STATE BANK OF HYDERABAD Vs. NAGABHUSHANAM

JUDGEMENT

(1.) The short, but a fairly substantial question that falls for determination in this second appeal is, whether a promissory note executed in favour of a guarantor, who endorsed it in favour of the bank, which lent the amount to the original executant of the promissory note, will enable the banker to successfully lay a claim against the guarantor, while giving up the original executant ?

(2.) The plaintiff, which is the bank, filed the suit against defendants Nos. 1 and 2. The first defendant, who is the first respondent herein, was having a hotel business and he was given credit facility to the extent of Rs. 2,000 against the personal guarantee of the second defendant, who is the second respondent herein. In respect of the above loan facility, a demand promissory note for Rs. 2,000 was executed by the first defendant in favour of the second defendant and later it was endorsed by the second defendant in favour of the appellant bank. Also an agreement of cash credit executed by the first defendant along with the second defendant were taken in favour of the appellant bank. Though the first defendant availed of the entire credit facility, nothing was paid. Hence the suit.

(3.) It may, however, be stated here, that inasmuch as the suit was not pressed against the first defendant, the same was dismissed as against the first defendant and the trial court thereafter held that the second defendant cannot be termed as coobligant and, therefore, the suit cannot be decreed as the first defendant was given up. The decree of the trial court was confirmed on appeal.