The Court's decision was influenced by the provisions of the Indian Contract Act, 1872, regarding pledge, and the bank's actions leading to deprivation of the defendants' business and damages.

1. 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 installments 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 pendent e