The appellant is the second defendant in O.S.No.171 of 1996. The first respondent filed the above suit for recovery of Rs.7,76,497.76 comprising of Rs.5,10015.10, being the principal amount and Rs.2,66,482.66, being the interest payable at 18% per annum for 34 months and 25 days.

2. According to the first respondent, the second respondent herein purchased cotton lint in the year 1992 and 1993 from the first respondent. As per the books of account maintained in regular course of business by the first respondent, a sum of Rs.5.10,015.10/- was found due and payable by the second respondent as on 19.6.93. The second respondent is a unit of appellant. Therefore, both are liable to pay the said sum of Rs.5.10,015.10/- together with interest at 18% as per the trade practice. Thus, the first respondent filed the above suit for recovery of Rs.7,76,497.76 against the second respondent and appellant herein.

3. The appellant filed written statement stating that the second respondent was taken over by the appellant and General Managers appointed by Director of Handloom and Textiles were managing the affairs. The second respondent incurred heavy loss to the tune of Rs.5 lakhs per month