STATE BANK OF INDIA Vs. NAGESH HARIYAPPA NAYAK

JUDGEMENT

(1.) THIS appeal under Section 96 of the Code of Civil Procedure is by the plaintiff/bank which is aggrieved by the Trial Court declining to decree the suit claim as against the Guarantors also and in having decreed the suit as against the principal borrower only.

(2.) THE principal borrower was the first defendant in the suit and the guarantors are defendents 2 and 3 in the suit. The suit was filed for the recovery of a sum of Rs. 5,42,456-00 with current and future interest at the rate of 20. 75 % per annum and had been decreed only against the first defendant/borrower for the entire suit claim with current and future interest at 17. 5% p. a. The plaintiff/ bank has preferred this appeal questioning the decision of the Trial court in so far as it relates to the dismissal of the suit as against the guarantors.

(3.) THE brief facts leading to the above appeal are that the plaintiff/bank had entered into an agreement with the first defendant/ borrower to lend a sum of Rs. 1,00,000/- in what is known as Cash credit Hypothecation Limit Loan Transaction for a sum of Rs. 1,00,000/- bearing interest at 1% above the State Bank Advance rate to the minimum of 17. 5% and that the validity period of extending the limit was for one year which can be renewed thereafter if the transaction in the account was to the satisfaction of the Bank. This agreement between the parties to which the guarantors also subscribed is evidenced by Ex. P. 3. In pursuance of this agreement, the hypothecation agreement of even date as per Ex. P. 4 was executed by the borrower. The agreement of * RFA No. 135/1996 dated 22nd January 2003 hypothecation and guarantee which is a composite document under which the borrower had hypothecated certain goods by way of security for repayment of loan and defendants 2 and 3 stood as personal guarantee for the repayment of the same amount.