ANDHRA BANK KODAD Vs. VATTIKUTI SREEMANARAYANA

JUDGEMENT

(1.) This is an appeal filed by Andhra Bank against the judgment and decree dated 16.4.1984 passed by the I-Additional Subordinate Judge, Vijayawada dismissing the suit being O.S. No.497 of 1981 for recovery of Rs.1,14,274/-. The parties shall be referred to as they are arrayed in the suit.

(2.) Detailed facts are not necessary to be mentioned as the controversy is in a short compass. Defendants were running business in Abkari and the bank had sanctioned a loan facility of Rs.69,000/- in their favour. Defendants 2, 6 and 8 had deposited title deeds on 3.10.1978 with Huzurnagar's Branch of the Bank. By this, an equitable mortgage was created in favour of the bank. Defendants 1 to 7 also executed a pronote on 29.9.1978 in favour of the bank. Certain other documents were also executed, but the loan was not repaid and the bank filed the suit. Execution of the documents was admitted, but it was denied that the amounts were received. The main defence which was taken by the defendants was that they had formed themselves into a partnership firm for doing arrack business and this fact was known to the plaintiff-bank. The arrack business was not permissible, so the amounts advanced to the defendants were for an illegal purpose and the purpose was opposed to the public policy. Therefore deposit of title deeds by Defendants 2, 6 and 8 would not create any right in the plaintiff-bank as the contract itself was void.

(3.) The first issue framed by the Trial Court was, "Whether the suit pronote is void and illegal as the amount lent under it is for partnership in Abkari business and is opposed to public policy and statute?" This issue was decided in favour of the defendants and against the plaintiff-bank. Evidence was led by plaintiff-bank and defendants did not lead any evidence. According to P.W.I, Abkari loan of Rs.69,000/- was sanctioned to Defendants 1 to 4 on 29.9.1978 by the bank, Defendants 5 to 7 were the co-obligants of Defendants 1 to 4 and Defendants 2, 6 and 8 had deposited their title deeds on 3.10.1978. He marked Exs.Al to B23. It is pertinent to note that the plaintiff-bank in the plaint itself in para-2 submitted.