H MOHAMED KHAN Vs. ANDHRA BANK LTD

JUDGEMENT

(1.) This appeal has been preferred by the legal representatives of the original defendant No. 3, challenging the judgment and decree dated March 22, 1974, made against them in O.S. No. 86 of 1969 by the Second Additional Civil Judge, Bangalore City.

(2.) Respondent No. 1, Andhra Bank Ltd., since nationalised and now called as the Andhra Bank ("the bank"), sued defendants Nos. 1 to 3 to recover a sum of Rs. 1,63,300 on the following allegations.

(3.) That defendant No. 1, Seth Menghraj Parasuram ("Parasuram"), was having financial accommodation with the bank under various sets of accounts. As security for the amounts advanced, he has endorsed promissory notes and other securities in favour of the bank executed in his favour by his customers. On April 4, 1966, defendant No. 2, Abdul Jabbar, executed a promissory note in favour of Parasuram along with a consideration receipt agreeing to pay on demand to him or to his order, the sum of Rs. 1,20,000 together with interest thereon at the rate of one per cent. per mensem. For valuable consideration received, that promissory note was also endorsed in favour of the bank. The bank has thus become the holder in due course and is entitled to recover the amounts due under the said on demand promissory note. Defendant No. 3 Mohammed Khan, has stood guarantee for payment to the extent of Rs. 75,000 of the amount that might be advanced by Parasuram to Jabbar and executed a letter of guarantee in that behalf. Parasuram has also assigned that letter of guarantee in favour of the bank and Mohammed Khan is, therefore, liable to pay as guarantor to the extent of Rs. 75,000 and interest thereon.