UNION BANK OF INDIA Vs. C ARUMUGHA MOOPANAR

JUDGEMENT

(1.) THE Union Bank of India, thanjavur (the appellant herein), lent a sum of Rs. 57, 800 to the first defendant (first respondent) on a promissory note dated May 16, 197 5 , which is marked as exhibit A-1. THE second respondent (second defendant) is the father of the first defendant and the third respondent (the third defendant) is the younger brother of the first defendant. THEy executed a letter of guarantee on the same day in favour of the bank. An agreement of hypothecation of agricultural implements was also executed by defendants Nos. 2 and 3 on the same day. THE said documents are marked as exhibits A-3 and A-2, respectively. A mortgage of agricultural lands was created by depositing the title deeds on the same day and the memorandum of title deeds is marked as exhibit A-4. THE bank gave acknowledgment of receipt of documents under exhibit A-5 immediately. THE first defendant paid a sum of rs. 20, 012. 85 and there was a balance of Rs. 89, 102 as on October 21, 1980. It should be mentioned here that the rate of interest as per the documents was 15 per cent. per annum with half-yearly rests. THE first defendant confirmed the correctness of the balance on July 2, 1975 , May 8, 1976 , July 12, 1976 , January 18, 1977 , June 30, 1977 , June 30, 1978 , and June 30, 1979 , and sent the necessary acknowledgments. In spite of repeated demands made orally and in writing, the defendant did not discharge the loan. Hence, the bank filed the suit after issuing a lawyer's notice by registered post on February 9, 1980 ,demanding payment. THE suit was filed on October 21, 1980. In the plaint, a preliminary decree is prayed for for a sum of Rs. 89, 102 with future interest at 15 per cent. per annum till the date of realisation. Consequential prayers for passing a final decree and also for personal decrees against the defendants were made. In the written statement, the defendants contended that the interest claimed is usurious and the suit is barred by limitation as against defendants Nos. 2 and 3. It was also prayed that the plaintiff should proceed against the A schedule property and if it was found insufficient, then it should proceed against the B schedule property. However, in paragraph 9 of the written statement, it was stated as follows : "the defendants confess judgment for the principal amount with interest at 9 per cent. per annum less the amounts paid and a charge decree may be passed against A and B schedules properties to be proceeded against first against A schedule and then against B schedule properties with pre-costs and with lawyer's fees on confessional scale. THE defendants pray that the suit for personal decree against defendants Nos. 2 and 3 may be dismissed with costs. "

(2.) THE trial court held that the suit was not barred by limitation as there were several acknowledgments by the first defendant under exhibits A-11 to A-17. However, the trial court held that defendants Nos. 2 and 3 were not personally liable as they did not receive any money and they did not join the execution of exhibit A-1. THE court also held that the interest charged by the bank was usurious and the defendants being agriculturists were entitled to claim 15 per cent. simple interest from the date of grant of loan. Consequently, a preliminary decree was passed by the trial court for Rs. 81, 138 with proportionate costs and interest at 6 per cent. per annum from the date of decree till the date of realisation. Aggrieved by the said decree, the bank has preferred this appeal. We find that the view taken by the trial court on the question of limitation is correct and the suit is not barred by limitation. As regards the grant of personal decree against defendants Nos. 2 and 3, the trial court is in error in refusing to pass a decree against them. No doubt they have not received money or joined the execution of exhibit A-1. But they have personally executed a guarantee deed on the same day as exhibit A-1. THEy have agreed that the indemnity and guarantee given by them in favour of the bank is absolute and in addition and independent of and not in substitution of any security, guarantee or indemnity the bank may have taken or may take from the borrower or any other person. Thus, defendants Nos. 2 and 3 have made themselves personally liable for the amount borrowed by the first defendant. THE decree of the trial court dismissing the suit as against defendants Nos. 2 and 3 with respect to passing of personal decree is set aside and there will be a personal decree against defendants Nos. 2 and 3 also.