JUDGMENT :

1. These appeals by the borrower and the guarantors seek to lay a challenge to the Judgment and Order dated 20.03.2013, whereby the learned District Judge, Uttara Kannada, Karwar having favoured lenders Miscellaneous Case No. 5/2008 filed under Sections 31(1) and 32 of the State Financial Corporation Act, 1951, has held them liable to pay a sum of Rs. 8,75,63,691/- with current interest at the rate of 18.5% p.a. and another sum of Rs. 1,85,74,890/- with interest at the rate of 21% from the date of petition, with post judgment interest at the reduced rate of 15% p.a.

2. After service of notice, the respondent lender i.e. Karnataka State Industrial Investment and Development Corporation Ltd. (hereafter ‘KSIIDC’) having entered appearance through its counsel resisted these appeals making submission in justification of the impugned Judgment and Order and the reasons on which they have been constructed. Learned Sr. Adv. Shri G.S. Khannur taking the Court through the LCR contends that, though the challenge lies both in law and facts, the Court below having considered the pleadings of the parties and the evidentiary material borne out from the records has entered the subject Judgment & Order and therefore, interference at the hands of this Court is not warranted, the arguable insignificant lacunae therein, notwithstanding.

3. Brief facts:

(a) The KSIIDC is a lending agency which answers the description of State Financial Corporation under the provisions of SFC Act; it is a State Government Agency; the appellant No. 1(a) namely M/s. Cham Lukkung Pvt. Ltd. is a company (hereafter ‘the borrower’) incorporated under the provisions of the erstwhile Companies Act, 1956; the other respondents happen to be the guarantors; in April 1996, the KSIIDC had advanced a Term Loan of Rs. 1 crore with 21% interest p.a. to be charged on quarterly rests; subsequently a Bridge Loan of Rs. 25 lakh with compound interest at the rate of 25% p.a. to be levied on quarterly rests came to be advanced in May 1996.

(b) These loans were secured by the mortgage of certain properties in addition to the personal guarantee of other respondents; the above loans having remained over due and no repayment having been made despite demand, the KSIIDC had taken over the plant and machinery by invoking Section 29 of the Act; the Miscellaneous case came to be filed against the borrower and the guarantors; the same was resisted by filing objections, inter alia contending that the claim was not maintainable in law and that the guarantors have not put their signatures to the loan papers at all.

(c) From the side of KSIIDC, its official Shri G.C. Kempahonnaiah got examined as PW-1 and in his deposition, 12 documents came to be marked as per Exs.P1 to P12 which inter-alia comprised of loan documents, loan sanction letter, guarantee agreement, demand notice and legal notice and the account extract. From the side of the guarantors one Mr. Hari Ram Cham i.e. one of the guarantor for the Term Loan was examined as RW-1; the learned Judge of the Court below having adverted to pleadings of the parties and having weighed the evidentiary material on record has made the subject Judgment and Order that are put in challenge both by the borrower and the guarantors before us.

4. We have heard the learned counsel for the parties, perused the appeal papers and the original TCR; we have adverted to the rulings cited at the Bar; we are inclined to grant a marginal indulgence in the matter as under and for the following reasons:

(i) A ‘Term Loan’ of Rs. 100 lakh was sanctioned vide letter dated 18.03.1995, the loan documents have been signed by the Directors of the borrower company on duly stamped papers; by way of security of repayment mortgage has been created of the plant and machinery and the land on which they are founded; this Term Loan has been guaranteed by the sureties namely the respondent Nos. 2 and 3; however, the respondent No. 4-Ramachandra Panchaksharam Naidu and respondent No. 5-Mr