The main legal point established in the judgment is the validity and enforceability of the equitable mortgage, determination of interest rate, and rejection of the claim of discharge from liability due to the plaintiff's alleged inaction.

( 1 ) THE appellant and the respondents in this appeal are respectively the plaintiff and the defendants in O. S. No. 33 of 1983 on the file of the Civil Judge, Srirangapatna. For convenience the parties will be referred to by their Ranks in the trial Court. The plaintiff will also be referred to as the 'bank'.

( 2 ) THE first Defendant, a Company incorporated under the Companies Act, was a constituent of the plaintiff Bank at its Malai Mahadeswaraswamy Hills Branch, Kollegal Taluk, Mysore District. On the request of the first defendant for certain loan facilities for purposes of their business, the Bank granted the following credit facilities on 16-1-1980 : (A) A cash credit loan facility to a limit of Rs. 2,00,000/- against hypothecation of goods/stock in trade repayable with interest at State Bank Advance Rate with a minimum of 161/2 per annum with quarterly rests; (hereinafter referred to as the Hypothecation Account); (B) A cash credit clean loan of Rs. 60,000/- repayable with interest at the State Bank Advance Rate with minimum of 16 1/2 p. a. , with quarterly rests (hereinafter referred to as the clean loan Account) (C) A term loan of Rs. 1,65,00/- against the hypothecation of standing crops repayable with interest at the State Bank Advance Rate with minimum of 161/2 per annum with quarterly rests; (hereinafter referred to as the Term Loan Account ).

( 3 ) THE repayment of the said loans was guaranteed by defendants Nos. 2, 3 and 4 (who were respectively the Managing Director and Directors of the First Defendant) as the co-obligants/guarantors for repayment of the amounts due by the first defendant. By way of collateral security for repayment of the said loan, the 4th defendant who was the owner of the plaint schedule lands bearing Sy. No. 34/1 of Hebbadihundi village, Sy. No. 36 of Neelana Koppalu village, Sy. Nos. 12, 13m, 15 and 18 of Allapattana village and Sy. No. 34 of Nagarakatte Kaval village in Srirangapatna Taluk, Mysore District, created an equitable mortgage over the said properties. The said equitable mortgage was created by the 4th defendant on 17-1-1980 by depositing the title deeds relating to the Plaint Schedule properties with the Bank at its Shivarampet Branch, Mysore with intent that they shall remain as collateral security for securing the payment of several loans aggregating to Rs. 4,75,000/- with interest and other charges. Subsequently on 26-3-1981, the 4th defendant executed a Memorandum in favour of the Bank confirming the deposit of title deeds already made on 17-1-1980. As the Plaint Schedule properties were situated in Srirangapatna Taluk, the said memorandum was registered in the office of the Sub-Registrar, Srirangapatna on 26-3-1981. The Bank also stated that the defendants had confirmed the balances due in the accounts as on 31-12-1981 and also executed letters of revival on 17-2-1982 and 5-3-1992.

( 4 ) AS the first defendant did not pay the amounts due in the said accounts, the Bank filed the suit on 17-6-1983 in the Court of the Civil Judge, Srirangapatna for recovery of Rs. 6,73,509-90 with costs and current interest at the rate of 16. 5% per annum from the date of suit till date of realisation. The suit claim was the aggregate of the following amounts : (A) Rs. 3,06,049-76 due in the cash Credit Loan Account; (b) Rs. 1,02,149-68 due in the cash Credit clean loan account; and (c) Rs. 2,65,310-46 due in the term Loan account. The Bank prayed for a mortgage decree for sale of the mortgaged properties with a direction that if the sale proceeds were insufficient to discharge the decree, the short fall shall be recoverable from the other assets of the First Defendant and personally from defendants Nos. 2 to 4.

( 5 ) DEFENDANTS 1 and 2 filed their written statement (adopted by the 3rd and 4th defendants) admitting the grant of aforesaid credit facilities and borrowing of Rs. 2,00,000/- Rs. 60,000/- and Rs. 1,65,000/- respectively in the three accounts. They also admitted the