JUDGMENT :- This appeal under Section 96 of the C.P.C. has been filed by the appellant against the judgment and decree passed by Civil Judge, Nainital on 15-5-1995 in Original Suit No. 40 of 1992, whereby the suit was dismissed with costs and all securities/equitable mortgages of immovable properties were released from encumbrances. The Truck No. UGP/4671 was also released to stand as security.

2. Brief facts of the case are that the appellant/plaintiff is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act No. 5 of 1970. Its Head Office is situated at Mandvi, Baroda in the State of Gujarat and a Branch Office at Kashipur, District Nainital. Respondent No. 1-M/s. Nainital Seeds Corporation is a partnership firm doing in production and marketing of certified quality of seeds after purchasing raw seeds from the seed growers approved by respondent No. 1. Respondent No. 1 through respondents/defendants No. 2 and 3 approached to the appellant/plaintiff-Bank at Branch, Kashipur, District Nainital for grant of the financial assistance of Rs. 32,00,000/-by way of a cash credit (hypothecation) limit and Rs. 8,50,000/- as term loan for purchase of machinery and other movables. The appellant/plaintiff-bank sanctioned the aforesaid loan on certain terms and conditions. The respondents No. 2 and 3 for and on behalf of respondent No. 1 and respondent No. 4 and father of respondents No. 7 and 8, Sri Raja Ram were the grantors of respondent No. 1 which was executed and delivered in favour of the appellant/plaintiff-Bank on 6-4-1989 at Branch Kashipur, District Nainital. The following security documents in consideration of the aforesaid credit facilities were extended to respondent No. 1 :-

a) One Promissory note worth Rs. 32,00,000/- and one promissory note worth Rs. 8,50,000/- dated 6-4-1989 carrying minimum interest @ 15.50% and 12.50% respectively.

b) Two letters of partnership dated 6-4-1989.

c) Letter of continuing security dated 6-4-1989.

d) Two-draft letter of undertaking dated 6-4-1989.

e) Undertaking dated 6-4-1989.

f) Instrument of Hypothecation of goods dated 6-4-1989.

g) Two agreements of Hypothecation of moveable machinery dated 6-4-1989.

h) Letters of instalment with acceleration clause dated 6-4-1989.

i) Refinance Agreement 'A' dated 6-4-1989.

j) Two general form of Guarantee dated 6-4-1989 for Rs. 32,00,000/- and Rs. 8,50,000/- executed by respondent/defendant No. 4 and Late Sri Raja Ram.

3. A cash credit (Hypothecation) account and term loan account were opened in the name of respondent/defendant No. 1 in the ordinary books of accounts of the appellant/ plaintiff. Cash credit facility was increased to Rs. 40,00,000/- by the appellant on the request made by respondents No. 1 to 3. In consideration of the aforesaid credit facility defendants No. 1 to 4 and late Raja Ram executed and delivered to the appellant on 2-8-1989 the security documents. Term Loan of Rs. 8,50,000/- was to be repaid by respondents No. 1 to 3 in quarterly instalments of Rs. 42,500/- in favour of the appellant. In this connection, respondents No. 2 and 5 mortgaged a residential house known as 'Ambika Bhawan' on 17-1-1990 in favour of the Bank as additional security by depositing its title deed i.e. a sale-deed dated 26-9-1987. On 14-6-1990, respondent No. 4 sold the property to respondent No. 7 without prior permission and knowledge of the appellant/bank. The guarantor-Raja Ram has expired and the respondents No. 3, 7 and 8 are sons, heirs and legal representatives of the deceased. Therefore, the respondents No. 3, 7 and 8 are bound by the personal guarantee given by Late Sri Raja Ram to the appellant/Bank on 6-4-1989. The respondents No. 1 to 3 closed their business without paying the dues of the appellant/bank. Hence, the appellant/bank gave a final notice of demand to all the respondents on 14-3-1992. Thereafter, the appellant/bank had initiated recovery against the respondents of Rs. 55,95,270.54 along with pend

Click Here to Read the rest of this document