, the liability of the 2nd defendant is discharged. 9. In Halsbury’s Laws of England, 4th Edn., Vol 20, para 280, p. 152, the statement of the law bearing on this point reads as under: “ 280. Effect of loss of securities - On paying the guaranteed debt the surety is endued to have all the securities held by the creditor for the debt handed over to him by the creditor in exactly the same state and condition in which they were originally provided, whether they were in existence at the date of the contract of suretyship or came into existence subsequently. Consequently, any act of the creditor interfering with or impairing that right will, to the extent at all events, of any loss inflicted, relieve the surety from liability , and, if it has the effect of altering or purporting to alter the contract of suretyship, discharge him altogether. Thus, where there is a mortgage security given in respect of a debt which is subsequently guaranteed, the creditor must hold the security for the benefit of surety, so that, on paying the debt, the surety may obtain a transfer of the mortgage in its original unimpaired condition. Thus, where there is a mortgage security given in respect of a debt which is subsequently guaranteed, the creditor must hold the security for the benefit of surety, so that, on paying the debt, the surety may obtain a transfer of the mortgage in its original unimpaired condition. If the creditor does not fulfil his duty in this respect the surety is discharged”. This has been referred to in State Bank of Saurashtra v. Chitranjan Rangnath, A.I.R. 1980 S.C. 1528 while deciding the liability of the surety on the basis of the said statement of law in Halsbury’s Laws of England, wherein the Apex Court has held as follows: “The surety in good faith contracted to offer personal guarantee on the clear understanding that the principal debtor has offered security by way of pledge of goods and the goods were to be in the custody of the creditor Bank. On this conclusion S. 141 of the Act will be indubitably attracted. Section 141 comprehends a situation where the debtor has offered more than one security, one of which is the personal guarantee of the surety. Even if the surety of personal guarantee is not aware of any other security offered by the principal debtor yet once the right of the surety against the principal debtor is impaired by any action or inaction, which implies negligence appearing from lack of supervision undertaken in the contract, the surety would be discharged under the combined operation of Sections 139 and 141 of the Act. In any event, if the creditor loses or without the consent of the surety parts with the security, the surety is discharged to the extent of the security lost as provided by S. 141”. 10. Even in the decision in State of M.P. v. Kaluram, A.I.R. 1967 S.C. 1105, the Apex Court has held as follows: 11 “Kaluram by executing the surety bond had undertaken to discharge the liability arising out of any act, omission, negligence or default of the forest contractor. The surety Kaluram contends that because the State lost or parted with the security he stood discharged. By S. 10 of the Indian Contract Act. The surety Kaluram contends that because the State lost or parted with the security he stood discharged. By S. 10 of the Indian Contract Act. 1872, where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he liable for, is inve sted with all the rights which the creditor had against the principal debtor; and by S. 141 it is provided: ‘A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and, if the creditor loses, or, without consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security.’ The State had as already observed, a first charge over the goods. The State was also entitled to prevent the goods from being removed without payment of the instalments due. The expression ‘security’ in S. 141 is not used in any technical sense; it includes all rights which the creditor had against the property at the date of the contract. The surety is entitled on payment of the debt or performance of all that he is liable for, to the benefits of the rights of the creditors against the principal debtor which arise out of the transaction which gives rise to the right or liability; he is therefore on payment of the amount due by the principal debtor entitled to be put in the same position in which the creditor stood in relation to the principal debtor. If the creditor has lost or has parted with the security without the consent of the surety, the latter is, by the express provision contained in S. 141, discharged to the extent of the value of the security lost or parted with. 12. The State had a charge over the goods sold as well as the right to remain in possession till payment of the instalments. When the goods were removed by Jagatram that security was lost and to the extent of the value of the security lost the surety stood discharged. 