STATE BANK OF SAURASHTRA Vs. GHITRANJAN RANGNATH RAJA

JUDGEMENT

(1.) This appeal by certificate under Article 133 (1) (a) of the Constitution is by the original plaintiff-State Bank of Saurashtra ('the Bank' for short) whose suit for recovery of Rs. 76,368.04 p. from the legal representative of the deceased principal debtor Harilal Parmananddas Adatia and his surety original defendant 2 Chitranjan Rangnath Raja, ('surety' for short) was decreed by the trial court both against the legal representative of the principal debtor and the surety but on appeal by the surety, was dismissed by the High Court only against the surety.

(2.) Harilal Parmananddas Adatia, hereinafter referred to as 'principal debtor' approached the Manager of the Bagasra Branch of State Bank of Saurashtra seeking facility for cash credit up to Rupees 75,000/-. He submitted proposal form Ext. 66 on September 10, 1957, offering to give security for the cash credit by pledge of groundnut oil tins as also a personal guarantee of defendant 2 Chitranjan Rangnath Raja. After obtaining the approval of the General Manager of the Bank cash credit facility to the extent of Rs. 75,000/- was sanctioned against the pledge of approved goods under the lock and key of the Bank and on personal guarantee of the surety. The principal debtor executed a demand promissory note Ext. 81 in favour of the Bank on September 16, 1957, and on the same day the principal debtor also executed a demand promissory note, Ext. 30, in favour of the surety which the surety endorsed in favour of the Bank. Along with the two demand promissory notes, simultaneously the surety executed a letter of guarantee Ext. 31 in favour of the Bank and the principal debtor executed a bond Ext. 83 in favour of the Bank. The principal debtor also passed letter of continuity of the bond and the promissory note Ext. 82. Thereafter the principal debtor enjoyed the cash credit facility by borrowing various amounts. By the end of February 1959 the principal debtor owed Rs. 76,368.04 p. in this account to the Bank. Principal debtor died in November 1957. The Bank wrote to the surety letter Ext. 32 dated December 24, 1957, calling upon him to pay the outstanding balance of Rupees 70,879/- in cash credit account of principal debtor as in the circumstances mentioned in the letter the balance was required to be recovered from the surety. Some correspondence ensued thereafter between the bank and the surety and ultimately the Bank filed the suit for recovery of Rupees 76,368.04 p. against defendant 1, the legal representative of principal debtor and defendant 2, the surety.

(3.) Defendant 1 contested the suit, inter alia contending that the Court had no jurisdiction to hear the suit and he had no knowledge about the suit transaction. The allegation of fraud made against him in the plaint was denied. He also denied his liability for the claim of the Bank as heir and legal representative of deceased principal debtor. Defendant 2, the surety, contested the suit as per written statement Ext. 7, inter alia, contending that the Bank had agreed to grant cash credit facility to deceased principal debtor on the security of goods by way of pledge and that though the goods were to be kept in the godown in the compound of Vijay Oil Mills Pvt. Ltd. but the godown was to be kept under the lock and key of the Bank. It was also contended that the principal debtor would provide such quantity of goods as would provide full cover to the outstanding balance in the cash credit account and the Bank was to be responsible for the safe custody and keeping of the pledged goods. It was also contended that the principal debtor had all throughout pledged sufficient quantity of goods to provide full cover for the Bank's claim but the Bank either wrongfully lost the goods or was negligent in retaining the goods within its custody or the Bank wrongfully parted with the goods without the consent of the surety and, therefore the surety was discharged.