( 1 ) THIS is a suit for recovery of Rs. 5,40,191. 80 on account of term loan of Rs. 2,50,000/- and cash credit hypothecation limit of Rs. 25,000/ -. Plaintiff is a bank constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act 5 of 1970. The case of the plaintiff in brief is as under:-

( 2 ) DEFENDANT no. 1 is a proprietorship firm engaged in the business of laser type setting, word processing and computer service. Defendant no. 2 who is the sole proprietor of defendant no. 1 approached the plaintiff at its Janpath Branch and requested the plaintiff bank vide his loan application dated 21. 10. 1988 to grant credit facilities of Rs. 2. 58 lacs (Rs. two lacs fifty eight thousand) under the term loan and of Rs. 23,000/- (Rs. Twenty three thousand eight hundred) under cash credit hypothecating head, as financial assistance for purchase of computers, air conditioner, furniture and fixture and to instal desk top publishing work station and also as working capital for the smooth running and development of his business. The defendant no. 2 also forwarded with his loan application the project report and other various documents and gave assurances