SHIV MACHINE TOOLS Vs. CANARA BANK

JUDGEMENT

(1.) this appeal is preferred by defendant 3 in the trial court under Section 96, C.P.C. challenging the judgment and decree dated 7-11-1986 passed in o.s. No. 722 of 1982 by the learned first additional city civil judge, Bangalore, decreeing the suit for Rs. 63,415.80ps. With interest against defendants 1 to 3 jointly and severally but restricting the liability of the third defendant-appellant to an extent of Rs. 50,000/- only.

(2.) the appeal arises in the following circumstances :defendant 1 with defendant 2 as co-obligant raised a loan of Rs. 30,000/- from the plaintiff-canara bank on 15-10-1977 repayable with interest for buying the machinery. The loan was repayable in 24 equal monthly instalments of Rs. 1,250.00 each; promissory note and other documents were executed. Defendants 1 and 2 executed a hypothecation agreement hypothecating the existing machinery and the machines to be purchased. Third defendant who is the appellant before this court, stood as a guarantor and executed a guarantee agreement on 15-10-1977 restricting its liability in the sum of Rs. 50,000/-. Defendants 1 and 2 acknowledged their liability in writing on 8-7-1980. Since there was default, the bank instituted the suit against defendants 1 to 3 claiming the amount due on the loan.

(3.) defendants 1 and 2 were proceeded ex parte, defendant 3 alone contested the suit. Defendant 3 denied the plaint allegations with regard to executing the guarantee agreement and contended that the validity of the guarantee agreement and other documents was the subject matter of the suit in o.s. No. 303 of 1982 and that suit was pending and therefore the present suit required to be stayed. It further contended that its liability is discharged because of the acts of commission and omission on the part of the plaintiff-bank. According to third defendant, by the negligent acts of the bank, securities available to it were lost and in that view liability of the third defendant stood discharged.