KARNATAKA BANK LTD. Vs. NARAYANA BHATTA

JUDGEMENT

(1.) THIS Appeal by the Karnataka Bank, the unsuccessful plaintiff, directed against the judgment and decree dated 12 -9 -1983, passed in O.S. No. 13 of 1981 on the file of the Civil Judge, Srirangapatna, dismissing its suit for recovery of money advanced on the security of a contract vehicle, raises certain interesting questions touching the extent of the Bar of Civil Courts' jurisdiction under the Karnataka Contract Carriages Acquisition Act, 1976.

(2.) PLAINTIFF , Karnataka Bank Ltd., on 1 -8 -1972, agreed to advance a sum of Rs. 1,08,000/ - to S. Narayana Bhatta, the first -defendant, to enable him to purchase a new Ashok Leyland Bus to be used as contract -carriage. First defendant's father was a surety. His legal representatives are defendants 2 to 8. The State Government is defendant -9. Out of the sanctioned loan of Rs. 1,08,000/ - Rs. 74,112 -33 was released on 1 -8 -1972 for payment to the supplier of the chassis at Ananthapur. Two sums of Rs. 24,000/ - and Rs. 9,887 -67 were released by the plaintiff on 4 -8 -1972 and 30 -9 -1972. respectively, directly to the body -builder. On 22 -11 -1972, the bus was registered originally as APA 4625, but later assigned a fresh identification mark, MYM 6370. The loan was to carry interest at 6 1/2% above the Bank -rate with Quarterly rests.

(3.) IN the suit the first -defendant and the ninth -defendant filed their writer statements. There were some contentions raised by the first defendant denying the due execution of the loan -documents relied upon by the plaintiff. Having regard to the point on which the suit came to be dismissed, the trial -Court did not go into the merits of those defences. They are, therefore, not material in this appeal. These contentions are left open. The defences which assume materiality in the context of the controversy required to be resolved in this appeal pertain to the effect of the acquisition of the hypothec on the obligations of the borrowers. The specific contention was that after the acquisition of the hypothec all liability arising out of the transaction, stood transferred, and confined, to the "amount" payable under the 'Act' for the acquisition and that having regard to the provisions of the 'Act' for the adjudication and satisfaction of the claims of the secured -creditors and to the express bar of suits under Section 26 of the Act, a suit in a Civil -Court was barred. The ninth -defendant, the State, in its written statement, virtually, subscribed to the same defence ;