MAGANTI RAJA BABU Vs. VIJAYA BANK

JUDGEMENT

(1.) In this appeal filed under Section 96 of the Civil Procedure Code, the appellant who is defendant No. 2 in the Court below, seeks to assail the correctness of the judgment and decree dated 5.4.1999 in O.S.No.10 of 1991 on the file of the III Additional Senior Civil Judge, Vijayawada, Krishna district decreeing the suit filed by the first respondent-Vijaya Bank for recovery of a sum of Rs.5,27,227.24 Ps against the defendants 1 to 5/partners and so far as defendants 6 and 7 are concerned from the estate of late Koganti Kesava Rao, along with interest at 18 % per annum from the date of suit till the date of realization and costs.

(2.) The brief version as can be made out from the pleadings in the Court below, is that in the suit, the case of the plaintiff was that it is a corporate body/a bank and the husband of the first defendant by name Mr Koganti Kesava Rao and defendants 1 to 3 constituted a firm viz., M/s. Sai Krishna Films, Gandhinagar, Vijayawada-3 and applied for three types of loans for the purpose of business. Accordingly, the plaintiff bank has sanctioned a sum of Rs. 1,50,000/- under Clean Bills Purchased Account, Rs. 1,00,000/- towards Open Loan Cash Credit and another sum of Rs.3,00,000/- towards Key Loan Cash Credit in favour of the said firm. Thereupon, on behalf of the firm, promissory notes were executed on 28.3.1985 for repayment of the said loans together with interest at 18% per annum with quarterly rests. Accordingly, accounts were opened with the bank in the name of the firm. The two loans viz., clean bills purchased account and open loan cash credit loan were closed, since the amounts due under them were adjusted and received by the plaintiff bank. The defendants 3 to 5 are guarantors for the debt and they executed a letter of guarantee on the even date, undertaking the liability to pay the debts due by the firm. Later, Sri K Keshava Rao, one of the partners, died leaving behind defendant No.1 and defendants 5 (sic. 6) and 7 as legal heirs. There is a due amount along with interest thereon, which has remained undischarged. Later, the first defendant on behalf of the firm and as a partner of the same, gave a letter of acknowledgment dated 3.7.1988 acknowledging the liability to pay the debt under the promissory notes dated 28.3.1985. In spite of several demands made by the plaintiff bank since no amounts were paid, the plaintiff got issued notice on 30.12.1990 but there was no response, hence the present suit has been filed.

(3.) Defendants 1, 3 to 7 remained ex-parte. The second defendant who is the appellant herein filed a written statement denying the entire allegations and pleading that the suit is barred by time and not maintainable. Further, it was his case that the letter of acknowledgment of the debt signed by defendant No.1 does not bind him nor the firm, since the firm did not authorize the defendant No.1 to make any such acknowledgment, therefore in the absence of valid acknowledgment, no liability can be fastened on him or other defendants and there is mismanagement apart from the bank itself in collusion with the defendant No.1 and guarantors and thus, there is no valid claim and the same cannot be enforced and suit is liable to be dismissed.