( 1 ) THIS appeal is by the 4th defendant. The plaintiff-bank instituted a suit for the recovery of 4,40,847. 50 together with court cost and current interest at 12. 5% p. a. , from the date of suit till the date of realisation.

( 2 ) ACCORDING to the plaint avernents, the 1st defendant-m/s. Karnataka paper converters is a partnership firm and that the defendants 2 and 3 are its partners. Defendant 3 is the wife of the 4th defendant.

( 3 ) THE 1st defendant represented by the defendants 2 and 3 have applied for loan facilities under various categories with the plaintiff bank. Accordingly, a sum of Rs. 60,000/- was sanctioned by way of cash credit pledge loan on 22-12-1978 and the said loan was sanctioned in favour of defendant 1 and the defendants 1 to 3 have agreed to repay the said amount together with interest at the rate of 3% over and above rbi with a minimum of 12% with. Quarterly rest. On the same date, the plaintiff has also sanctioned the cash credit hypothecation goods loan of Rs. 50,000/- and accordingly the defendants 1 to 3 have signed the on-demand promissory note and the defendant 4 who is the husband of the defendant 3 has stood as a guarantor for these two loans and that the defendant 4 has also executed the agreement of guarantee.

( 4 ) SUBSEQUENTLY, the limit of Rs. 60,000/- has been enhanced to Rs. 1,90,000/-, the request of the defendant 1 and the said loan was sanctioned on 6-2-1979. On the request of the defendant 1, a term loan of Rs. 19,000/- was also sanctioned on 22-12-1978. Since the defendant did not repay the amount, the plaintiff filed the suit for the recovery of the amount. The defendants 1 and 2 filed a common written statement. The defendants 1 and 2 have not disputed the loan availed by them from time to time. The defendants 1 and 2 have requested the plaintiff to redraw the account and also adjust the amount that may be payable by the insurance company towards this loan amount. The defendant 3 filed a separate statement. Accordingly, she became the partner of the firm and she effected the entire transaction. However, it is admitted that her signature has been taken by the 2nd defendant to various papers and therefore she has denied her responsibility to one of the claims made by the plaintiff-bank.

( 5 ) THE defendant 4 filed a written statement separately. According to him he has admitted the two transactions, namely, the loan sanctioned in favour of the 1st defendant for Rs. 50,000/- and Rs. 60,000/- respectively and he has also admitted that he stood as a guarantor. But what has been contended by the defendant 4 is that he has never stood as a guarantor for the subsequent enhancement from Rs. 60,000/- to 1,90,000/- on 6-2-1979 and for a term loan of Rs. 19,000/ -. He also contends that since there is a variation of contract between the plaintiff and the defendants 1 and 2, his surety has been discharged. Therefore, he is not liable to pay any amount to the plaintiff-bank.

( 6 ) BASED on the above said pleadings, the following issues have been raised by the trial court: 1. Whether the defendants 1 and 2 prove that they are not liable to pay the compound interest? 2. Do they further prove that on account of electrical short-circuit, fire accident took place in the godown causing loss to defendant 1-firm? 3. Whether defendant 1 and 2 prove that plaintiff is entitled to recover amount from defendant 5 and it should be adjusted towards suit loan? 4. Whether defendant 3 proves that she is not liable for the amount borrowed prior to her becoming partner? 5. Whether defendants 3 and 4 prove that their signature was obtained on blank forms by the plaintiff-bank? 6. Whether defendant 4 is only a surety and that he has not taken loan? 7. Whether defendant 4 proves that loan facility was increased without his knowledge and as such he is not liable to pay the suit loan? 8. Whether plaintiff proves that defendant 5 is liable to pay insurance amount to plaintiff? 9. Whether defendant 5 proves that defe

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