SYNDICATE BANK AND ANOTHER Vs. KRISHNA AND OTHERS

JUDGEMENT

(1.) This appeal is filed by the original plaintiff-Syndicate Bank and its branch office at Nagpur, both duly represented by one Shri Musale as the duly authorised Principal Officer for institution of the suit. Plaintiff suit for recovery of Rs. 58,041.70 came to be dismissed, both against the defendant No. 1 as the principal debtor and the defendant Nos. 2 and 3 as the sureties. The suit came to be dismissed on one single finding of fact that the plaint in the case was not duly presented, the suit was not competently filed. The dismissal of the suit thus is challenged by the plaintiff Bank.

(2.) According to the plaintiff, the defendant No. 1 No. Krishna Patil claiming to be a person having about 6 months experience in the transport operator's line, desired to start his own business and needed money for the purchase of a Matador make delivery van. He, therefore, approached the plaintiff Bank for financial assistance in the sum of Rs. 55,000/-. The defendant No. 3as he further represented being himself in the transport line, was to assist him in the conduct of the proposed business. Defendant No. 1 quoted the price of the Matador Van as being Rs 52,377.43. The defendant Nos. 2 and 3 expressed their willingness to be co-obligants and/or guarantors to the Bank for any amount that may be financed to the defendant No. 1, upon his application dated 3.2.1976 for assistance. An amount of Rs. 50,000/- was accordingly sanctioned for being advanced in favour of the defendants and actually an amount of Rs. 46,125/- was advanced to the defendant No. 1 on or about 17.4.1976, in token of receipt of which the defendant No. 1 executed a proper receipt. Some time on 19.4.1976, the defendant No. 1 obtained from the plaintiff Bank Pay Order, payable to the dealer from whom the vehicle was to be purchased. The Van was accordingly purchased by him, delivery taken and vehicle duly registered with the R.T.O., Nagpur. The vehicle was also then hypothecated with the plaintiff Bank. On 19.4.976, the defendants entered into an agreement with the Bank in respect of the amount of Rs. 46,125/- which was advanced to and received by defendant No. 1 on 17.4.1976, the terms and conditions were agreed upon, as stated in this Deed of Agreement, the principal sum of Rs. 46,125/- was to be paid in instalments, on the dates as mentioned in the schedule attached to the agreement. The first instalment was accordingly due on or before 19th May, 1976, the subsequent instalments were to be paid on or before the 19th of every month next following, the last instalment was to be of Rs 525/- due on or before 19th July, 1979. The defendants also agreed to pay, in the meantime interest on the principal sum of Rs. 46,125/- or on so much thereon as would from time to time remain unpaid. The interest was to be at a rate of 3-1/2% over and above the Reserve Bank of India rate, subject to a minimum of Rs. 12-1/2% per annum. It was further agreed that if the interest on instalments were not paid on the dates due, the arrears in the loan would carry overdue interest at the rate of 21% per annum, the vehicle hypothecated with the same and possessed by it as security for due payment and would be possessed by it as security for due payment by the borrowers, until closing of the aforesaid advance in full, with interest.

(3.) The defendants, however, failed to make repayment of the amount advanced together with interest, of all instalments as stipulated. According to the plaintiff, in addition to the sum secured i.e. Rs. 46,125/-, interest added as due and outstanding, a total amount of Rs. 58,041.70 was due outstanding. Since the loan account of the defendants was irregularly attended to, letters were addressed to the defendant from time to time and expenditure on that count was also debited to the account of the defendant. Such registered letters have been sent on 13.9.1979, 28.9.1979 and 3.12.1979. However, all these attempts of the plaintiff bank proved to be abortive and the loan account stood as it was. Finally the plaintiffs sent a notice dated 29.1.1980 to the defendants, calling upon them to pay the balance outstanding in the sum of Rs. 56,320.15, which was due as on 1.1.1980. The notice was not heeded to. Thus plaintiffs were entitled to recover Rs. 58,041.70 from the defendant Nos. 1, 2 and 3 and the cause of action for the suit instituted accordingly, arose on 19.4.976 when the amount was advanced and the period of limitation for institution of the suit stood extended by reason of the demands made by the defendants from time to time, the last one being 1.12.1978. The suit was thus within limitation. The plaintiffs further stated that plaintiff No. 1 was the Bank having its head office at Manipal in Karnataka State. The plaintiff No. 2 was its branch and the pleadings had been signed and verified by its principal officer one Shri V.M. Musale, who was authorised in the matter and who is also to depose to the facts of the case.