SRINIVASA CONSTRUCTION CORPORATION Vs. CANARA BANK

JUDGEMENT

(1.) This Appeal Suit is filed by the defendants 1, 2 and 4 aggrieved by the judgment and decree dtd. 31/10/2006 in O.S.No.23 of 2005 (originally O.S.No.9 of 2005) passed by the Additional District and Sessions Judge (Fast Track Court-II, Ranipet), Vellore District in and by which the Suit for recovery of money filed by the plaintiff bank was decreed by the Trial Court by passing a preliminary decree directing the defendants to deposit a sum of Rs.18,12,933.99 with further interest at the rate of 6% per annum till the date of realisation. In this judgment, the parties are referred to in the same ranking as before the Trial Court.

(2.) The case of the plaintiff/Bank is that the first defendant is a partnership firm and the defendants 2 to 4 are its partners. The firm availed a loan of Rs.50,000.00 on 7/6/1989 agreeing to repay the debt with interest at the rate of 16.5% per annum compounded quarterly for the value received. A promissory note duly signed by the second defendant on behalf of the first defendant firm in the capacity of Managing Partner was executed. The debt was followed by two letters of Acknowledgement of Debts dtd. 2/7/1991 and 20/3/1993. The balance outstanding on account of the said loan was Rs.31,608.00 with further interest inclusive of penal interest upto 15/11/1994.

(3.) The first defendant also availed overdraft facilities to the tune of Rs.2,00,000.00 and two promissory notes were executed by the first defendant firm on the same terms and conditions. The two promissory notes are dtd. 7/6/1989 for Rs.1,00,000.00 and another for Rs.2,00,000.00 on 20/10/1990. The first defendant firm also executed a Deed of Hypothecation. The loan was also acknowledged by letter on 1/2/1992 and the balance outstanding on the said account as on 31/12/1991 was Rs.3,35,376.00. Thereafter, on 17/2/1993, in respect of the total liability arising out of both the transactions, the second defendant deposited the title deeds in respect of the Suit Schedule Property by duly executing a Memorandum of Deposit of title deeds and created a mortgage of making the suit property as security in respect of the entire loan amount. The defendants defaulted in repayment and therefore as on the date of filing of the Suit, the total outstanding amount was Rs.5,10,773.00 along with future interest at the rate of 21.25% and hence the Suit.