STATE BANK OF INDIA Vs. T R SEETHAVARMA

JUDGEMENT

(1.) The appeal arises from a suit for money. Plaintiff is the appellant.

(2.) A partnership firm by name Reshmy's of which defendants 1 and 2 are the partners availed of loan facilities from plaintiff bank. An overdraft agreement for Rs. 3 lakhs was executed on behalf of the firm on 24-12-1979. A promissory note for the same amount was also executed and handed over as collateral security with a letter of continuity on the same date. As per the agreement it was agreed that the accommodation will be on account of current in the name of Reshmy's at the Kaloor Branch of the plaintiff bank with liberty to overdraw upto a limit of Rs. 3 lakhs. The third defendant had agreed to guarantee the same. The amount borrowed was agreed to be repaid with interest at 18% per annum with quarterly rests. Advances were made to the firm by the Bank. Defendants 1 and 2 failed to operate account properly. On 24-1-1988 third defendant drew a cheque on Vijaya Bank for Rs. 6,600/- in favour of Reshmy's and the same was purchased by plaintiff bank. On presentation the cheque was dishonoured. The amount was not repaid in spite of demands. A cheque was drawn by 4th defendant for Rs. 7, 500/- in favour of Reshmy's which also was dishonoured on presentation by the bank. The amount covered by that cheque was also not paid. Another cheque drawn by Reshmy's in favour of 4th defendant on 5-2-1980 for Rs. 19,380/- was also discounted by Reshmy's with the plaintiff bank. That cheque was also dishonoured on presentation. Another cheque drawn by the third defendant for Rs. 4,500/- on 28-5-1980 was discounted with the plaintiff bank. That cheque also was dishonoured on presentation. The amount covered by the four cheques comes to Rs. 37,950/- together with interest at the contract rate. Those amounts are also liable to be paid by defendants 1 and 2 as partners of Reshmy's. A total amount of Rs. 3,91,540/- was claimed in the plaint of which Rs. 3,28,638/- represents the amount due as per accounts as on 26-11-1982 and interest thereon and the balance amount represents the amount covered by the cheques together with interest.

(3.) Defendants 1 and 2 had executed a dissolution of partnership in which the 5th defendant company also joined as a party. By that deed of dissolution the partnership was dissolved and the assets and liabilities of the partnership were taken over by the 5th defendant. When the bank threatened to institute a suit defendants approached them and the 5th defendant agreed to pay the amount and the stock in trade, stores, laboratory equipments, air conditioners, stock in hand and finished goods situated in and around the premises were hypothecated to the bank. On the basis of that hypothecation a charge is claimed by the plaintiff over those goods. A decree was claimed against defendants 1 and 2 personally and the 5th defendant from out of the assets in their hands. A decree was also claimed against defendants 3, 4 and 6 personally for the amount shown in valuation 2 to 5, the amount covered by the cheques. The third defendant died pending suit and defendants 7 to 9 were impleaded as legal representatives.