Decided on March 04,2005



K.J.Paratwar, - (1.) IN this O.A. for recovery of Rs. 1,83,89,977.18 with interest at the rate of 18% per annum with quarterly rests, there is 1st defendants counter claim for Rs. 2,59,11,342.50 Ps.
(2.) The 1st defendant company manufactures colour coated sheets and galvanized sheets. Defendant No. 2 is its Managing Director while defendants 3 to 6 are directors sued as guarantors. The applicant's case stated pithily is that on or about 9.7.1987 cash credit limit of Rs. 26 lakhs was sanctioned by it to 1st defendant. In lieu thereof, defendant No. 1 executed D.P. Note and Agreement of Hypothecation in the applicant's favour. The security was of surety by defendant Nos. 2 to 6 and equitable mortgage by deposit of title deeds of 1st defendant's property being Leasehold Plot No. A-8/4 admeasuring 7200 sq.m. together with the buildings, shed, godown and machineries situated at MIDC, Kamleshwar Industrial Estate, Kamleshwar, Distt. Nagpur. On or about 24.10.1987, the applicant sanctioned ad hoc CC of Rs. 6 lakhs. The cash credit limit was enhanced to Rs. 75 lakhs on or about 9th January, 1988. It was further enhanced to Rs. 95 lakhs on or about 25.10.1989 on which date Bill Purchase facility to the extent of Rs. 90 lakhs was also sanctioned. The aforesaid enhancements were on personal guarantee of defendant Nos. 2 to 6 and continuation of equitable mortgage earlier created. In lieu thereof, the defendants executed usual documents namely D.P. Note, Agreement of hypothecation and the letters of guarantee, as the case may be.
(3.) THE defendant No. 1 utilized both the facilities. However, bills discounted by the Bank aggregating Rs. 25.35 lakhs were not retired by the respective parties and returned unpaid. THE amount, therefore, was debited in cash, credit account. From out of it, sum of Rs. 20 lakhs was paid between December, 1989 and July, 1990. THE defendant No. 1 company did not regularize the account and eventually closed the manufacturing unit. However, the defendant No. 1 company executed fresh D.P. Note and Deed of hypothecation on or about 6.7.1990. THE company, however, continued to commit defaults and failed in making payment despite repeated letters and demands. THE Bank, therefore, issued recall notice dated 20.6.1991. While defendants 5 and 6 in reply dated 27.6.91 admitted the liability, the other defendants refused to accept the notice. This O.A, therefore, has been filed for recovery of the amount by sale of the mortgaged property.;

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