VIJAYA BANK Vs. SANSU INDUSTRIES AND OTHERS

JUDGEMENT

(1.) The plaintiff bank has filed this suit under Order 37 of the Code of Civil Procedure (Code for short) for recovery of Rs. 2,05,120.59 with costs and interest against the defendants. Defendant No. l is alleged to be a firm carrying on business in partnership at C-4/145, Safdarjung Enclave, New Delhi 110 016 with defendants 2 and 3 as its partners. Defendant 4 is stated to be the guarantor and husband of defendant 3. It is alleged that in September, 1976 defendant 1 requested the plaintiff bank for grant of certain facilities like term loan, for purchase of machinery and hypothecation limit for working capital requirements. The plaintiff bank by its letter dated 25.9.1976 granted secured loan of Rs. 80,000/- on hypothecation of machinery purchased and to be purchased and overdraft facility by way of open cash credit upon a limit of Rs. 75,000/- on the hypothecation of stocks. In consideration of the secured loan facility defendants 2 and 3 as partners of defendant 1 executed various documents like Demand Promissory Note, Hypothecation Agreement, Article of agreement etc. as detailed in para 5 of the plaint on 31.10.1976. Defendants 2 to 4 also executed letter of guarantee in consideration of the bank agreeing and continue to grant or otherwise giving credit in the name of defendant 1 jointly and severally. Defendant 4 also separately executed a guarantee letter upto Rs. 80,000/- with interest for agreeing and continuing to grant loan or other credit facilities in the name of defendant 1. The facilities were availed by the defendants and on 14.10.1979, defendants 1 to 3 acknowledged their liability in writing as on 30.9.1979 at Rs. 84,343.65. On 3.10.1979, defendant 4 as guarantor also confirmed his liability as on 30.9.1979 at Rs. 84,343.65 and at Rs. 87,960.15 as on 31.12.1979.

(2.) In consideration of the cash credit (overdraft) facility of Rs. 75,000/-, defendants 1 to 3 executed various documents on 27.9.1976 as detailed in para 10 of the plaint. These are Demand Promissory Note, an agreement for demand cash credit on the hypothecation of movable property, a letter of guarantee by defendants 2 to 4, a separate letter of guarantee by defendant 4 and so on. Defendants also confirmed and admitted in writing on 17.4.1977 a sum of Rs. 72,288.49 due from them as on 31.3.1977 and Rs. 69,969.77 as on 30.9.1979. Defendant 4 by a separate acknowledgement confirmed balance due from him to the plaintiffbank on 31.12.1979 stood at Rs. 73,393.67. Defendants failed to repay the secured loan in agreed forty monthly instalments of Rs. 2,000/- each and cash credit overdraft loan of Rs. 75,000/- before 31.10.1977 in spite of a demand letter dated 24.12.1980. Hence the present suit under Order 37 of the Code.

(3.) On being served three different applications have been moved in this case for leave to defend. IA 2453/81 is on behalf of defendant 4, IA 4380/82 is on behalf of defendant 2 while IA 3288/83 is on behalf of defendant 3. Defendant 4 is the guarantor. Although a number of defendants were raised in the applications on behalf of all these defendants, but only some of these pleas have been urged before me. The first plea common to all these defendants is that the suit is not maintainable under Order 37 of the Code. In this respect, defendant 4 alleges that so far as he is concerned, the amount is alleged to be due on the basis of a pronote and since no pronote was executed by him in favour of the plaintiff bank, Order 37 of the Code was not attracted. He was merely a guarantor.