( 1 ) ). BY this appeal under Sec. 96 of the Code of Civil procedure, the appellant-original plaintiff. State Bank of India, has questioned the absolving of respondent Nos. 6 and 7 guarantors of cash credit transaction between the appellant and respondent Nos. 1 to 5 from payment of decreetal dues holding that there was no continuing guarantee. The parties are hereinafter referred to, as arrayed in the suit for the sake of convenience and brevity.

( 2 ) THE plaintiff had to initiate a legal battle by filing Special Civil Suit no. 35 of 1983 in the Court of Civil Judge (S. D.) Kachchh, at Bhuj, against respondent Nos. 1 to 7 who are original defendants Nos. 1 to 7 in the suit for the recovery of the bank dues of Rs. 8, 82, 093. 47 ps. together with interest at the rate of 15% per annum with effect from 1-4-1983 till date of payment from all the defendants jointly and severally pursuant to a cash credit loan transaction entered into on 19-10-1978 between the plaintiff bank and the original defendant Nos. 1 to 5. Original defendant No. 1 is partnership firm, whereas, original defendant Nos. 2, 3, 4 and 5 are partners of original defendant No. 1. Original defendant Nos. 6 and 7 are the guarantors.

( 3 ) ORIGINAL defendant No. 1, on 19-10-1978, had drawn Rs. 1 lakh in the Cash Credit Account. The defendants were, from time to time, utilising this facility and sometimes they were also depositing certain amounts in the cash Credit Account. The plaintiff bank as per the terms of the aforesaid general agreement revised the interest with effect from 1-7-1980, and the defendants were informed accordingly.

( 4 ) DEFENDANT No. 1 partnership firm was carrying on business of production of bicycle spokes and nipples and on its failure in the market, switched over to manufacture of stainless steel utensils and cutlery at Kandla Free Trade Zone. Defendant No. 1 firm through its partners, on 19-10-1981 (1981 sic. 1978), approached the plaintiff bank with a request to finance their business by granting facilities under the Banks Scheme for finance of Small Scale Industries which came to be accepted by the plaintiff bank and cash credit loan account was started with a limit of Rs. 1 lakh. An agreement known as the General agreement for the grant of Small Industrial Advances and Hypothecation of movables, Book debts and other assets on the terms and conditions incorporated therein was executed (which is hereinafter referred to as the General Agreement for the sake of brevity ).

( 5 ) BY executing the General Agreement, the defendants, inter alia, agreed and charged or hypothecated by way of first charge in favour of the plaintiff bank all their present and future goods, book debts, movables, machinery, furniture, store and other assets. The defendants had also agreed that in case of default by them, then the plaintiff, at their option, may take possession of the hypothecated properties or could get a receiver appointed and dispose of the hypothecated properties pursuant to clause (35) of the General Agreement. It was also agreed that by virtue of the General Agreement that the defendants shall pay interest at the rate of 11% percent per annum or at such rates which would be determined by the plaintiff bank from time to time and if such rate is linked to the State Bank of India advance rate obtaining at a particular time, any revision in the State Bank of India advance rate will correspondingly change the effective rate of interest on such account. The plaintiff bank was, also, entitled to charge at its own discretion such enhanced rate as it may fix, from time to time, on any irregularity as provided in clause (9) of the General agreement. The conditions incorporated in the General Agreement are binding to all the parties. It is, only, in pursuance of the execution of the General agreement by original defendant Nos. 1 to 5 and guaranteed by original defendant Nos. 6 and 7, the plaintiff bank agreed to grant accommodation by way of ca