PANDURANGA TRADERS Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) This appeal is filed against the decree and judgment of the Principal Subordinate Judge, Eluru, in O.S.No. 100/92 passed on 26-3-1996. The defendants are the appellants. The plaintiff-State Bank of India, Vatluru Branch, West Godavari District, filed the suit for recovery of Rs. 3,77,751/-

(2.) The facts in brief are as follows: The 1st defendant is the proprietory concern, 2nd defendant is the guarantor for the loan transaction between the plaintiff-Bank and the 1st and 2nd defendants. An amount of Rs. 1.50 lakhs was allowed as Cash Credit Mundy by the plaintiff-Bank to the defendants in 1986. The defendants executed various security documents and furnished immovable property as collateral security by creating equitable mortgage. They have also agreed to pay interest at 17.5% per annum with quarterly rests. In 1987, the defendants approached the plaintiff-Bank for enhancement of the limit by another sum of Rs. 50,000/- and the plaintiff-Bank enhanced the limit by another sum of Rs. 50,000/-. Again on 18-5-1987 another loan of Rs. 60,000/- was given. Thus, the defendants availed a total limit of Rs. 2,60,000/- and the defendants had executed, on 1-8-1989 and 19-4-1990, revival letters acknowledging the debt and security. In spite of the demand, the defendants have not paid the loan amount. Hence the suit.

(3.) The 1st and 2nd defendants filed a Written Statement which was adopted by the 3rd defendant. The defendants had denied the loan transaction and also execution of the loan documents and creation of equitable mortgage in favour of the plaintiff-Bank. The defendants claim that they are liable for waiver benefit under Agriculture Rural Debt Clearing Scheme to the tune of Rs. 10,000/- as they are small farmers, that the rate of interest is excessive and penal, and that the suit is barred by limitation and therefore prayed for dismissal of the suit.