CENTRAL BANK OF INDIA Vs. GEETAJI CHEMICAL INDUSTRIES

JUDGEMENT

(1.) This is a plaintiff's appeal arising out of a suit for recovery of money which the Additional District Judge, Delhi has dismissed by the impugned judgment and decree. The facts giving rise to the institution of the suit and the present appeal may be summarized as under :

(2.) The defendant respondent No. 1 herein is a partnership concern with respondents No. 2 to 4 as its partners. The plaintiff bank's case as set out in the plaint was that defendant No. 1 firm approached the plaintiff for the grant of a loan facility in connection with the latter's business against collateral securities of Life Insurance Policies, shares of Joint Stock Companies, properties and farm land. The plaintiff accordingly sanctioned a cash credit facility of Rs.50,000/- against hypothecation of stock of dyes, chemicals etc. as well as against the collateral securities mentioned above worth Rs.70,875/-. Requisite documents necessary in this connection were executed by the defendant borrowers which included a Demand Promissory Note for Rs.50,000/-, a letter of continuity, a letter of waiver and an agreement of hypothecation to secure Demand Cash Credit against goods, all dated 20th June, 1983. The payment of loan was guaranteed by defendant No. 5 who executed a letter of guarantee in favour of the plaintiff.

(3.) A fresh set of documents was executed by the defendants in June, 1987. Since however the defendants were not regular in making payments, they were informed that they should make payments regularly which did not evoke any response. Communications dated 31st August, 1987 and 11th September, 1987 were in that connection sent to the defendants in response to which defendants 1 to 4 by their letter dated 18th September, 1987 assured the plaintiff that they would submit regular statement of stocks in time and adjust the outstanding dues of the plaintiff in the near future as they were expecting their payment very soon. Letters dated 5th October, 1987, 23rd November, 1987, 3rd December, 1987 and 19th December, 1987 pointed out the failure of the defendants to bring down the debit balance, submit balance sheet and trading account and furnish statements of hypothecated stocks.