STATE BANK OF INDIA Vs. VIPUL ENTERPRISES

JUDGEMENT

(1.) State Bank of India has sought recovery of Rs.4,64,655.73P from M/s Vipul Enterprises basing its claim on the cash credit facilities provided to the said Firm under the provisions of Credit to Small Scale Industries. These cash credit facilities in the form of cash credit (Factory Type). Cash Credit Bills, Medium Term Loan, Medium Term Equity Funds Scheme, Medium Term Clean Limit were sanctioned in 1982-83, in favour of the Firm through its sole proprietor i.e. defendant No.2. Defendants 3 to 6 stood guarantors for the repayment of these loans. Defendant No.2 was the sole proprietor of defendant No 1 at the lime of sanctionig of these credit facilities. He executed various loan documents. As a security he pledged the goods produced and merchandised by the defendant No.1 with the Bank. Defendants 1 & 2 also agreed to keep the margine in the goods pledged by the defendants to the bank in the ratio of 10% in the raw material and 10% of finished goods. They also pledged machine in the factory premises. It is the case of the plaintiff that the defendant's account became most irregular which inspile of reminders they did not clear the outstanding amounts, hence legal notice was served on them. As per the agreement' and the documents executed by the defendants, they were liable to pay interest at the rate of 18% p.a. on all the accounts except medium term loan on which the defendants agreed to pay interest at the rate of 13.5% p.a. Since the accounts of the defendant became irregular, therefore the plaintiff transferred the outstanding various loan accounts of the defendants to the protested hill accounts on 2nd December,1985. When the outstanding amounts inspile of legal notices were not paid, hence this suit.

(2.) Summons in the suit were issued to defendants. On behalf of defendants 1, 2 & 6 one written statement was Filed on 2nd August,1986. On behalf of defendant No.4 written statement was Filed on 7th October,1986 and by defendant No.3 on 7th August 1986. Defendant No.5 was served through proclamation. The citation appeared in the newspaper "Statesman" on 21st December.1987 but when inspite of publication the defendant No.5 did not appear he was proceeded ex-parte vide order dated 3rd August, 1988.

(3.) On the pleadings of the parlies following issues were framed:-