GRISON KNITTING WORKS Vs. LAXMI COMMERCIAL BANK LTD

JUDGEMENT

(1.) This judgment will dispose of two cross-appeals No. 291 of 1951 by the defendants and No. 38 of 1952 by the plaintiff Bank from the judgment and decree dated 29-11-1951, of the Subordinate Judge, 1st Class of Ludhiana.

(2.) The plaintiff Bank brought a suit to recover an amount of Rs. 29,785-4-3 from the seven defendants, of whom the first is firm Girson Knitting Works, Ludhiana, 2nd, 3rd, 4th and 5th, namely, Mangat Ram, Babu Ram, Jai Pal and Raj Pal, are sons of the 6th defendant. Labhu Ram, and the 7th defendant Poni Devi is the wife of defendant No. 6 and mother of defendants Nos. 2 to 5. The circumstances out of which the claim of the plaintiff the Laxmi Commercial Bank Ltd., has arisen are these.

(3.) The plaintiff Bank has a branch at Ludhiana. Defendant No. 1 is a firm which carries on hosiery and cloth manufacture business at Ludhiana. The plaintiff has alleged that defendants Nos. 2 to 6 are the partners of defendant No. 1. On 181-1946, the firm defendant No. 1 of defendants No. 2 to 6 made an application to the plaintiff Bank for a cash credit account to the tune of rupees one lac. The application was allowed to the extent of Rs. 50,000/-, but, on a subsequent approach by the partners of the defendant firm, on 1-11-1946, the cash credit limit of the loan was enhanced to rupees on lac. On 18-1-1946, defendants Nos. 2 to 5 gave the promissory note Exhibit P. 2 for the amount of rupees one lac to the plaintiff Bank on behalf of defendant No. 1 as security for the cash credit account. It was accompanied by the letter, of even date, Exhibit P. 5 also signed by the same defendants. On the same date as security for the same loan a pledge of goods lying in the godown of the Imperial bank at Tuticorin port in Madras Presidency along with other property, was given, signed by defendants Nos. 2 to 5, to the plaintiff Bank. The plaintiff Bank averred in para No. 4 of the plaint that the value of the pledged goods was stated to be Rs. 60,000/-. On 17-6-1947, defendant No. 7 deposited, with the plaintiff Bank, title deeds of the land, of which description is given in para No. 5 of the plaint, as an additional security for repayment of the debt due to the plaintiff Bank from defendant No. 1 and its partners. On the same date under letter Exhibit P. 8 the defendant firm pledged with the plaintiff five thousand shares of the value of Rs. 25,000/-in Girson Cloth Mills authorising the plaintiff Bank, in the even of non-payment of the debt, to recoup the loan by the sale of the shares. In the agreement Exhibit P. 3 of 181-1946, it was further agreed by the defendants with the plaintiff Bank that the latter would have power to sell the pledged goods without giving any notice of sale to the defendants.