Retired partners and guarantor who stood discharged from liability not liable for any liability.

K. SAMPATH, J.

The parties will be referred to as per their ranks before the lower Court.

2. The first respondent herein, the Tamil Nadu Industrial Investment Corporation Ltd. (TIIC for short), filed TSFC OP NO.177 of 1992 for directing the respondents therein to pay a sum of Rs.1,74,647.47 as on 7.6.1992 with subsequent interest at 15.5% per annum till realisation by enforcing the liability personally against the respondents on the following allegations:

3. The first respondent, an industrial partnership concern, is carrying on the business of grinding, turning and drilling works on job order basis. Respondents 2 and 3 and one James Vedachalam as partners approached the petitioner for a term loan for their business. The petitioner sanctioned a term loan of Rs.62,000/- on 31.3.1982. Out of the said amount, the petitioner disbursed a sum of Rs.55,534/- to the first respondent. The loan was repayable in ten half-yearly instalments after a moratorium period of 12 months from the date of first disbursement with interest at the rate of 5.5% over the IDBI rate for refinance with a minimum of 15.5% per annum. In consideration of availing the loan, the first respondent, represented by its partners, mentioned above, executed a Deed of Hypothecation on 14.6.1982 containing the terms and conditions. Under the said instrument, all the machinery, furniture, instruments, accessories, electrical equipment, fittings and spares, etc. belonging to the first respondent stood hypothecated in favour of the petitioner. James Vedachalam, one of the partners, died on 3.1.1989 leaving behind respondents 4, 5 and 6 as his legal heirs, the fourth respondent being his widow, while respondents 5 and 6, his children. They became liable to discharge the debt from the estate of James Vedachalam. The seventh respondent was a guarantor having executed a Deed of Guarantee on 14.6.1982 in favour of the petitioner guaranteeing due repayment of the loan with interest and other charges. He had also undertaken to pay on demand to the petitioner, the entire dues and indemnify and keep the petitioner indemnified against the loss of principal, interest or other moneys secured and costs. His liability was co-extensive with that of the other respondents. The first respondent had been a chronic and systematic defaulter in repayment of the loan. The petitioner therefore foreclosed the loan by a notice, dt.21.12.1988 and exercised his right to repossess the hypothecated machinery and sell them by public auction. When the Officers of the petitioner went to repossess the hypothecated machinery, they found some of the items of machinery, set out in the Schedule to the petition, to be missing from the business premises of the first respondent. The petitioner repossessed the rest of the machinery, and sold the same in a public auction on 7.6.1989 for a sum of Rs.43,100/-. After giving credit to the said amount, the petitioner was moving the Court for a direction to the first respondent to produce the missing machinery, so that the same could be sold. Inspite of repeated demands, the respondents having failed and neglected to repay the entire balance loan amount, the petitioner caused a legal notice, dt.2.6.1992, and the same not having produced any effect, he filed the petition for recovering the balance of the amount. Even though the petitioner sanctioned the loan on 31.3.1982 and the respondents concerned and the said James Vedachalam executed documents on 14.6.1992, the petition was not barred by limitation as the account was a running account and the loan amount was repayable in ten half yearly instalments commencing from 1.1.1984, and the hypotheca was sold in public auction on 7.6.1989, and the sale proceeds were given credit to on 17.8.1989. The petition filed within three years therefrom, i.e. on 8.6.1992 after the summer recess, was in time.

4. Respondents 2 and 7 filed a common counter stating inter alia as follows:

Owing to personal reasons, respondents 2 and