SYNDICATE BANK Vs. NARAYANA IYER

JUDGEMENT

(1.) A .S. 22/1922 is filed by the plaintiff in O.S. 528/1982 on the file of the Principal Sub Judge, Kottayam. A.S. 608/1996 is an appeal filed by the first defendant in the above suit. These two appeals are disposed of by this common judgment and the parties will be referred to in this judgment as they are referred to in the suit.

(2.) THE first defendant was the Managing Director of M/s. Kottayam Textiles Limited, a Company incorporated under the Companies Act. At the time of institution of the suit there was only one defendant in the suit and the Company was subsequently impleaded as additional second defendant. The bank filed the suit against the defendants for realisation of an amount of Rs. 11,26,026.51, the amount outstanding as due to the bank in a loan transaction. The suit was decreed by the trial Court allowing realisation of the amount with interest at the rate of 21.65% per annum from the date of suit till realisation and costs of the suit. There is a direction in the judgment that the execution of the decree will stand postponed till the claim filed by the plaintiff before the Commissioner appointed under Act 27 of 1985 is disposed of. There is also direction that credit shall be given to the first defendant of any amount which the plaintiff might realise in terms of Act 27 of 1985.

(3.) THE case of the plaintiff is that the second defendant availed itself of various financial facilities from the plaintiff bank and the first defendant in his capacity as the Managing Director of the second defendant signed documents and acknowledgment of liability on the reverse of the demand promissory note on 12.5.1977 and 31.12.1977. In addition to that, on 29.7.1976 the first defendant executed a deed of guarantee in his personal capacity in favour of the plaintiff guaranteeing repayment of all and every sum due to the plaintiff on any account of the second defendant up to a limit of Rs. 28,20,000/-. Ext. A8 is the deed of guarantee executed by the first defendant in favour of the plaintiff bank in which it is stated that the first defendant agreed to pay and satisfy the bank on demand all and every sum of money which is due to the bank from the principal debtor. Ext.A9 is a letter given by the first defendant to the bank in which it is stated that since it was felt necessary for the first defendant to guarantee the credit limits to the Company in his personal capacity up to a limit of Rs. 28,20,000/- as per the guarantee bond Ext.A8, he was furnishing his personal properties towards security on the strength of which the bank would continue to extend the credit limits to the Company. There is also statement that the first defendant deposited documents of title of his property to create an equitable mortgage with the bank. The property the document in respect of which was deposited with the plaintiff bank is the property mentioned in the plaint.