B L NANJAPPA Vs. SANGLI BANK LTD

JUDGEMENT

(1.) THIS Revision Petition under section 18 of the Karnataka Small causes Courts Act, arises from the judgment and decree dated 12th March, 1997 delivered by the VI Addl. Judge, Court of Small Causes, bangalore (Shri K. Ninge Gowda), decreeing the plaintiff's suit for a sum of Rs. 10,462. 43 ps. with current and future interest at the rate of 18. 5. per cent per annum on the sum of rs. 10,000/ -.

(2.) THE facts of the case in a nut-shell are that the plaintiff filed O. S. No. 5445/93 against defendants 1 to 3 for recovery of a sum of rs. 10,462. 43ps with current and future interest with costs. The case of the plaintiff-respondent has been that the first defendant borrowed a sum of Rs. 5,000/- from the plaintiff on 26. 2. 1983 for the purpose of improving his business, which was run by him under the name and style of "m/s Sheetal Travel Agencies', agreeing to repay the said amount of loan with interest at the rate of 18. 5% p. a. compounded quarterly and the first defendant, in this connection, had executed a promissory note. agreement of pledge, letter of lien and set off dated 26. 2. 1983 and continuing security letter dated 26. 2. 1983 in favour of the plaintiff-respondent. According to the plaintiff's case. defendants 2 and 3 stood guarantee and executed letter of guarantee dated 26. 2. 1983 in favour of the plaintiff-respondent. According to the plaintiff, the first defendant was very irregular in repayment of the loan and he was due in a sum of Rs. 7,566. 83 as on 28. 6. 1985 to the plaintiff. On 12. 7. 1985, according to the plaintiff's case, the first defendant had executed a letter of confirmation. On 10. 1. 1985, the first defendant had acknowledged the liability by executing of a letter of acknowledgement. Further, the plaintiff's case is that in spite of repeated demands and legal notice, the defendants has not repaid the amount in question which amounts to Rs. 10,462. 43ps. as on 31. 3. 1987. In view of the above circumstances, the plaintiff had filed S. C. No. 5445/93 before the Court below praying for a decree, recovery of aforesaid sums with past and future interest as mentioned above.

(3.) DEFENDANTS 1 and 2 (defendant 2 is the petitioner herein) filed a written statement, but the third defendant did not put in appearance, though served, and he was treated as exparte before the trial Court. It has been admitted that first defendant borrowed a sum of rs. 5,000/- from the plaintiff on 26. 2. 1983, but denied that they agreed to pay interest at the rate of 18. 5% p. a. According to the defendants, the loan was taken under the self-employment scheme with interest at the rate of 10. 5% p. a. and there was no agreement to pay interest at the rate of 18. 5% p. a. at quarterly rest. According to the first defendant, he suffered loss in the business, closed down his business and therefore, he could not repay the amount of loan. As regards the execution of guarantee dated 26. 2. 1983, they admitted the same. They contended that neither they gave their consent for continuation of the loan amount, nor they continued their guarantee. The defendants denied execution of any acknowledgement of debt or confirmation letter. They also denied issuance of notice to them by the plaintiff. Plea of limitation was also raised and it was asserted that the rate of interest charged at 18. 5% p. a. was exorbitant. On the basis of the above pleadings of the parties, the trial Court framed the following issues :