CENTRAL BANK OF INDIA Vs. MISHRA OIL UDYOG

JUDGEMENT

(1.) The plaintiff-appellant-Central Bank of India has filed this Appeal against that part of the Judgment and decree dated 18.03.1993 passed by the learned Subordinate Judge, 7th Siwan in Title Mortgage Suit No. 42 of 1990/85 of 1992 whereby the learned Court below disallowed the claim of interest pendente lite and future on the decreetal amount at contractual rate.

(2.) The plaintiff-appellant field the aforesaid suit for realization of a sum of Rs. 6,88,529.97/- from the defendants-respondents on account of the advance of loan to the defendants. The case of the plaintiff-appellant is that the defendant No. 1 is a proprietary firm and the defendant No. 2 is sole proprietor who carries on the business of oil milling in the name and style of defendant No. 1. The defendant No. 3 to 5 respondents are the guarantor of the loan advanced to the defendant No. 2. The defendant No. 2 applied for loan for the purpose of purchasing oil expeller and motor and a term loan of Rs. 26,000/- and a cash credit up to the limit of Rs. 10,000/- was sanctioned on 10.06.1979. The stock in trade was hypothecated in favour of bank as security and other terms were also there. The defendant No. 2 agreed to the terms and he executed relevant documents in favour of bank and created equitable mortgage dated 10th July, 1979. He also deposited title deeds with regard to his 1 biggahas 11 dhurs of land as security. The limits of cash credit was enhanced to Rs. 50,000/- on 05.05.1981 on execution of relevant document by defendant No. 2. On 03.12.1983, again the limit of cash credit was enhanced to Rs. 2 lakhs. The defendant No. 3 to 5 stood as guarantors. The defendant No. 2 purchased the machinery and the business flourished but in violation of the terms and conditions, the defendant No. 2 did not deposit the sell proceeds of the hypothecated goods, and because of that the account became irregular. On demands for regularizing the account, the defendant No. 2 only confirmed the balance and renewed the documents on 30.01.1986 and 07.03.1988. Legal notices were served but he did not pay the dues.

(3.) The defendant-respondent appeared and filed contesting written statement, however, he admitted to have taken loan. He also admitted the execution of documents and enhancement of loan limit and purchase of machinery out of that loan. The further case of the defendant was that the business did not flourish and because of non-cooperating attitude of the bank, exorbitant rate of interest, the defendant could not succeed to meet their demand.