CANARA BANK Vs. M.K. INDUSTRIES AND ORS.

JUDGEMENT

(1.) THE appellant bank filed a suit for recovery of Rs. 5,43,472.00 against the defendants with the allegation that respondent No. 2 herein was the sole proprietor of the first respondent and had imported "Brass Scrap Honey" from Holland under OGL. A revision in the custom duty had arisen which was challenged by respondents 1 & 2 by filing a writ petition before this Court and the Court had directed stay of the differential duty on furnishing a bank guarantee for a sum of Rs. 3,75,000.00, being 50 per cent of the differential amount.

(2.) IN order to obtain the said bank guarantee respondents 1 & 2 along with the third respondent approached the appellant bank and in view of the documents executed by the respondents, the appellant bank issued the bank guarantee with 10 per cent margin money. Respondent No. 3 deposited the sum of Rs. 37,500.00, being the 10 per cent margin money with the appellant bank.

(3.) THE appellant claimed that it was entitled to interest @ 17.5 per cent per annum on the amount of Rs. 3,75,000.00, being the contractual rate of interest. Respondents 1 & 2 did not even appear and were proceeded ex parte while respondent No. 3 filed the written statement. Respondent No. 3 sought to set up defences that it is only at the request of some relatives that he had furnished the margin money and that he did not know the first two respondents.