SYNDICATE BANK Vs. I K AMITHA

JUDGEMENT

(1.) This appeal by Syndicate Bank, Bangalore, is directed against the judgment and decree of the Prl. Civil Judge, Banglore City (as it then was) made in O.S. No. 150 of 1968 on his file.

(2.) The appellant Bank was the plaintiff in the suit. Suit was for a decree against the respondents in the sum of Rs.1,15,210/- and for sale of the mortgaged suit schedule property of the defendants in the event of the defendants not depositing the amount decreed within the time specified. The suit came to be decreed only as against defendant-1, but it came to be dismissed as against defendants 2 to 9. Defendant-1 has been directed to pay the decretal amount within 3 months from the date of the decree failing which only the share of defendant-1 in the suit schedule mortgaged property is directed to be brought to sale to realise the amount. Aggrieved by the said judgment and decree in regard to failure to get a decree against all the defendants, the plaintiff Bank has preferred this appeal. Orginally the appeal was filed only making defendants 2 to 9 as respondents. Subsequently defendant-1 made an application to implead himself in this proceeding and he was permitted to implead himself as respondent-9 in this proceeding.

(3.) In this appeal we will refer to the parties by the ranks they held in the court below. The brief facts leading to the suit are as follows :- It was averred by the plaintiff Bank that defendants 1 to 9 wrote a letter dated March 25, 1964 by which they asked for a Bank guarantee in a sum of Rs. 50,000/- to be given to the Government Soap Factory on behalf of the 1st defendant for the performance of his obligations under the terms of an Agency Agreement entertd into by him with the Government Soap Factory is regard to sale of the products of the Soap Factory within the area allotted to the first defendant in the agency agreement. In order to secure the repayment of the liability arising thereunder defendants 2 to 9 authorised the first defe idant by the powers of attorney given by them to execute all the loan papers such as on Demand Promissory Note, Deposit of Title Deeds pertaing to the properties belonging to all the defendants jointly with intent to create an equitable mortgage in favour of the plaintiff Bank and to do all necessarry things for and on their behalf also. Pursuant to that dcfendant-1 deposited the title deeds described in Schedule 'A' to the plaint with the plaintiff Bank and secured the Bank guarantee Defendant-1 also offered the title deeds creating mortgage for utilising the loan facility of discounting bills to a limit of Rs. 1,50,000/- and in that behalf a continuity letter dated February 11, 1965 was also given. The Bank guarantee was enforced against the plaintiff Bank thereupon the Bank was required u> pay a sum of Rs. 43,592-46 on March 8, 1967. In the result the on Demand Promissory Note which had already been executed for Rs. 50,000/- was converted into an operative negotiable instrument with effect from the date ot such payment and became enforceable against all defendants jointly and severally. In all 14 documentary bills discounted between December 26, 1966 and January 4 1967 for an aggregate sum of Rs. 54,108.34 temained unrealised in spite of repeated reminders to the parties coacerned. In that circumstance, a total sum of Rs 1 15,210/- was liable to be paid on the security of the mortgaged property by the defendants and as the defendants failed to pay the same the plaintiff filed the suit for recovery the same. Defendant-1 resisted the suit claim on the basis that there was no enforcement of the Bank guarantee and there was no payment by the plaintiff in that behalf. He also disputed his liability to pay any amount to the Bank on the second loan discounting billson the ground that the Bank statements were inaccurate, that the discounting bills, in fact, have been realised by the plaintiff and sucn there was no lability to pay. However, in his written statement he asserted that the propeity offered as security was worth more than Rs 2,00,000/- and if it was found that he was liable to pay any amount to the Bank he may be granted reasonable to pay the same.