LAWS(ORI)-1992-5-27

SATYARANJAN DEY Vs. INDIAN BANK AND ORS

Decided On May 01, 1992
SATYARANJAN DEY Appellant
V/S
INDIAN BANK AND ORS Respondents

JUDGEMENT

(1.) Defendant No. 1 is the appellant.

(2.) Defendant No.1 carries on business in shop No. 9 in Eastern Market Building in Unit No.II. Bhubaneswar in trade name of M/s. Society Shop with effect from 6.8.1975 and was availing credit facility to a limit of Rs. 5,000/- executing a demand promissory note to that effect on 6.8.1975 with an over draft letter of that date. This was renewed on 21.4.1978 for the outstanding amounts in the account and was continued till 4.9.1980. Defendant No. 3 was the guarantor. At request of defendant Nos. 2 and 3, the bank agreed to enhance the cash credit facility of Rs. 20,000/- limit with the guarantee of defendant No. 3. A demand promissory note was executed on 4.9.1980 by defendant No. 1 for Rs. 20,000/- with interest @5% over the official rate of Reserve Bank of India having a minimum rate of 14% interest per annum. A letter of continuing security had been executed on 21.4.1978 in respect of the hypothecation of move ables and stock in trade of defendant No. 1. On that basis, over draft letter dated 4.9.1980 was executed by defendant Nos. 2 and 3 wherein defendant No.2 was authorised to operate the accounts in name of defendant No.1 which is a trade name of the shop only. Defendant No. 2 also undertook to intimate the change in constitution of the business as and when such position arises by declaring that he was liable for existing balance of Rs. 13,770.89 paise outstanding in the account of defendant No. 1 on 1.7.1980 and for the enhanced limit of Rs. 20,000/-. When the amount was not paid regularly, several letters were written to the defendants to pay the amount and lastly the suit was filed for recovery of amount of Rs. 50,286.85 paise with interest @ 18% per annum from 6.12.1984 till actual payment.

(3.) Defendant No. 2 filed a written statement doenying his liability. It was stated that he was only managing the business and is not personally liable for the demand promissory note executed and owner of the business is liable for the credit.