1. Heard learned counsel for therival parties.

2. This suit is filed by Nationalized Bank against defendant Nos. 1 and 2 for recovery of their dues with interest thereon. Defendant No.1 is proprietorship concern; whereas, defendant no.2 is a guarantor. The defendant no.2 has expired. His heirs and legal representatives were not brought on record. Consequently, the suit stood abated against him.

THE FACTUAL MATRIX:

3. The factual matrix reveal that defendant no.1 enjoyed cash credit facility in the sum of Rs. 80,000/- against hypothecation of cinema equipments, spare parts and other goods lying in the office premises of defendant no.1 located at Purushattam Building, 25-A, Tribhuvan Road, Bombay 440 004.

4. The defendant no.1, in consideration having sanctioned cash credit facility had executed various loan documents including promissory note, deed of hypothecation and pledge of goods with various other documents on 22.5.1987. The details of which are to be found in para 4 of the plaint. In addition to the execution of the loan documents, he had also pledged life insurance policy and furnished guarantee of defendant no.2, who guaranteed repayment of the outstanding dues of the bank due and recoverable from defendant no.1.

5. The defendant no.1 on execution of the aforesaid loan documents utilised the aforesaid financial loan facility.

6. The defendant no.1 did not repay the loan amount and committed default in payment of interest and/ or part thereof. Consequently, demand notice was issued calling upon the defendants to pay the outstanding dues of the bank. The defendants did not pay their outstanding dues payable to the bank. Consequently, bank has filed the present suit for recovery of their outstanding dues with interest thereon and has also claimed future interest from the date of the suit till realization with costs.

7. On being served with the writ of summons, defendant Nos. 1 and 2 appeared and filed their joint written statement on 4.8.1995 raising various pleadings in defence and denied liability to pay the outstanding dues of the bank. The defendants have also raised a plea in defence that pursuant to the order dated 8.7.1993 passed by learned Single Judge ( Variava,J, as he then was) defendant no.1 has made payments without prejudice to its rights and that as per the said order the amount ought to have been credited towards principal dues of the bank payable by the defendants. The defendants in the entire written statement have not denied the execution of loan documents though the plaintiffs have specifically pleaded execution thereof by the defendants in para 4 of the plaint. The defendants in reply have stated that for want of inspection of the loan documents, it is not possible for them to comment about the contents thereof and reserved their right to file their additional written statement as and when inspection would be given to them. The defendant no.1 denied to have given letter of acknowledgement dated 18.7.1998.

THE ISSUES:-

8. Considering rival pleadings of the parties on 10.9.1987 the issues were framed reading as under:

1. Whether the defendants prove that the suit is barred by limitation? ...(No)

2. Whether the plaintiffs prove that the defendants owe to the plaintiffs a sum of Rs. 2,45,356.00 alongwith further interest @ 20% p.a. compounded at quarterly rests? ...(Yes.)

3. Whether the liability of the defendants for payment of interest till the last instalment would be at future rate of interest, in view of the payment already made by the defendants in terms of the Order dated 8th July, 1993? ...(No.)

4. Whether the defendants prove that the plaintiffs are seeking to recover interest on interest and the suit filed by the plaintiffs is not maintainable and is, therefore, liable to be dismissed with costs? ...