PUNJAB TRACTORS LTD. Vs. PUNJAB AND SIND BANK

JUDGEMENT

(1.) M /s Punjab Tractors Limited has filed the present appeal and it has been directed against the judgment and decree dated 20.12.1996, passed by the Addl. Distt. Judge, Ropar, who affirmed the judgment and decree of the trial court dated 10.2.1995 vide which the money suit of Punjab and Sind Bank was decreed for a sum of Rs. 92,976-10 along with interest at the rate of 17- 1/2 % payable on the principal amount of Rs. 71,283-88 from the date of the institution of the suit till payment.

(2.) THE brief facts of the case are that Punjab and Sind Bank filed a money suit against M/s Punjab Tractors Ltd. and M/s Sirocco Auto Pvt. Ltd. and others, by alleging that the defendant No. 2 had been enjoying and availing various credit facilities from the plaintiff-Bank and one of the facilities being enjoyed was discounting or advancing against the bills drawn on various parties accompanied by railway receipts or goods receipts of approved transport companies and against bills of exchange accepted by the third party or against the clean bills. Defendant No. 2 approached the plaintiff-Bank in the year 1975 for the above mentioned facilities and accordingly a limit to the extent of Rs. 9 lacs was sanctioned on execution of necessary documents. Defendants 3 to 7 stood guarantors for the said amount. It was pleaded by the plaintiff-Bank that the above mentioned facility was enhanced to Rs. 12 lacs in the year 1976 and to Rs. 20 lacs in the year 1978. It was further pleaded that on 5.2.1980, limit for bills of exchange was further enhanced to Rs. 55 lacs and another limit of Rs. 15 lacs was sanctioned. Ultimately, on 10.2.1983, the aforesaid limits were further enhanced to Rs. 80 lacs on execution of necessary documents. Defendants No. 3 to 7 stood guarantors for this amount also.

(3.) NOTICE of the suit was given to the defendants and the plea taken up by defendant No. 1 was that since there is no privity of contract between it and the Bank, therefore, it is not liable to pay the amount. Moreover, the acceptance of the Hundi was subject to the condition that the goods would be supplied in accordance with the order and, in these circumstances, defendant No. 1 is not liable to pay the amount and interest as claimed by the Bank.