INDIAN BANK Vs. VENKATESHARA PRINTING PRESS

JUDGEMENT

(1.) This is a suit for the recovery of Rs. 9,24,089.00 (Rs. Nine lakhs twenty four thousand eighty nine only). The Plaint discloses that on the application of Defendant No. 2, who is the proprietor of Defendant No. 1, and in considerate, i of Defendants 3 and 4 having stood personal guarantee for the repayment of the Credit Facilities granted by the Plaintiff to Defendant No. 1, an Open Cash Credit (in working capital) Facility of Rs. 1,00,000.00 one lakh only), and a Medium Term Loan of Rs. 1,00,000.00 (Rs. one lakh) was granted on 7.7.1989. On the request of Defendants 1 and 2 the Plaintiff increased the Cash Credit Facility by a further sum of Rs. 1,00,000.00(Rs. one lakh only), and on a further request made by them converted this into a normal Open Cash Credit Facility. The following documents were executed.

(2.) Defendants 3 and 4 renewed the guarantee on 3.6.1992. The Plaint further states that in 1981 the Defendants had agreed to pay interest at the rate of 4% and 3.5% per annum over and above the R.B.I, rate subject to a minimum of 14% per annum and 13.5% per annum with quarterly rests in the Open Cash Credit Account and Medium Term Loan account respectively. On to pay the interest was agreed between the parties to be payable at the rate of 18.25% and 15.5% respectively and that the interest rate would be increased or decreased in accordance with the R.B.I. guidelines. It is stated in the Plaint that at the time of its filing the Defendants were liable to pay interest at the rate of 20.75% per annum and 19.75% per annum respectively. The Defendants also obligated themselves to pay additional penal interest at the rate of 2% per annum over and above the prescribed rates in case of delay or default in the repayment schedule. Since this has occurred the Defendants are liable to pay interest at the rate of 22.75% per annum and 21.75% per annum respectively with quarterly rests.

(3.) It is further averred that the Defendants acknowledged their indebtedness on 24.3.1994 for a sum of Rs. 4,01,022.40.00 (Rs. Four lakhs one thousand twenty two and paise forty only) and Rs. 2,11.646.05.00 (Rs. Two lakhs eleven thousand six hundred forty six and paise five only) on these two accounts, as on 31.12.1993. They further acknowledged the liability in terms of their lters dated 28.1.1991, 3.9.1991, 31.3.1993, 2.12.1994 and 26.6.1995. In accordance with the Plaintiffs books of accounts maintained by them in the ordinary course of business, a sum of Rs. 6,88,280.00 (Rs. Six lakhs eighty eight thousand two hundred eighty only) was due and payable against the Open Cash Credit amount and Rs. 2,35,800.00 (Rs. Two lakhs thirty five thousand eight hundred only) in respect of the Medium Term Loan Account, thereby aggregating Rs. 9,24,080.00 (Rs. Nine lakhs twenty four thousand and eighty only) as on 31.12.1991. A Legal Notice issued on 14.11.1994 failed to elicit the requisite response. Hence the suit.