The 2nd defendant in OS No. 61 of 1987, on the file of Principal Senior Civil Judge, Warangal, preferred this appeal against the judgment and decree passed therein. Respondent No. 1 herein is the plaintiff - Syndicate Bank, Warangal Branch, and respondent No. 2 is the 1st defendant in the suit.

2. For the sake of convenience, the parties are referred to as arrayed in the suit before the trial Court.

3. (a) Plaintiff filed the suit for recovery of a sum of Rs.78,187-90 paise alleging that the 1st defendant was a proprietary concern and the 2nd defendant was its co-obligant and guarantor for the loan sanctioned by the plaintiff to the 1st defendant under the loan agreement executed by both the defendants on 12.1.1983 for Rs.25,000/-, wherein they agreed to repay the same with interest at 9.5% per annum above the rate of interest of the Reserve Bank of India, with a minimum of 19.5% per annum, compounded quarterly for the value received, the same is enhanced to 20% with effect from 1.10.1984. On 12.1.1983, the 1st defendant executed an hypothecation agreement hypothecating the stock in trade and both the defendants executed a letter of authority authorizing the 1st defendant to