HUKUMCHAND INSURANCE CO LTD Vs. BANK OF BARODA

JUDGEMENT

(1.) This appeal by the second defendant, an Insurance Company under the name and style Fukumchand Insurance Company is directed against the judgment and decree dated 3-2-1973 in O.S.No.9 of 1970 on the file of the Court of the II Additional Civil Judge, Belgaum, by which the Court-below held the second-defendant liable to the suit claim to the extent of Rs.1,66,231-15 on the basis of a Credit Indemnity Policy dated 28-12-1967 issued by it in favour of the plaintiff.

(2.) The facts, in so far as they are material for the disposal of this appeal, are the following : Plaintiff, Bank of Baroda, is a Nationalised Bank, Defendant-1 is a firm of partners of which defendants 1 (a) to 1 (f) are stated to be the partners. On 28-1-1967, first defendant executed what is styled as a "Cash Credit Agreement" with the plaintiff and secured cash credit facility to the extent of Rs.2,00,000/- for the purpose of its business. By way of security the movable assets of the firm were hypothecated in favour of the creditor-Bank. In addition, under a mortagage by deposit of title-deeds certain immovable properties situate at Wadgaon, Belgaum, Mahadevpur and Angol were offered as security for the said loan. On 28-12-1967, second defendant issued what is styled "Bank Loan/ Cash Credit Indemnity Policy", as per Exhibit-P-6, by which in consideration of the payment of Rs. 3,000 by the first defendant, the second defendant undertook to indemnify the plaintiff against losses that may be suffered by the plaintiff in consequence of any default on the part of the first-deiendant in due repayment of ail moneys at any time payable by the first-defendant to the plaintiff, provided that the liability under that Policy did not exceed the principal sum of Rs.2,00,000/-. The first- defendant having committed default in the matter of re-payment of the moneys borrowed from the plaintiff, plaintiff instituted tne present suit against both the defendants and sought recovery of Rs. 2,24,334-33 from them.

(3.) First defendant while admitting the liability, disputed, in some measure, its extent and sought for the grant of instalments in re-payment.