STATE BANK OF INDIA Vs. QUALITY BREAD FACTORY

JUDGEMENT

(1.) THIS second appeal has been filed by the State Bank of India, Batala plaintiff, against the judgment and decree of the IInd Additional District Judge, Gurdaspur (Smt. Bimla Gautam ).

(2.) BRIEFLY, the case of the plaintiff is that Avtar Singh, defendant No. 2, was the sole proprietor of M/s. Quality Bread Factory, at Batala, defendant No. 1 He approached the Branch manager of the plaintiff bank for the grant of cash credit facility to the tune of Rs. 5,000/- 16th May, 1975. The Bank agreed to grant that facility to defendants Nos. 1 and 2, who agreed to pay interest at the rate of 4 per cent per annum below the State Bank advance rate with minimum rate of 10 per cent per annum in respect of the monies advanced. It is alleged that defendants Nos. 1 and 2 also agreed to pledge the machinery, namely, mixer, moulder, slicer and sealer, which were lying in the factor premises situated at Jullundur Road Batala. Accordingly, defendants Nos. 1 and 2 executed in favour of the plaintiff an agreement for cash credit facility on security of pledge of mixer, moulder, slicer, sealer, produce and merchandise on the same day and pledged the said things. They also executed a demand promissory note in the sum of Rs. 5,000/- in favour of Gurbachan Singh, defendant No. 3, and he delivered the same, duly endorsed in favour of the plaintiff a security for the said amount. It was agreed that defendants Nos. 1 and 2 would pay the amount due from them with interest to the plaintiff on demand and in case of default the plaintiff could recover the same by public auction or private sale of the pledged goods, produce, merchandise etc.

(3.) THE case of the plaintiff further is that defendant No. 3 in consideration of the plaintiff having agreed to advance to defendants Nos. 1 and 2 the cash credit facility guaranteed the repayment of the loan advanced to them from time to time together with interest thereon.