KARNATAKA BANK LTD Vs. GAJANAN SHANKARARAO

JUDGEMENT

(1.) This appeal by the plaintiff in O.S. 10 of 1967 on the file of the Civil Judge at Hubli is directed against that part of the judgment and decree dated 25-2-1972 by which the Court-below, while granting a decree against the principal-debtor, the first defendant in the suit for the sum of Rupees 32,757 negatived the claim against the sureties, defendants 2 and 3 who are respondents 1 and 2 respectively in this appeal.

(2.) Appellant claiming to be the successor-in-interest of Bank of Karnataka Ltd, Hubli, instituted the suit from which this appeal arises, for the recovery of the sum. of Us.32, 757 against the first defendant as the principal debtor in enforcement of the pronote for Rs. 25,000, Ext.P1, and the hypothecation bond, ExtP2, relating to the Truck MYG 3031 and against defendants 2 and 3, on the basis of the surety bond, Ext.P3; the said transactions under Exts.P1, P2 and P3 having been entered into by the defendants with the Bank of Karnataka Ltd, Hubli. Appellant claims that the assets and liabilities of the said Bank of Karnataka are taken over by the appellant on 29-12-1966.

(3.) The defence urged by respondents 1 and 2 in the Court below, inter-alia, was that appellant was not the holder in due course of the negotiable instrument, Ext.P1 and was not competent to maintain the the action thereon; and that the appellant and the Bank of Karnataka from which appellant derives title having allowed the security under the hypothecation bond, Ext.P2, to be impaired and lost owing to their own negligence and defaults and having thereby rendered themselves disabled from, giving to the sureties the benefit of the security, the liability of respondents 1 and 2 as sureties has had to be reduced to the extent of the value of the security so impaired.