SHANTHILAL JAIN S/O POONAMCHAND PARTNER V.S. PAPER AGENCIES Vs. THE UNITED WESTERN BANK LTD. REP. BY ITS BRANCH MANAGER, MANOJ REP. BY ITS PROPREITRIX MS. USHA S. JAIN AND MR. SUBHASH KUMAR JAIN V.S. PAPER AGENCIES

JUDGEMENT

(1.) THIS appeal is filed by Defendant No. 3 in O.S. No. 11134/1995 on the file of XXVI Addl.City Civil & Sessions Judge at Mayohall, Bangalore being aggrieved by the judgment and decree dated 7 -12 -2004 wherein the suit filed by the Plaintiff -Bank (Respondent No. 1 herein) has been decreed entitling the Plaintiff to recover a sum of Rs. 5,75,564/ - together with current and future interest at the rate of 16.5% p.a. on the said amount from Defendant Nos. 1, 2 and 3 jointly and severally from the date of suit till the date of its realization.

(2.) THE material facts of the case leading up to this appeal with reference to the rank of the parties before the trial Court are as follows: The Plaintiff filed O.S. No. 11134/1995 seeking recovery of Rs. 5,75,564/ - together with interest and costs from Defendants -1 to 3 jointly and severally on 16 -11 -1995. It is averred in the plaint that Plaintiff is a joint stock company incorporated and registered under the Indian Companies Act, VII of 1913 and included in the Second Schedule of the Reserve Bank of India Act, 1934 having its registered office at Satara, Maharashtra State and a Branch at No. 11, 1st Cross, Gandhinagar, Bangalore 560 009. The first Defendant represented by its proprietrix Smt. Usha S Jain along with Defendants -2 and 3 availed cash credit advance facility of Rs. 50,000/ - on 8 -4 -1988 which was enhanced to Rs. 1 lakh and further enhanced to Rs. 2 lakhs. The first Defendant availed the said cash credit facility and secured repayment thereof and executed Demand Promissory note dated 30 -10 -1990 agreeing to repay the amount as agreed with interest at 11.5% p.a. over and above the Reserve Bank of India, official, rate of interest with minimum of 21.5% p.a. with quarterly rests and also executed hypothecation agreement. The Defendants -2 and 3 guaranteed repayment of the said facility and stood as guarantors and executed general form of guarantee. The first Defendant failed to repay the amount as per the Schedule. Notice was issued to Defendants. Despite the same, amount was not repaid by Defendants -1 and 2. Defendant -3 managed to send back the notice sent to him under registered post acknowledgment due. The Defendants have acknowledged the debt and their liability to pay amount to the Plaintiff -Bank by letters dated 21 -8 -1991, 13 -7 -1934 and 25 -5 -1995 and therefore suit was filed for the above said relief.

(3.) HAVING regard to the above pleadings, following issues were framed: