- (1.) The appellant-State Bank of India had filed this suit against M/s Madras Bolts and Nuts (P) Ltd. and its three Directors, Defendants 2 to 4, of which the 2nd defendant is the Managing Director. The suit was for recovery of a sum of Rs 2,47,797.18 with future interest as set out therein under a cash credit (Mundy Type) Account and Rs 22,133.40 under an overdraft against bills account. The three Directors of the first defendant Company had given personal guarantees and the 1 st defendant Company had executed promissory notes as collateral security for repayment of the amounts due and payable by the first defendant Company under these accounts. Defendants 1 and 2 did not contest the suit. The only contestants were Defendants 3 and 4.
(2.) Defendants 3 and 4 had resigned as Directors of the Company w. e. f. 12/8/1966. At the hearing of the suit, it was conceded on behalf of the Bank that Defendants 3 and 4 would be liable only in respect of the liabilities of the 1st defendant Company as of 12/8/1966. Learned advocate of the Bank also pressed the claim of the Bank against them only under the cash credit (Mundy Type) Account and on the amounts due and payable in this account as of 12/8/1966. On the basis of this concession, the learned Single Judge passed a decree against Defendants 1 and 2, as prayed. He passed a decree against Defendants 3 and 4 for a sum of Rs 1,86,889.97 with simple interest at 8.25% per annum from 12/8/1966 up to date without any rest and with future interest at 6% per annum from this date to the date of realisation. He also made an order for costs as set out therein. He also said that after the filing of the suit, a sum of Rs 95,000. 00 was realised by the plaintiff-Bank by selling the securities. Whatever amount had been realised, should go in partial satisfaction of the decree.
(3.) An appeal was filed against this judgment and decree by Defendants 3 and 4 before the division bench of the High court. Defendants 3 and 4 contended that they would be entitled to the credit of certain payments received by the Bank from the Company after 12/8/1966. The other contention was that since they were required to discharge the liabilities of the Company as of 12/8/1966, they would be entitled to the benefit of the securities held by the Bank to cover the credit facilities granted by the Bank to the Company. Both the contentions were upheld by the division bench of the High court. Hence the Bank has filed this appeal.;