A bank is entitled to recover a loan amount, interest, and costs from a borrower who defaults in repayment, and the bank can sell the hypothecated stocks under the terms of the deed of hypothecation.

( 1 ) THIS is a suit for recovery of Rs. 1,09,185. 45with pendent lite and future interest @ 20% per annum with quarterlyrests.

( 2 ) THE facts of the case briefly stated are that the plaintiff is a bodycorporate constituted under the Banking (Companies Acquisition andtransfer of Undertakings) Act 40 of 1980 with its Head Office-at Newdelhi and its branches spread all over India. S/shri Makhan Singh andshyam Sunder, Regional Manager and Manager respectively are the principalofficers of the plaintiff Ban and they are duly authorised to sign and verifythe present plaint and to institute the present suit. In this regard both holdthe power of attorney from the Plaintiff Bank.

( 3 ) AS per averments made in the plaint, the defendant No. 2 who isthe Proprietor of the defendant No. 1, approached the Branch Office of theplaintiff Bank situated at A-199, Okhia Indl. Area, Phase-1, New Delhi andat his request, the plaintiff Bank granted the defendants the credit facilitydrawable to a limit of Rs. 25. 000. 00. In consideration of this grant of loan,the defendant No. 2 for himself and as proprietor of defendant No. 1executed and delivered on 20/03/1984 various documents, namely,demand promissory note for Rs. 25. 000. 00, confirmation on bank s Formno. 106, undertaking on bank s Form No. 122 Agreement on bank s Formno. 126, letter of continuity and deed of hypothecation all dated 20thmarch, 1984. On the same date the defendant No. 3 executed and delivereda letter of guarantee in his personal and individual capacity guaranteeingthe repayment of the sum (s) advanced to the defendants Nos. 1 and 2together with interest and costs and all other charges.

( 4 ) IT is further stated in the plaint that on 17/03/1987 thea/c. of the defendants showed a debit balance of Rs. 57,582. 75 and in consideration of the said amount the defendant No. 2 as proprietor of defendantno. 1, executed and delivered a demand promissory note on the said dateagreeing to pay the sum due on demand with interest @ 3. 5% p. a, over thereserve Bank of India rate subject to a minimum of 13. 5% p. a. withquarterly rests. It is further stated that the said defendant also executed aconfirmation on bank s Form No. 106 waiving the presentment of relativepronote and other negotiable instrument, letter of continuity and anotheragreement on bank s Form No. 291 agreeing to pay additional interest@ 2. 5% pa. in the event of any delay or default in effecting the repayment. It is further stated that the defendants 1 and 2 agreed the plaintiff Bankwould be entitled to sell the goods hypothecated in the event of delay ordefault in making payment of amounts due.

( 5 ) IT is further alleged in the plaint that the defendants did not keepup their commitment and failed to repay the loan inspite of the variousrequests made by the Plaintiff Bank including a telegraphic notice dated5. 3. 90. Lastly it has been stated in the plaint that A/c. of the defendantsas on 15. 3. 90 was showing a debit balance of Rs. 1,09,185. 45 inclusive ofinterest and other charges upto 15/03/1990. Since the defendantshave failed to repay the said amount the present suit has been filed.

( 6 ) NOTICE of the suit was issued to the defendants. Despite serviceno one appeared on behalf of the defendants and accordingly they wereproceeded against Ex-parte vide order dated 7/01/1993. On thesame date the plaintiff was permitted to lead evidence by way of affidavits. Thereafter the plaintiff has filed affidavits of Shri Gurdip Singb, Manager ofchandigarh Branch Office, Shri T. S. Bhatia, Senior Manager of Azadpurbranch Office and Shri Shyam Sunder, Manager of Branch Office, A-199,okhia Phase-1 of the plaintiff Bank. All the averments and allegations madein the plaint have been proved by the aforesaid three witnesses.

( 7 ) EX. P-l to P-6 are the demand promissory note, confirmation onbanks Form No. 106 waiving the presentment of the relative pronote andother negotiable instrument, undertaking on bank s Form No. 122. Agreeme