BANK OF BARODA Vs. HIMALAYA BRUSH INDUSTRIES

JUDGEMENT

(1.) THIS is a suit for recovery of money by plaintiff Bank.

(2.) DEFENDANT No. 1 is a partnership firm carrying on business of manufacturing brushes. Defendant Nos. 2 to 5 are partners of the firm and defendant No. 6 is the guarantor.

(3.) DEFENDANT No. 1 applied for grant of credit facilities and was given cash credit facility against hypothecation to the extent of Rs. 75,000/- and cash credit against book debts to the tune of Rs. 50,000/- on execution of necessary document. Defendants No. 2 to 5 as partners of defendant No. 1 executed documents like demand promissory note, hypothecation deed, letter of continuing security in respect of both the facilities; whereas defendant No. 6 executed guarantee deed for the aforesaid facilities granted to the defendant Nos. 1 to 5. On execution of all the necessary documents, defendants opened a current account. Defendants converted their account to cash credit. The facility was thereafter enjoyed by the defendants and from time to time amounts were withdrawn. Plaintiff bank maintained the account of the defendants. The amounts were withdrawn by cheques issued under the signatures of two partners as required by the bank. The defendants agreed to pay interest at 4?% over bank rate subject to minimum of 13?% calculated on daily balance with quarterly rests. When the defendants were found irregular in making repayment and huge amount was due from them, the plaintiffs called upon the defendants to clear the dues by letter dated 27-10-1979. Defendant No. 3 by letter dated 2-11-1979 denied to have availed of or enjoyed any facility or even have opened an account with the bank. Similar was reply of defendant No. 4. However, there was no reply from defendant No. 2. Defendant No. 6 was also called upon to make payment by letter of 27-10-1979. Defendant No. 6 also did not bother to make any payment and therefore advocates notice was issued to all the defendants calling upon them to pay sum of Rs. 98,313. 83 against cash credit hypothecation and against cash credit (book debts) amount of Rs. 57,573. 15 along with interest as per the agreement. Defendant No. 3, 4 and 5 replied through their advocate denied to have obtained any credit facility and defendant No. 6 also denied having given security for loan advanced to defendant Nos. 1 to 5 and therefore plaintiffs had no alternative, than to approach this Court.