Surjit Singh, Judge.: The Himachal Pradesh State Industrial Development Corporation Limited, a Company incorporated under the Companies Act 1956, has filed the present suit through its Senior Manager (Project) Shri Vinajyaka Kahol against defendants No. 1 to 4 for recovery of a sum of Rs. 1,43,49,345/-.

2. Cause of action, as disclosed in the plaint, may be summed up thus. One of the functions of the plaintiff- Corporation is to provide financial assistance to industrial units. Defendant No.1, which is a private limited company, applied to the plaintiff for grant of term loan of Rs.49.5 lacs for construction of a building, purchase of land, plant and machinery for setting up a factory of manufacturing of basic drugs at Baddi, District Solan. Term loan of Rs.45.5 lacs was sanctioned on 30.5.1992 and the remaining amount of Rs.4 lacs on 8.4.1993. Loan documents were executed by defendant No.1 through its Directors, impleaded as defendants No. 2 to 4. The documents included loan agreements and hypothecation agreements in respect of both the loans, i.e. one amounting to Rs.45.5 lacs and other amounting to Rs. 4 lacs. One set of the documents in respect of the loan of Rs.45.5 lacs was executed on 5.8.1992 and the other in respect of the loan of Rs.4 lacs on 11.4.1994. Equitable mortgage, in respect of the properties of defendant No.1, was also created in favour of the plaintiff by deposit of title deeds of the said property with proforma defendant No.5. It has, however, not been explained why mortgage was created by deposit of title deeds with proforma defendant No.5 instead of the same being deposited with defendant No.1. Defendants No.2 to 4 guaranteed the repayment of the loan and interest by executing guarantee deeds. Their liability, as per terms of the guarantee deeds, was to be joint and several and co-extensive with that of defendant No.1. The guarantee was a continuing one. As per loan documents, the principal amount, together with interest at the agreed rate, i.e. 19% per annum with half yearly rests, was payable in half yearly instalments. The first instalments was payable on 10.2.1995 and the last one on 10.8.2002. The defendants did not stick to the repayment schedule. On 29.1.1996 defendants No.1 to 4 submitted a proposal to the Corporation regarding arrangement of repayment of the loan money. It was proposed that the factory be leased out to M/s Panacea Bio Tech Ltd., New Delhi, who will repay the loan. The plaintiff Corporation and proforma defendant No.5 discussed the matter with defendant No.1 and it was made clear to defendant No.1 by the plaintiff and defendant No.5 that no more time could be given to the promoters / new party (sic) for clearance of the loan. After further deliberations, defendant No.5, out of which Rs. 4.5 lacs were paid to the plaintiff and the remaining amount to the proforma defendant. No.5. The plaintiff came to know about the handing over of the Industrial unit by defendant No.1 to M/s Panacea Bio Tech Ltd. on 5.6.1996, when a news item appeared in the Indian Express (Chandigarh edition) that a fire had broken out in the industrial unit by defendant No.1. Defendant No. 1 filed an insurance claim with M/s National Insurance Company (proforma defendant No.6) for a sum of Rs.80.96 lacs. A power of attorney was executed in favour of the plaintiff by defendant No.1 to receive the insurance claim from proforma defendant No.6. When nothing was paid to the plaintiff by defendants No.1 to 4, a notice was issued to them on 23.1.1999. By then a sum of Rs.1,20,04,183/- had become due to the plaintiff on account of addition of interest amount to the principal amount. Defendant did not clear their liability despite service of notice. The plaintiff, therefore, filed the present suit claiming a sum of Rs. 1, 43, 49,345/- which was outstanding as on 10.2.1999. Future interest at the rate of 19% per annum has also been claimed. Cause of action is stated to have accrued on 23.1.1999, when the legal