The main legal point established in the judgment is the liability of the 9th respondent under Section 30 of the Negotiable Instruments Act, 1881, for the amount due as per the bill of exchange.

Mohamed Shafi, J.

The plaintiff Bank in O.S. 24 of 1988 on the file of the Subordinate Judge’s Alappuzha is the appellant. The judgment dated 12.8.1993 is under challenge.

2. The appellant/plaintiff filed the above suit for recovery of the money advanced by it to the first defendant partnership firm on different counts. Defendants 2 to 4 are the partners of the firm and defendants 5 to 8 are the guarantors who furnished security for the loan by way of mortgage to the plaintiff. The 9th defendant is a Limited Company which is an export house in Delhi having arrangement with the first defendant to export the goods in their name.

3. The plaintiff claimed a total amount of Rs.16,29,582.86/- with interest thereon at 16.5% per annum.

4. The fact that the appellant bank allowed the following facilities to the first respondent, partnership firm is admitted.

1. Packing credit facility

2. Term loan

3. Temporary Overdraft

4. Foreign demand bills purchase facility.

5. The appellant claimed Rs. 10,60,277.03/- towards packing credit facility due from the first respondent partnership firm from defendants 1 to 8. They also claimed Rs. 3,40,258.39/-, being the amount due under foreign demand bills purchase facility, jointly and severally from the defendants 1 to 9. The lower court disallowed the claim made by the appellant against the 9th defendant jointly and severally with the other defendants. The lower court disallowed the amount of Rs. 1,34,294/- and Rs.4,50,617/-paid by the Export Credit Guarantee Corporation (herein after called ‘ECGC’) to the appellant after suit on packing credit facility and decree passed for the balance amount against respondents 1 to 8 and charged upon the plaint schedule properties.

6. The Plaintiff has preferred this appeal challenging the decree and judgment passed by the lower court disallowing the joint and several decree against the 9th defendant with regard to the claim for foreign demand bills purchase facility and the amount of Rs.5,84,913/-out of the total claim of Rs.9,60,277.03/-due as per packing credit facility.

7. The appellant has contended that for the packing credit facility accorded by the appellant/Bank to the first respondent partnership firm, an agreement evidenced by Ext.A 65 dated 6.5.85 has been entered into between the appellant/Bank and the ECGC of India Ltd. Clause 18 of Ext.A 65 Guarantee No.5022/85 dtd. 6.5.85 deals with recovery steps and sharing of recoveries, which reads as follows.

“18(i) Upon payment by the Corporation of the amount of claim due hereunder to the INSURED, the INSURED shall take all steps which may be necessary or expedient or which the CORPORATION may at any time require to effect recoveries of the I INSURED DEBT whether from the Exporter or from any other person from whom such recoveries may be made including if so required the institution of legal or other proceedings in a Competent Court of Law and shall carry such proceedings to final execution”.

ii) Upon recovery by the INSURED or by the CORPORATION of any amount in respect of the amount due by the Exporter to the INSURED, the amount recovered shall be divided between the INSURED and the CORPORATION in the proportion in which the claim has been settled.

iii) The INSURED shall pay forthwith to the CORPORATION all sums which constitute the share of the CORPORATION in the said recoveries upon their being received by the INSEURED or by any other person on its behalf. The INSURED shall receive and hold such sums in trust for the CORPORTION until such payment is made to the Corporation’.

Therefore it is clear that the appellant insured is liable to realise the amount from the exporter and to pay the ECGC the proportionate amount as per the agreement out of the amount of the claim made by the appellant insured and admitted and paid by the ECGC to the appellant.

8. It is not is dispute that the appellant/bank is the insured in this case. Clause 19 of Ext.A 65 deals with the appropriation of the recovery expenses incurred