Decided on February 20,2007



K.Gnanaprakasam, J. (Chairperson) - (1.) The defendants 4 and 5 in the OA are the appellants.
(2.) THE respondent Bank filed a Suit OS No. 163/1994 before the City Civil Judge, Belgaum, for recovery of a sum of Rs. 44,96,809.76p together with interest thereon and the same got transferred to DRT, Bangalore and tried as OA -527/1995 and it was decreed on 25.7.1997. As against the same, the appellants herein preferred an appeal in AT -42/2000 and the respondent Bank was set ex parte in the appeal and the appeal was allowed by this Tribunal by Order dated 18.4.2002. As against the same, the respondent preferred W.P. No. 36097/2002 (GM -DRT) before the High Court of Karnataka, which by its Order dated 13.3.2006, allowed the Writ Petition and the matter was remanded to this Tribunal for fresh disposal. The case of the respondent Bank is as follows.
(3.) THE 1st defendant in the OA is a Registered partnership firm in which defendants 2 and 3 were partners. Defendants 4 and 5 (who are the appellants herein) were the partners of 1st defendant firm and had offered their FCNR deposit as collateral security for the repayment of the credit facilities granted to the 1st defendant. The 1st defendant had the credit facilities to a limit of Rs. 9.50 lakh, Overdraft against term deposit upto a limit Rs. 3,10,000/ - and Inland Bank guarantee upto a limit of Rs. 1,51,000/ - from Central Bank of India, Belgaum. The defendants 1 to 3 had created an equitable mortgage by deposit of title deeds in respect of the house at Belgaum as a collateral security for the due repayment of the credit facilities. They also created a lien in respect of their shares valued at Rs. 1,05,000/ - and also accepted with Central Bank of India to marked lien in respect of their term deposits of face value of Rs. 3,08,000/ - and also in respect of FCNR deposits to the extent of US $ 43,125.28 standing in the name of defendants 4 and 5 as security for the repayment of the dues of the 1st defendant. The defendants 4 and 5 retired from the partnership and defendants 2 and 3 have joined as partners of 1st defendant and they engaged in the business. The defendants 2 and 3 had the Cash Credit facility to the limit of Rs. 14,00,000/ - with a sub -limit of Rs. 11,00,000/ - against receivable and book debts and inland guarantee to the extent of Rs. 2,50,000/ for the purpose of clearing the borrowings from the Central Bank of India, and to continue their business and offered securities therefor. The defendants 1 to 3 have executed necessary documents. Defendants 2 and 3 had also furnished their personal guarantee in favour of the plaintiff Bank guaranteeing repayment of the loan together with interest thereon. The defendants 1 to 3 had further facilities and also had the renewal of the credit facilities with enhanced limits. It is the case of the plaintiffs Bank that the defendants 4 and 5 have validly offered the FCNR deposits as security for the dues of the 1st defendant and they also willingly appointed the 2nd defendant as their official representative in respect of their FCNR deposits. Defendants 4 and 5 are the close relatives of the 2nd defendant. FCNR deposits had in fact been offered as a security to the Central Bank of India for the dues of the 1st defendant. Subsequently, the FCNR deposits in the names of defendants 4 and 5 were charged to the plaintiff Bank as security for the dues of the 1st defendant. Hence, the plaintiff Bank filed the suit against all the defendants, claiming security over FCNR deposits.;

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