SYNDICATE BANK Vs. PARERHAT PAPER

JUDGEMENT

(1.) This suit has been filed on behalf of the plaintiff-bank under Order 37 of the Code of Civil Procedure (in short the Code) for recovery of Rs.II,05,251.10 with interest and costs. Since the defendants could not beserved by the ordinary process, the plaintiff filed anapplication bearing IA No. 10473/92 under Order 5 Rule 20 read with Section 151 of the Code for effecting substituted service upon defendants 1 to 3. This application came up for hearing before the Joint Registrar on 4th August, 1993 and the Joint Registrar directed that the aforesaid defendants be served both in the suit as well as in IA 8577-78/91 with the summons in the prescribed manner by means of publication in the newspaper 'Times of India' in Delhi edition as well as in the U.P. edition for 10th November, 1993. The case again came up for hearing before the Deputy Registrar on 10th November, 1993 and it has been stated in the order dated 10th November, 1993 that the defendants 1 to 3 have been served by subs tituted service but none was present on behalf of the defendants on that day. The case was fixed before the Court on 1st December, 1993, but none appeared on behalf of the defendants on that date. Even today the case has been called out second time after a pass over was given, but none has appeared on behalf of the defendants. Defendants have not entered an appearance within the stipulated period despite service. Learned Counsel for the plaintiff submits that since the defendants have failed to enter appearance despite service, the suit may be decreed as prayed. Insupport of his submission, he has relied upon ajudgment of this Court reported in the case of Asea Brown Boveri Ltd. v. Goindwal Steel Ltd., DRJ 1992(22) 144.

(2.) Briefly the facts of the case, as stated in the plaint are that the defendant No. 1 is a partnership-firm of which the defendants No. 2 and 3 are the partners. Defendant No. 1 through its partners, defendants 2 and 3 approached the plaintiff-bank for grant of various facilities which were duly sanetioned by the plaintiff-bank as mentioned in para 4 of the plaint. In para 6 of the plaint it has been stated that the defendants executed several loan documents in favour of the plaintiff-bank in respect of over-draft facility No. SOD70/85 including the demand promissory note dated 9th September, 1985 for Rs. 9,80,000.00 , letter dated 19th September, 1985 agreeing to pay overdue interest and Deed of Hypothecation of goods and monies receivable,. In para 10 of the plaint, it has been stated that the defendants executed fresh loan document in favour of the plaintiff-Bank in respect of Over Draft Facility renumbered as SOD 115/86 including Demand Promissory Note dated 28th November, 1986 for Rs. 9,80,000.00 , Letter dated 28th November, 1986 agreeing to pay overdue interest. Deed of Hypothecation of goods and monies receivable dated 28th November, 1986 and Declaration dated 28th November, 1986 confirming the value of hypothecated stock at Rs.14.30 lakhs. It has further been stated in the plaint that defendants 2 and 3 also executed personal continuing guarantee dated 28th November, 1986 personally guaranteeing the repayment to the plaintiff on demand all and every sum of money which was at that time owing or which may be at any time outstanding against the defendant No. I together with interest and charges. The said guarantee was for an amount of Rs.28.30 lakhs.

(3.) It has further been stated in the plaint that.the defendants started committing default in submission of periodic stocks and otherwise failed to maintain financial discipline and by their letter dated 10th January, 1989 apologised for not being able to deposit any substantial amount for the last 2 or 3 months. The defendants gave a repayment shcedule and agreed to pay minimum of Rs.1.00 lacs on or before 15th February, 1989 and a further amount not less than Rs.1.5 lakhs before 31stMarch, 1989 and thereafter they promised to continue depositing atleast Rs.75,000.00 to Rs.1.00 lakh per month to clear the outstandings. However the the promised payment was not made as scheduled. It has also been stated in the plaint that on 27th March, 1989, the defendants No. 2 and 3, who are the partners of defendant No. I firm, separately acknowledged on their behalf and on behalf of defendant No. I in writing that as on 1st January, 1989 an amount of Rs-7,82,527.59 together with interest @ 18.5% per annum thereon was due as outstanding in respect of the overdraft account which after renewal was numbered as SOD 115/86. Thereafter on 28.3.1989, a payment of Rs.1.00 lakh was made by the defendants. After making the aforesaid payment of Rs.1.00 lakh, the defendants have not made any payment to the plaintiffs. It has then been alleged in the plaint on 23rd July, 1991 anamount of Rs.11,05,863.10 was due as outstanding from the defendants in respect of overdraft facility No. SOD 115/86. The defendants have failed to pay any amount despite notice dated 27th June, 1989 sent by the plaintiff-bank through Counsel, hence the present suit has been filed.