12. The State had a charge over the goods sold as well as the right to remain in possession till payment of the instalments. When the goods were removed by Jagatram that security was lost and to the extent of the value of the security lost the surety stood discharged. In the present case the State has not produced the accounts furnished under R. 16 by the contractor relating to the quantity of goods removed by Jagatram. We must in the circumstances hold that the entire quantity contracted to be sold to Jagatram had been removed, and the surety is, because the State has parted with the security which it held, discharged from liability to pay the amount payable under the terms of the contract.” 11. Following the decision of the Apex Court in M. Chettyappan & 4 others v. State Bank of India, Nungambakkam Branch, Madras-34, AIR 1980 S.C. 1528 . the Division Bench of this Court in 1992 (1) L.W. 631 , has held as follows: “We have chosen to refer to these salutary principles and statements of law on the subject only to assure ourselves that it is not in the language of S. 140 or S. 141 of the Indian Contract Act that the Court will always endeavour to find out whether the creditor was in actual custody of the security or not and that it was only on account of the negligence of the creditor that the security was lost. The provision in S. 140 invests the surety with the same rights which the creditor had against the princi pal debtor and thus puts him in the same position as the creditor to realise his debt from the principal debtor had in the properties that were offered as securities. Unless such transfer of security is also read in S. 140 of the Contract Act, there shall be always a chance of a creditor suing the surety and in the meanwhile, the principal debtor approaching or removing every security, so that in the event of the surety paying or performing all that he is liable for he is denied the benefits or the righ t of the creditor that is conferred upon him by virtue of a statute. S. 141 read in the same context as the Supreme Court has read thus entitles the surety to the benefit of every security which the creditor has against the principal debtor at the time when the contract for suretyship is entered into. The qualifying words ‘whether the surety knows of the existence of such security or not’ keep the surety in uneviable position in relation to the creditor, as all rights of the creditor as per S/ 140 would vest in him upon payment or performance of all that he is liable for. The other co-ordinating part of S. 141 reads: ‘and, if the creditor loses or, without the consent of the surety, parts with security, the surety is discharged to the extent of the value of the security.’ The loss that can be discharged by the surety to the extent of value of the security has been illustrated as follows: ‘C advances to B, his tenant, 2, 000 rupees on the guarantee of A, C., has also further security for the 2, 000 rupees by a mortgage of B’s furniture. C cancels the mortgage. B become insolvent and C sues A on his guarantee. A is discharged from liability to the amount of the value of the furniture.’ This illustration has some similarity with the case in hand. It is found in Exhibits P2, P3, P4 and P5 that the cash credit loan was sanctioned on the security of the goods, produce and merchandise and the stock of canned shrimps was required to be stored in such place and in such manner as the Bank may from time to time approve. The first defendant company held in trust solely for the plaintiff Bank the goods pledged and the documents of title thereto in their absolute control, possession and dispossession, free of any charge, lien or other encumbrance and to keep the goods fully insured against loss or damage by fire, riot, civil commotion, theft, pilferage, etc. This shows that the security against loss even on account of theft, pilferage, etc., must be found in the hands of the creditors. The creditor cannot escape liability by saying that he has not ensured that the first defendant company had kept all the goods insured against loss or damage by fire, riot, civil commotion, theft, pilferage, etc. This shows that the security against loss even on account of theft, pilferage, etc., must be found in the hands of the creditors. The creditor cannot escape liability by saying that he has not ensured that the first defendant company had kept all the goods insured against loss or damage by fire, riot, civil commotion, theft, pilferage, etc. It will be for the creditor thus to say how the security was lost and in case of loss the amount of insurance that must be found to accrue to the surety and the surety must accordingly be found to have been discharged to the extent of the insurance. If there is no insurance, it is obvious, it is on account of the negligence of the creditor Bank. If there is insurance, there is security and the surety must be deemed to have been discharged to that extent”. In view of the above settled principles of law and in view of the abovesaid undisputed fact that the plaintiff has not filed any application for final decree and thereby lost their right towards the security it has to be held that the liability of the 2nd defendant is discharged. So, I am not inclined to go on merits whether the 2nd defendant is also liable for the suit claim as claimed by the plaintiffs/appellant or not. 12. In view of the above, the judgment and decree of the trial Court are sustained on the abovesaid reasonings. Consequently, this appeal is dismissed with costs.