PUNJAB NATIONAL BANK Vs. LAXMI ENTERPRISES

JUDGEMENT

(1.) The plaintiff Bank has sued the defendants for recovery of Rs.7,36,380.40 with interest.

(2.) . The defendant No.1, Laxmi Enterprises, a partnership concern of defendants 2 & 3, approached the plaintiff Bank vide their application dated 31/12/1990 for grant of cash credit limit of Rs.4,00,000.00 lakhs as working capital and term loan of Rs.1.20 lakhs for the purchase of machinery. The plaintiff Bank sanctioned cash credit limit of Rs.3,00,000.00 lakhs @ 6.5% per annum over RBI rate with minimum of 16.5% p.a. with quarterly rests against hypothecation of raw material etc. A term loan of Rs.1.20 lakhs with interest @ 6.5% per annum over RBI rate with minimum of 16.5% p.a. against hypothecation of machinery was also sanctioned.

(3.) . In consideration of aforesaid facilities, defendants 2 & 3 on behalf of defendant No.1 executed various documents in favour of the plaintiff Bank, as detailed in paragraph 6 of the plaint. The defendant No.4 executed an agreement of guarantee in respect of the said facilities in favour of the plaintiff Bank agreeing to abide by all the terms and conditions of the loan transactions, and had given an undertaking to pay jointly and severally to the plaintiff Bank the amount which may become due from the defendants 1 to 3. The guarantee was a continuing one.