S A SATTAR Vs. KURUVILLA

JUDGEMENT

(1.) Plaintiffs are the appellants. Suit was instituted for recovery of an amount of Rs. 10 lakhs with interest at the rate of 18% per annum from the ate of the suit till realisation from the defendants jointly and severally. The relief sought for in the plaint is primarily based on the Bank guarantee, Ext. A3, dated 12.3.1981.

(2.) While the suit was pending, first plaintiff died and his legal representatives, plaintiffs 4 to 6 were impleaded as per order in LA. No. 3995 of 1986. Defendants 4 and 5 represent the State Bank of India, the successors of the erstwhile Bank of Cochin Ltd. who executed a Bank Guarantee at the instance of Dl to D3 in favour of the plaintiffs. Even though it is stated in the plaint that the amount is sought to be recovered jointly and severally from the defendants, counsel for the plaintiffs maintained the stand that he is mainly concerned with enforceability of the Bank guarantee executed by the erstwhile Bank of Cochin Ltd., now the State Bank of India.

(3.) Short facts which are necessary for the disposal of the appeal are as follows. Plaintiffs were erstwhile Directors of a private limited company by name, Premier Steels Private Limited. While the plaintiffs were running the said company, husbands of defendants 1 to 3 negotiated with the plaintiffs for the purchase of the shares of the company as a running concern for a sum of Rs. 15 lakhs. During the course of finalization of the negotiations, they requested that they may be relieved of paying the entire sale consideration in a lump, and payment of the purchase value of the shares be deferred to be paid in instalments. This was agreed to by the plaintiffs. An advance of Rs. 50,000/- was paid towards final settlement of the negotiations. This amount was advanced by cheque by one L.K. Prabhu, husband of the second defendant at the instance of defendants 1 to 3. ,