E.S. Indiresh,J. - (1.) This appeal is preferred by defendant No.2-State Bank of India (for short hereinafter referred to as 'the Bank'), challenging the judgment and decree dated 17th November, 2011 passed in Original Suit No.15 of 1993 by the Senior Civil Judge and JMFC, Bhadravati, whereby the suit filed by the plaintiff for recovery of money came to be decreed in part.
(2.) For the sake of convenience, the parties in this appeal are referred to with their status and rank before the trial Court.
(3.) The brief facts, for the purpose of adjudication of this appeal are that, the original plaintiff-Visweswaraiah Iron and Steel Limited (for short hereinafter referred to as 'Company') had supplied alloys and special steel to the defendant No.1. The defendant No.1 satisfied the claim in part raised through invoices by the plaintiff at Bhadravati, Pune and Madras. It is further averred in the plaint that the defendant No.1 has made part payment to the plaintiff-Company in respect of certain invoices raised and was due to satisfy the entire claim. In this regard, the defendant No.1 agreed to pay interest at the rate of 17.50% per annum for delay of thirty days and thereafter, at the rate of 24% per annum and therefore, the defendant No.1 was liable to pay Rs.41,98,102/-. It is also stated in the plaint that the defendant No.1 had furnished bank guarantee on 11th May, 1991 (No.1 of 1991-92) in a sum of Rs.12,00,000/- and another Bank guarantee on 11th September, 1991 (No.9 of 1991-92) to an extent of Rs.21,00,000/- issued by State Bank of Saurashtra, Mission Road, Bangalore (now merged with State Bank of India, the appellant herein). The plaintiff-Company accepting the aforementioned two bank guarantees, released goods in favour of the defendant No.1. In the aforementioned two bank guarantees, the defendant No.2- Bank has agreed to pay interest to the plaintiff. It is the case of the plaintiff-company that it is entitled for the amount due and the Bank Guarantees have been duly invoked in accordance with the policy of the Bank and as such, averred in the plaint, that the defendant No.2-Bank is liable to honour those two bank guarantees. In this regard, the plaintiff-Company addressed letter to the defendant No.2-Bank with regard to invoking bank guarantees to which the defendant No.2-Bank responded that both the bank guarantees have been forged and that the bank guarantees issued by the Bank was for a sum of Rs.2,00,000/- and for Rs.1,00,000/-, and as such, since there is an element of fraud involved in those bank guarantees, it informed the plaintiffcompany that the amount specified in those two bank guarantees cannot be invoked. On receipt of the reply made by the defendant No.2-Bank, the plaintiff-company averred in the plaint that the officials of the Bank had colluded with the defendant No.1, while preparing the bank guarantees and the alleged alterations made in those two bank guarantees, as stated by the defendant No.2-Bank, is illegal and therefore, the defendants are jointly and severally liable to satisfy the suit claim. In this backdrop of circumstances narrated above, the plaintiff-company caused legal notice to the defendants on 01st March, 1993 and the defendant No.1 failed to reply to the same. Being aggrieved by the inaction on the part of the defendants to satisfy the claim made therein, the plaintiff-company was constrained to register a suit for recovery of sum of Rs.42,29,454/- with interest.;