DENA BANK Vs. PRAMOD KUMAR

JUDGEMENT

(1.) This Suit has been filed by the plaintiff-Bank for recovery of Rs.8,34,632.50 along with interest and cost. It is averred in the plaint that the plaintiff is a body constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 with Head Office at Cuffe Parade, Bombay and one of the branch office at 'Goverdhan', Nehru Place, New Delhi. Shri Ramgopal HarikishanJi Khandelwal is the Branch Manager and General Attorney of the plaintiff-Bank, who is fully conversant with the facts and circumstances of the case and is authorised to do all acts on behalf of the Bank. Defendant no.1 is the sole proprietor of M/s. Kaveri Industries, who approached the plaintiff-Bank in mid-June, 1978 for grant- of various credit facilities.

(2.) Defendants 2 and 3 offered securities for due payment Defendants 2 and 3 offered securities for due payment of the credit facilities to be granted by the plaintiff. After examining the proposal of the defendants and their financial status, the plaintiff-Bank agreed to advance credit and sanctioned three credit facilities, i.e. Rs.1,50,000/~ against hupothecation of raw materials, stock-in-trade, etc - and term loan of Rs.1,75,000/~ against hypothecation of machineries already existing and to be purchased and of Rs.70.000/- for bill purchase. On 16/06/1978 the defendants executed following documents in respect of the two credit facilities i.e. the cash credit facility against hypothecation of stock and term loan against hypothecation of machineries :- i. Demand Promissory Note of Rs.1,50,000/~; ii. Demand Promissory Note for Rs.1,75,000/~; iii.Ketter treating the Demand Promissory Note of Rs.1,50,000/~ as continuing security; iv. Agreement of hypothecation of goods. The defendants 2 and 3 on , 16/06/1978 also executed separate Deeds of Guarantee in respect of the loans to be advanced and they further assured to the plaintiff-Bank that they would be personally liable as guarantors also to get the amount adjusted in the event of committing default by the defendant no.1. After ten days, i.e. 26/06/1978 the defendant no.1 also by executing term loan agreement against hypothecation of plant and machinery and equipments existing as well as to be purchased in future hypothecated them with the plaintiff-Bank.

(3.) The defendant no.1 placed orders for purchase of machineries on various parties and submitted their bills and invoices and assured the Bank that he had paid the margin money. On this assurance the plaintiff-bank made payment, directed to suppliers in 1978 against credit facilities for purchase of machineries. As per the sanctioned letter the defendant no.1 was required to refund the amount after six months of the installation machineries within a period of five years in equal quarterly instalments of Rs.8,750/- each. It is stated in the plaint that on or about, 16/04/1979 the defendant informed that he wants to purchase new machinery from M/s. M.Khanna and Company and paid the margin money. Accordingly, a sum of Rs.80,900/- was paid directly to M/s. M.Khanna and Company on 23/04/1979. As on 16/01/1981 when the defendant applied for enhancement of credit facilities, sums of Rs.1,67,000/- and Rs.1,12,000/- were outstanding in the two credit, facilities. At request of other defendants, the defendant no.l was allowed to avail the limit of Rs.1,75,000/~ instead of Rs.1,50,000/- and a temporary limit of Rs.25,0007- was sanctioned. On or about 2 4/11/1983 the defendants were requested to deposit the outstanding amount. As they have failed to pay the amount and on their expressing financial inability to pay the amount, they agreed to renew the documents and accordingly executed fresh documents on 1/12/1983. The defendant no.1 acknowledged its entire liability as on 2 8/11/1986 and executed a Demand Promissory Note in favour of the plaintiff-Bank and also placed the same as continuing security. Defendant no.2 also executed a fresh Deed of guarantee on 2 8/11/1986 guaranteeing the repayment of the outstanding dues of the plaintiff-bank. It is further averred in the plaint that inspite of repeated requests, the defendants have failed to pay the amount and letters sent to them are received back with the remarks that the letters have been refused. The plaintiff-bank was thus left with no alternative except to file the present Suit.