SUNEEL KUMAR GUPTA Vs. PUNJAB AND SINDH BANK

JUDGEMENT

(1.) These two appeals are directed against the same judgment and decree dated 17-9-1998, passed in Civil Suit No. 260 of 1987 by learned Civil Judge (Sr. Division), Hardwar. As such, both the appeals are being taken up to gether for its disposal.

(2.) Brief facts of the case are that plaintiff/bank allowed a cash credit facility to defendant No. 1 who is proprietor of M/s. Madhu Shree Industries (defendant NO. 2) on 1-4-1980 for a sum of PS. 65,000/- in respect of which a promissory note was executed by defendants. Defendant Nos. 3 to 5 are the guarantors of said loan, Defendant No. 2, hypothecated its goods to the bank, apart from executing equitable mortgage of his property. On 24-12-1980, cash credit limit was extended to Rs. 1,25,000/- on interest at the rate of 19.40% with quarterly interest thereon. After few years, defendant Nos. 1 and 2 stopped to submit the hypothecation statement to the bank. On 28-9-1986, plaintiff/bank served a notice on the defendant No. 1 for repayment of loan on which he promised to pay the sum of installment of Rs. 10,000/- per month. However, he deposited only Rs, 4,000/-.on 8-12-1986 and failed to pay anything thereafter. Meanwhile on 27-11-1986 and 31-11-1986, a hypothecation agreement and a prq- note was executed by defendant Nos. 1 and 2 for Rs. 4,78,505.61 and Rs. 4,80,521.01 respectively. Defendant Nos. 3 to 5 undertook to pay the debt jointly and severally. When the defendants failed to pay the debt, suit No. 260 of 1987 was instituted by the plaintiff/bank for a total sum of Rs. 5,64,158.56 with interest, before the Civil Judge (Sr. Division), Hardwar.

(3.) Defendant Nos. 1 and 2 contested the suit and filed the written statement before the trial Court in which they admitted having been cash credit facility to the tune of Rs. 65,000/-. It was also admitted by the defendants that raw material was hypothecated in favour of the bank by them. However, they denied other terms and conditions. Defendants did not deny the plea in the plaint that cash credit facility was not extended to Rs. 1,25,000/-. In the written statement, the contesting defendants pleaded that in December, 1983, a fire took place in the factory of the defendants and the entire stock got destroyed. According to the defendants, due notice of the aforesaid incident was given to the plaintiff/bank. Challenging the amount of interest claimed by the plaintiff, it was pleaded in the written statement that the account maintained by the plaintiff/bank was not proper and the defendants have not shown the proper account of the loan. It is also pleaded by the defendants that the suit is not maintainable for recovery of the loan against the defendants unless the amount due remains unsatisfied after the sale of mortgaged goods. Lastly, it is pleaded that the defendants should be discharged against Sections 139 and 141 of Indian Contract Act, 1872.