Judgment :-

(SMT.) RANJANA PRAKASH DESAI, J.

1. The appellant - Punjab & Sind Bank (for short, “the plaintiff-bank”) has challenged in this appeal, judgment and order dated 4/6/2003 passed by the Kerala High Court whereby the appeal filed by original defendants 1, 2, 4, 7 and 8 challenging the judgment and decree of the 1st Additional Sub-Judge, Ernakulam, decreeing the plaintiff- bank's suit for realization of money was allowed.

2. The title of the proceedings underwent changes during the course of time on account of death of some of the partners and/or guarantors and also on account of orders passed by the courts. There are also certain typographical errors in the amended cause title of the appeal. It is not necessary for us to give details of various changes which were brought about in the title. Suffice it to say that respondent 1 herein is the partnership firm i.e. original defendant 1 and the other respondents are either its partners and/or heirs of the partners or guarantors and/or heirs of the guarantors. By order dated 29/1/2003, the High Court has added the Kerala State Electricity Board (for short, “KSEB”) as respondent 6 and it is respondent 10 herein. We shall, however, for the sake of convenience refer to the parties as per their status in the trial court.

3. At the outset, we must make it clear that we have reached a conclusion that the defendants have taken a dishonest stand to evade the liability to make payment to the plaintiff-bank. At the cost of making this judgment prolix, we need to make a detailed reference to the pleadings of the parties because our conclusion, to a large extent, is substantiated by the pleadings. The facts, as disclosed by the plaintiff-bank in the plaint, are as under:

a) Defendant 1 is a partnership firm engaged in the business of engineering works and defendants 2, 3 and 4 are its partners, who undertook the execution of certain civil engineering works awarded to them by KSEB. As per the terms of the tender, defendants 1 to 4 had to furnish Bank Guarantees to KSEB. They approached the plaintiff-bank for issuance of Bank Guarantee for an aggregate amount of Rs.20 lakhs on their behalf in favour of KSEB. The plaintiff-bank agreed to do so on certain terms and conditions. Defendants 1 to 4 accepted the said conditions. The plaintiff-bank on 11/5/1983 executed and offered a Bank Guarantee on behalf of defendant 1 to KSEB for Rs.1 lakh as and by way of security deposit as per the terms of the tender. Thereafter, the plaintiff-bank on 24/6/1983 further executed and offered on behalf of defendant 1 another Bank Guarantee of Rs.19 lakhs to enable defendants 1 to 4 to avail of the amount of Rs.19 lakhs as mobilization advance from KSEB for the purpose of execution of the work undertaken by defendant 1.

b) According to the terms of the Bank Guarantee dated 11/5/1983, the amount of Bank Guarantee not exceeding Rs.1 lakh was payable to KSEB on demand at any time during its currency without any demur. In consideration of the aforementioned Bank Guarantee, defendant 1 by its partners i.e. defendants 2, 3 and 4 agreed and undertook to indemnify the plaintiff-bank by a Deed of Indemnity and Guarantee dated 11/5/1983 together with all costs and charges which may be incurred or become payable by the plaintiff-bank in connection with the Guarantee given to KSEB. As further security, defendants 2, 3, 4, 5, 6, 7 and 8 also undertook and agreed to indemnify the plaintiff-bank from and against all claims, demands, losses, charges and expenses which the plaintiff-bank may sustain in respect of any liability incurred by it and also guaranteed to make payment of the amount together with interest, costs, commission and charges payable thereon by the plaintiff-bank. As security for the aforementioned Bank Guarantee of Rs.1 lakh, defendant 2 deposited the title deeds of his property situated in Kottayam Village on 11/5/1983. He confirmed the deposit of title deeds by memorandum of deposit of title deeds. Defe