MOHANLAL AGARWAL Vs. BANK OF BARODA

JUDGEMENT

(1.) EN preferred by the abovenamed defendant No. 3 appellant against the judgment and decree dated 11.8.1986 and 26.8.1986 respectively passed by the then 3rd Additional Subordinate Judge, Jamshedpur in Money Suit No. 72 of 1983/3 of 1986, by which the plaintiffs suit for recovery of Rs. 25,350.70 ps. together with interest thereof at the rate of 17 per cent per annum from 26.3.1983 to 10.8.1986 with future interest at the rate of 17 per cent per annum till the date of realisation alongwith cost of the suit has been decreed.

(2.) THE plaintiff respondent is a Banking company having its head office at Mandri, Baroda (Gujrat) and branch office at Golmuri, P.S. Golmuri, town Jamshedpur, District Singhbhum East. The defendant No. 2 is the sole proprietor of defendant No. 1 carrying on business of cloth at 79, Jhanda Chowk, Sakchi Market, Jamshedpur in the name and style of M/s : Sri Niwas Textiles. The defendant No. 2 for pecuniary assistance in the business applied in 1972 to the plaintiff bank for cash credit facility to the extent of Rs. 10,000/ . The plaintiff bank acceded to the request of defendant No. 2 and allowed him the said facility. It was further agreed that the defendant No. 2 would pay interest on the amount withdrawn from the said account at the rate of 5% O.B.B. with minimum of 11% per annum with quarterly rest. The defendant Nos. 1 and 2 for security for re payment executed a demand promissory note for Rs. 10,000 in favour of the plaintiff Bank. On 9.1.1973 the defendant Nos. 1 and 2 again made a request to the plaintiff bank to increase the limit of cash credit facility to Rs. 15,000/ . To that also the plaintiff Bank acceded and enhanced the cash credit facility. On 18.2.1974 the defendant No. 2 for himself and on behalf of defendant No. 1 again executed a fresh Demand Promissory Note for Rs. 15,000/ and also executed letter of hypothecation by which the stock of clothes in the business was hypothecated as security for the re payment of the outstanding dues of the plaintiff Bank. The same term of O.R.B. with quarterly rest had been agreed upon. The defendant No. 3 became a guarantor for due repayment of the bank dues in the aforesaid cash credit account in case of failure to pay on the part of the defendant Nos. 1 and 2 to the plaintiff Bank and accordingly on 18.2.1974 executed an agreement of Company security making him liable to pay to the bank in case of failure of defendant Nos. 1 and 2 of the outstanding dues. The defendant Nos. 1 and 2, according to the plaintiffs, availed all the facilities and on 1.1.1977 the defendants jointly executed a letter of acknowledgment by which they confirmed and acknowledged the indebtedness of the defendants as on 30.12.1976 to the tune of Rs. 14,920.03 ps. on that date i.e. 11.4.1977 against the defendant Nos. 1 and 2 executed a fresh promissory bond of Rs. 15,000/ for the consideration received as aforesaid and also fresh agreement of hypothecation for the consideration received. Again on 30.10.1979 the defendant Nos. 1 and 2 again executed a demand promissory note for Rs. 16,250.50 ps. which was due on that date to the plaintiff bank and they also executed fresh hypothecation deed etc. On 7.1.1978 the defendant No. 2 executed a letter of acknowledgment of debt upto 31.12.1977 to the tune'of Rs. 16,667.88 ps. But, when the defendant filed to pay the bank's dues, the present suit has been filed for a decree of Rs. 25.350.70 ps. as dues on the date of the filing of the suit alongwith interest at the rate of 17 per cent both pendentilite and future together with costs. Other prayers had also been made regarding injunction, receiver etc.

(3.) IT has not been specifically denied regarding execution of guarantee bond by the defendant No. 3 on 18.2.1974 as alleged from the side of the plaintiff Bank. In para 16 of the written statement, averment was made in the following manner: That the guarantee bond (five pages) executed on 18.2.1974 could be executed for the facility granted by the documents executed on 18.2.1974 and when fresh documents have been executed on 30.10.1979 by defendant Nos. 1 and 2 the former documents will have a natural death. Again in para 19 of the written statement, the form if guarantee alleged to be executed by the defendant No. 3 has been said to be a forged and fabricated documents and it was contended that the said guarantee cannot cover cash credit facilities which has been granted to defendant Nos. 1 and 2 on 30.10.1979.