ADITYA NARAYAN CHOURESIA Vs. BANK OF INDIA

JUDGEMENT

(1.) This appeal is by defendant No. 2 in the suit. He was the guarantor for the cash credit facility extended by the plaintiff-bank/ respondent No. 1 to the principal debtor-respondent No. 2. The plaintiff-bank brought the suit for recovery of Rs. 1,04,601.06 which was decreed against the defendants, including the principal debtor and the guarantors/defendants. There are three defendants in this case. The first defendant is the principal debtor, whereas defendants Nos. 2 and 3 are the guarantors.

(2.) The gist of the case of the plaintiff-bank is that defendant No. 1 (Subodh Kumar), the principal-debtor, ran a grocery shop. He approached the plaintiff for financial assistance by way of working capital and the plaintiff agreed to grant cash credit facility to him to a limit of Rs. 25,000 only repayable with interest at 2.85 per cent. over Reserve Bank of India, subject to a minimum of 11.85 per cent. per annum, for which he executed a demand promissory note dated October 10, 1980 (exhibit 1), a deed of hypothecation of tangible movable property and defendants Nos. 2 and 3 executed a continuing guarantee dated October 10, 1980, taking all the responsibility that they would also be liable to pay the amount to the plaintiff-bank. It is the further case of the plaintiff that on the request made by defendant No. 1, the plaintiff on November 4, 1980, allowed him to overdraw the account to the extent of Rs. 25,000 more and defendant No. 1 executed another promissory note with respect thereof (exhibit 1/a). But defendant No. 1 failed to operate the account regularly, though he had availed of the cash-credit facility. By letters of acknowledgment of indebtedness dated July 3, 1982, and June 25, 1984 (exhibits 5 and 5/a) respectively, the defendants acknowledged the liability or payment of the entire dues in the cash credit facility account of the principal-defendant. In spite of demands and vakalatan notice, the defendants failed to regularise the accounts or to clear the dues. Hence, the plaintiff-bank brought the suit for recovery of due sum in the account against the defendants. The stand of the plaintiff-bank was that the defendants are jointly and severally liable to pay the same.

(3.) Defendants Nos. 1 and 2 resisted the suit by filing separate written statements. Defendant No. 1 admitted in the written statement that he had approached the plaintiff-bank on October 10, 1980, for cash-credit facility for Rs. 25,000, which was granted to him and that on November 4, 1980, on his request, the plaintiff allowed him to overdraw the account to the extent of Rs. 25,000 more, but he has denied to have executed the promissory notes (exhibits 1 and 1/a) or to have agreed to pay the alleged interest at compound rate. His stand was that his signatures were obtained by the plaintiff-bank on blank forms, which might have been converted into the promissory notes. He also denied to have executed the letters of acknowledgment of the debt (exhibits 5 and 5/a). He contended that the suit as framed is not maintainable ; that the claim was barred by limitation, estoppel and waiver and that the plaintiff was entitled to no relief.