Sunil Hali, J. - (1.) A Suit for recovery of a sum of Rs. 42,50,151.21 was filed by Respondent Kashi Nath Bank, now merged in State Bank of India (in short as the "Bank) before the Trial Court against the Defendants. It was contended in the Suit that the Defendant No. 1 is a partnership firm which does motor finance business. Defendant Nos. 2 to 5 are partners of the firm Defendant No. 1. An application for grant of loan was filed before the Bank and on such an application being filed, a loan of Rs. 25 lacs was sanctioned by the Bank on 29th April, 1992 in favour of Defendants, now the present Petitioners. Defendant No. 6 Natthu Lal was the guarantor and he mortgaged his property detailed in Schedule-I of the plaint. It is contended that in view of the loan being sanctioned, the following documents were executed:- 1. Pronote; 2. Demand Promissory note; 3. Hypothecation letter by which the property involved in the trade was hypothecated in favour of the Bank; 4. Letter of lien; 5. Form No. 208 by which they admitted conditions for the repayment of loan, interest & expenses; 6. Letter of continuing security.
(2.) Defendant No. 6 Natthu Lal by a contract and letter of guarantee dated 11th May, 1992 bound himself with the responsibility for repayment of the loan, in case of failure on the part of the Defendant Nos. 2 to 5 to repay the loan. The failure of the Defendants to repay the loan resulted in filing of the Suit.
(3.) It was contended in the Suit that Defendant No. 2 for himself and on behalf of Defendant No. 1 signed balance confirmation letter on 9th October, 1992 in favour of the Bank thereby admitted the correctness of the amount. The stand of the Defendants was that there was no privity of contract between the Bank and the Defendants as the Defendant Nos. 2 to 5 were not the partners of the firm New General & Motor Finances. The Defendants denied their liability and stated that neither the said loan was sanctioned in their favour nor they were partners of the firm to whom the loan was sanctioned. It was further stated the the Suit was barred by limitation. The agreement was executed on 11th May, 1992 and Suit was filed on 25th September, 1995 beyond the period of three years as provided under the Indian Limitation Act. The following issues were raised for determination of the dispute between the parties:- (i) Whether there is privity of contract in between the Applicant Bank and the Defendants as alleged by the Applicant Bank, (ii) Whether the application of the Applicant Bank is barred as alleged by the Defendants. (iii) To what relief the Applicant Bank is entitled to get.;