Judgment

HEGDE, J.: The 4th defendant in Original Suit No. 200 of 1954 in the court of Subordinate Judge, Vijayawada is the appellant in this appeal by special leave. That was a suit instituted by the Andhra Bank Ltd., the contesting respondent in this appeal. The suit was to recover the loans advanced to the Godavari Sugars, Refiners Ltd., defendant No. 5 in the suit. The suit was decreed against all the defendants and that decree was affirmed by the High Court in appeal. The decree against the other defendants has become final. The only question that arises for decision in this appeal is whether the decree against the appellant is sustainable. The High Court rested the decree against the appellant only on the basis of Ex. A-6 a letter given by defendants 1, 4 and another to the Masulipatam branch of the plaintiff bank while depositing Exhs. A-7 and A-8. In order to decide the correctness of the decree it is necessary to refer to the material facts as found by the trial court and the High Court and which are no more in dispute.

2. Defendants 1 to 3 were the partners of a company known as Aid Co. Ltd. (defendant No. 6). That company was the managing agents of defendant No. 5, the Godavari Sugars Refiners Ltd. which will hereinafter be referred as Godavari Sugars. The first defendant was the Managing Director of the Aid Co. Ltd. On January 29, 1952, the first defendant made an application on behalf of Godavari Sugars to the Andhra Bank Ltd. (which will hereinafter be referred to as the Bank ) for a loan of three to four lakhs of rupees under the key loan and cash credit account and on the guarantee and co-obligation of defendants 1 to 3 in their personal capacity also. The Managing Director and the General Manager recommended that application to the Board of Directors upto a limit of Rs, 1,25,000/-. Before the sanction of the Board of Directors was obtained, the first defendant requested the Managing Director to sanction Rs. 50,000/- tentatively as there was urgent need. The Managing Director sanctioned a sum of Rs. 50,000/- in anticipation of the loan to be granted in pursuance of the application (Ex. A-3) made by the first defendant on January 29, 1952. The Managing Director authorised the agent of Bhimavaram branch to obtain the necessary documents signed by defendants 1 to 3 in their personal capacity as well as the first defendant as the Managing Director of the managing agents and on behalf of Godavari Sugars. A pronote and the cash credit agreement relating to that loan were handed over to the agent of Bhimavaram branch on April 14, 1952 after the same were executed by defendants 1 to 3. Thereafter defendant 1 drew from the Bhimavaram branch Rs. 20,100/- on April 25, 1952 and Rs. 9,000/- on April 26, 1952. But he deposited a sum of Rs. 8,100/. on April 25, 1952, Thus a sum of Rupees 21,000/- was due to the bank under the loan in question on April 26, 1952. On that date the Board of Directors sanctioned the loan asked for under Ex. A-3 upto a limit of Rs. 1,25,000/-. Sometime thereafter the authorities of the Bank learnt that on a creditor s winding up petition a provisional liquidator for the Godavari Sugars had been appointed by the High Court of Madras without objection from defendants 1 to 3 on April 18, 1952. That fact had not been brought to the notice of the Bank authorities by defendants 1 to 3 when the advances were made on the 25th and 26th of April 1952. After coming to know of that fact, the Manager and the Managing Director of the Bank pressed defendants 1 to 3 to repay the amount drawn. But they were advised by Satyanarain Chowdary, the father-in-law of the first defendant (2nd defendant is the wife of the first defendant and the third defendant his mother in-law) to plead before the High Court that the Bank was a pledgee of the articles pledged for the keyloan and as such had a lien over the pledged goods in respect of the advances made. The Bank accordingly moved the High Court claiming a lien over the good