STATE BANK OF PATIALA Vs. GANESH TRADING CO

JUDGEMENT

(1.) Instant regular second appeal has been preferred by the appellant/plaintiff against the judgment and decree dated 01.11.1983 passed by learned Sub Judge, 1st Class, Batala whereby suit of the appellant-plaintiff for recovery has been decreed against defendant Nos. 1 to 4, as well as, against the judgment and decree dated 05.08.1995 passed by learned District Judge, Gurdaspur whereby decree of the Court of first instance has been modified to the extent that plaintiff is entitled to interest at the agreed rate from the date of the filing of the suit till the date of decree and from the date of decree till the realization @ 6% per annum. For convenience sake, hereinafter parties will be referred to as they were arrayed in the Court of first instance i.e. appellant as plaintiff and respondent as defendants.

(2.) The detailed facts are already recapitulated in the judgments of the Courts below and are not required to be reproduced. However, the brief facts relevant for disposal of this second appeal are that plaintiff filed a suit for recovery of Rs. 2,38,598.49 against the defendants. It was averred in the plaint that on 22.08.1977, defendant No. 1 through its partners defendant Nos. 2 to 4 approached the Manager of the plaintiff-Bank and requested for grant of cash credit (pledge/factory type) and hypothecation limit to the extent of Rs. 5 lacs on the basis of agreement to pay interest on the amount advanced at the rate of 1-1/2% above the State Bank of India advance rate rising and falling therewith with a minimum of 15-1/2% per annum from the date of advance till the date of repayment. The request was accepted and on 04.10.1977, plaintiff sanctioned the cash credit limit to the extent of Rs. 5 lacs in favour of defendant Nos. 1 to 4. In pursuance of that, defendant Nos. 1 to 4 executed the demand promissory note dated 04.10.1977 in favour of the plaintiff-Bank for Rs. 5 lacs received or to be received as consideration with interest at the above referred rate. The said limit was later on enhanced to Rs. 8 lacs on defendants' request dated 25.09.1978. Defendant No. 5 (who died during the pendency of the suit and is now represented by defendant Nos. 5-A to 5-E) and defendant No. 6 guaranteed the re-payment of the loan amount given to defendant Nos. 1 to 4 and they executed an agreement in that behalf. Defendant Nos. 5 and 6 also created equitable mortgage in favour of the plaintiff-Bank by way of deposit of sale deeds dated 01.06.1975 and 15.02.1966, details of which are given in the plaint. Defendant Nos. 1 to 4 had been availing the above said cash credit limit from time to time and a sum of Rs. 2,38,598.49 became due and payable by defendant Nos. 1 to 4 as principal debtors and by defendant Nos. 5 and 6 as guarantors which they have not paid.

(3.) Upon notice, defendants No. 1 to 4 appeared and contested the suit. They controverted the allegations made in the plaint and denied the liability to pay the suit amount to the plaintiff. Defendant Nos. 5 and 6 in their separate written statement denied having executed letter of guarantee in favour of the plaintiff and alleged that the alleged guarantee came to an end when the cash credit limit was increased without their consent. It was further alleged that suit is barred by time.