STATE BANK OF INDIA Vs. SHIVPRASAD FIREWOOD

JUDGEMENT

(1.) This Appeal is preferred by the state Bank of India challenging the 386 Banking Cases 1994 dismissal of its suit against the Respondents for recovery of Rs. 65,549.69 ps. with future interest and costs.

(2.) In order to appreciate the controversy which has given rise to this appeal it will be necessary to make a brief reference to the pleadings of the parties. The case of the Appellant/plaintiff is briefly as follows : On April 19, 1980 the Appellant granted to the Respondent Nos. 1 and 2 defendant Nos. 1 and 2 cash credit facility upto Rs. 50,000/-. The Respondent No. 1 is a proprietory concern of the Respondent No. 2. The Respondents agreed to repay the loan together with interest thereon at the rate of 3-1/2 per cent below the state Bank of India advanced rate, minimum 13 % per annum with quarterly rests. The Respondent Nos. 1 and 2 executed in favour of the Appellant a promissory note in the sum of Rs. 50,000/-. The Respondents also created a first charge by way of hypothecation in favour of the Appellant in respect of the stocks, all outstanding goods, machinery and book debts and other assets. The Respondent No. 3 defendant No. 3 agreed to act as a guarantee and duly executed a guarantee bond in favour of the Appellant. In or about December 1980 the limit of cash facility was increased from Rs. 50,000/- to Rs. 1,00,000/-. The Respondent Nos. 1 and 2 availed of the Bank facility and withdrew the amount from time to time. The operation of the account of the Respondent Nos. 1 and 2 was irregular and the drawings were disproportionate to stocks in business. The Respondent Nos. 1 to 3 failed and neglected to repay the said loan even after several demands. On these averments the Appellant claimed Rs. 65,549.65 ps. with future interest at the rate of 15.5 % per annum.

(3.) In contesting the Appellant's claim the Respondents raised various contentions in their written statement Ex. 19. The respondents contended that the respondent No. 1 is the proprietory concern of respondent No. 3 and that the respondent No. 2 was only looking after the business of the respondent No. 1 as she happened to be the daughter of respondent No. 3. The Respondents contended that out of the amount of Rs. 50,000/- sanctioned by the Appellant, Rs. 25,000/- were taken by one Vaidya, the then Branch Manager of the Appellant and Rs. 3,000/- by one Deshpande, then accountant with the Appellant. The said Batik Officers agreed that they will deposit this amount along with interest in the account of the respondent No. 1 but they did not keep their promise. The respondents also contended that 1400 quintals of Charcoal was hypothecated by the respondent No. 1 and the same was taken in possession by the appellant. According to the respondents the value of the hypothecated Charcoal was about Rs. 1,00,000/- and as the appellant refused to release the said goods, the respondents sustained heavy loss. The respondents also contended that a part of the hypothecated stock was sold by the appellant without Notice to the respondents and on that count also the Respondents suffered loss as the goods were sold at very low rate. It was also contended by the respondents that the interest charged by the Batik was excessive. The Respondents lastly contended that the Bank Officers who allegedly took money from them were necessary parties to the suit.