( 1 ) THIS is a defendants first appeal arising out of a suit for recovery of money brought by the plaintiff-despondent, a company styled as J. K. Jute Mills Company Limited, Kanpur against the defendant appellant also a company known as Lakshmi Ratan Cotton Mills Limited, Kanpur. Both the companies are limited liability companies, and have their registered offices at Kanpur. The plaintiff company is one of the concerns owned by the family of Juggilal Kamlapat. Sir padampat Singhania is the head of the said family. The defendant company belongs to another group of industries known as Beharilal Ram Charan group. Sri Ram Ratan Gupta is the head of that group. The defendant company was sued through two persons, namely, Sri Ram Prasad gupta and Sri Gulab Chand Jain both of whom are the directors of the defendant company.

( 2 ) THE plaintiffs case was that the plaintiff company had advanced a loan of Rs. 1,50,000/-to the defendant company on the understanding that the loan advanced would carry interest 1% higher than the current Bank rate, and would be repaid together with interest within six months. Sri gulab Chand Jain, one of the Directors of the defendant company, sent a letter on 24-12-1951 to sir Padampat Singhania the governing Director of the plaintiff company to advance the said loan. Sri Gulab Chand Jain also sent an advance receipt to the plaintiff along with the above-noted letter. Thereupon the plaintiff advanced a sum of Rs. 1,50,000/- as a loan to the defendant on 25-12-1951 through cheque No. 444821, dated 25-12-1951 drawn on the Hindustan commercial Bank Limited in favour of the defendant. A covering letter of the same date was also sent by the plaintiff to the defendant along with the above-noted cheque stating that the said loan was repayable within six months with interest which was to be 1 per cent, higher than the current Bank rate. After the expiry of the stipulated period of six months, the defendant failed to pay the loan in spite of reminders sent to it. Accordingly, the plaintiff filed the present suit praying that a decree of Rs. 1,55,671714/- together with pendente lite and future interest be passed and that the costs of the suit be also awarded in its favour.

( 3 ) THE defendant denied that there was any transaction of loan between the parties as alleged by the plaintiff. According to the case set up by the defendant, Sir Padmapat Singhania had entrusted Sri Ram Ratan Gupta with work of a personal nature involving a large amount of expenditure. As Sri Ram Ratan Gupta had to meet these expenses from his own pocket on behalf of Sir Padampat Singhania, the latter agreed to advance Rs. 1,50,000/- on the said account by remitting the amount of Rs. 1,50,000/-to the defendant company by way of temporary accommodation pending the payment of the money due to Sri Ram Ratan Gupta. Further, in para 16 of its written statement the defendant took the plea that no loan could be taken as no resolution sanctioning the taking of loan was passed by the Board of Directors. The defendant also alleged that the plaintiff company owed an amount of RS. 2,005/12/- to the defendant company, and claimed an adjustment in respect of this amount. The liability to pay interest was also denied by the defendant company.

( 4 ) THE trial Court held that an amount of Rs. 1,50,000/- was advanced by the plaintiff company to the defendant by way of loan as alleged by the plaintiff at the rate of interest and for the period mentioned in the letter sent along with the cheque, and that the said loan was binding on the defendant. As, however, the counsel for the plaintiff had made a statement that his claim be reduced by Rs. 2,005/12/-, which was the amount of deduction claimed by the defendant, the trial Court, accordingly, reduced the amount due to the plaintiff by Rs. 2,005/12/ -. It, accordingly, held that the plaintiff was entitled to get Rs. 1,53,665/2/- from the defendant, and passed a decree in respect of the said amount with pen