STATE BANK OF HYDERABAD Vs. STAR ELECTRICAL INDUSTRIES

JUDGEMENT

(1.) This appeal is filed challenging the judgment and decree dt. 09-10-1991 in O.S. No. 103 of 1980 of the V Additional Judge, City Civil Court, Hyderabad. The appellant Bank is the plaintiff in the suit. It filed the suit against the respondents/defendants for recovery of a sum of Rs. 1,65,255-86 ps with interest @ 14.5% per annum from the date of the suit i.e. 24-12-1979 till the date of realization and for costs.

(2.) The 1st respondent/1st defendant is a partnership firm with respondents 2 to 6 as its partners. It was engaged in the business of manufacturing of LTGI pins and electrical goods etc. in Jeedimetla, Hyderabad. The plaintiff Bank's branch at Kukatpally, Hyderabad granted credit facility to the defendants by way of a cash-credit facility on the basis of a personal guarantee of Defendant Nos. 7 and 8 and also against the security of stocks of Defendant No. 1 by way of pledge. The defendants requested the plaintiff to give further facility by way of cash credit limit of Rs. 1.00 lakh to be availed by them from the plaintiff Bank's branch at Brabourne Road, Calcutta to enable them to avail the said facility at Calcutta for manufacturing purposes, as by that time their unit at Jeedimetla had not started its production. The Bank sanctioned the said facility also on the security of hypothecation of movable assets of 1st defendant such as raw materials, finished products and machinery of 1st defendant firm. In respect of the said facility, defendants 2 to 8 executed Exs. A-3 to A-6 documents.

(3.) The plaintiff subsequently discovered that there was a deflation of stocks from the business premises of defendants 1 to 6 and in order to safeguard the interest of plaintiff-Bank, the stocks pledged to the Bank existing in the business premises of defendants 1 to 6 at Jeedimetla unit of 1st defendant were taken possession of by the plaintiff Bank with the consent of the Managing Partner of the 1st defendant firm (i.e. 2nd defendant) under a consent letter Ex. A-6 dt. 01-09-1978. However on inspection, on 03-11-1978, the officials of the plaintiff found that the lock put by the plaintiff to the godown of defendants 1 to 6 at Jeedimetla was broken and the stocks pledged to the Bank stolen. D-2 to D-4 and D-8 addressed a letter Ex. A-7 dt. 03-11-1978 informing the plaintiff that D-7 had broken the lock of the premises and had taken away the materials pledged to the Bank.