NEW BANK OF INDIA TRIVANDRUM Vs. SAJITHA TEXTILES

JUDGEMENT

(1.) This appeal is filed from the judgment and decree of the Second Additional Sub-Judge of Trivandrum in O.S. No. 99 of 1984.

(2.) The appellant was the plaintiff in O.S. No. 99 of 1984. The appellant is the New Bank of India. The first respondent is the proprietary firm called M/s. Sajitha Textiles. The first respondent Had taken a loan advanced by the M.G. Road Branch at Trivandrum of the plaintiff-Bank. It was as per cash-credit facility to the tune of Rs. 20,000/ - as on 12-8-1978. As security for the said cash-credit facility the first respondent executed an agreement of hypothecation on 12-8-1978 hypothecating his entire stock in trade stored in his shop M/s. Sajitha Textiles and he hypothecated the entire furniture and fixtures like ceiling fans etc. in the shop and agreed to pay interest at the rate of 15% per annum with quarterly rests on all the amount due as per the cash-credit account in the name of the first respondent. On the same date, the first respondent executed a pronote for Rupees 20,000/- with interest at the rate of 15% per annum with quarterly rests. He also executed a letter of waiver regarding the pronote and a letter of continuity. The second defendant executed a deed of guarantee in favour of the bank on 12-8-1978. The first defendant was operating the account and when the amount due to the bank exceeded the sanctioned limit, the bank asked the first defendant to regularise the account. When the amount came to Rs. 30,000/- the first respondent executed another pronote for that amount with interest at the rate of 15% per annum with quarterly rests and a letter of waiver and a letter of continuity were executed with a fresh agreement of hypothecation on 6-8-1979. The first respondent executed a letter of undertaking. Then the second respondent executed a fresh deed of guarantee for the amount of Rs. 30,000/- on 6-8-1979. Later the amount drawn by the first respondent came to Rs. 40,000/- and on 22-4-1981 fresh pronote and agreement of hypothecation with letter of undertaking were executed by the first respondent. The stand taken by the appellant was that the guarantee given by the second respondent extended and covered all further sum due as per the loan account in the name of the first respondent. Thus the suit was filed when the first respondent did not regularise the loan account in spite of repeated demand.

(3.) The first respondent remained ex parte and the second respondent contended before the Trial Court that he was a party to the transaction and that he had not executed any letter of guarantee. According to him he accompanied the first respondent to the appellant Bank with a salary certificate and that he had not signed any document. Thus according to him the alleged deed of guarantee was only a forged one. Thus he denied the liability to pay the amount as claimed in the plaint.