D.G.R.PATNAIK, J. - (1.) THIS appeal is directed against the judgment dated 21.7.1997 and its corresponding decree dated 4.8.1997 passed by the Sub Judge -II, Seraikella in Money Suit No. 5 of 1990, whereby the suit was decreed in favour of the plaintiff and against the defendants.
(2.) THE suit was filed by the plaintiff / respondent against the pro forma respondent Nos. 2 to 5 and against the present appellants 1 to 5 for a decree for realizing a sum of Rs. 6,72,105.73 paise together with pendente lite and future interest from the defendants and also for declaration that there is valid and subsisting charge in favour of the plaintiff on the hypothecated goods, plant and machinery of the defendant No. 1 and for a declaration that the plaintiffs are entitled to seize and sell the plant and machinery of the defendant No. 1 for appropriation of the decretal amount. The proforma respondents 2 to 5 were arrayed as principal defendants, while the present appellants were arrayed as defendants 5 to 9. The case of the plaintiff is that in the month of August 1985 the defendant No. 1 company through its directors, approached the plaintiff Bank for grant of loan by way of cash credit facility to the limit of Rs. 2.00 lakhs against which, the book debts of the company were hypothecated and for a further cash credit facility to the limit of Rs. 2.10 lakhs against which, stocks of the company were hypothecated. Defendant Nos. 2 to 4 stood as guarantors accepting joint and several liability for the repayment of the loan together with interest and other charges. On the loan being sanctioned, the defendants availed the cash credit facility of a sum of Rs. 2.00 lakhs and 2.10 lakhs. The defendants 2 and 3 being the directors of the defendant No. 1 had executed demand promissory note dated 1.9.1986 for a sum of Rs. 2.00 lakhs promising to repay the borrowed amount or balance thereof with interest at the rate of 5.5% over Bank rate with a minimum of 15.5% per annum with quarterly rests for value received, along with a letter of continuing security dated 1.9.1986. They had also executed another demand promissory note on the same day for a sum of Rs. 2.10 lakhs with identical undertaking for repayment of the loan and they had also executed an agreement of charge and hypothecation of book debts of the defendant No. 1 and had also executed an agreement or hypothecation of tangible machinery and plant on the same clay. Under the terms of agreement, the plaintiff Bank was vested with specific powers to seize and sell the hypothecated goods for recovery of its dues. In addition to the above documents, defendants 2 to 4 had executed two letters of continuing guarantee dated 1.9.1986 for the loan amount undertaking to repay the dues of the defendants No. 1 to the plaintiff Bank along with interest accrued thereon besides cost and expenses. The defendants 1 to 4 enjoyed the cash credit facility by withdrawing money from the plaintiff Bank. All such transactions were posted in the books of account maintained by the Bank in its regular course of business. In addition to the aforesaid documents, the defendant No. 1 company through its directors, executed letters of acknowledgment and confirmation of balance dated 23.8.1988 in favour of the plaintiff Bank. As against the defendants 5 to 8, the case of the plaintiff is that these defendants had joined as directors of the defendant No. 1 with effect from 2.1.1988 and hence, they are also liable jointly and severally for payment of the dues of the Bank. Further case of the plaintiff is that when the defendants had failed to maintain proper discipline in the transactions pertaining to the cash credit account, the plaintiff Bank served a notice on 1.2.1990 on the defendants recalling the cash credit facility and demanding repayment of the entire dues outstanding in each of the two accounts, but the defendants had failed and neglected to pay the dues. In respect of defendant No. 9 namely, Adarsh Paper Board Co. Pvt. Ltd, plaintiffs case is that since in their written statement, defendants 5 to 8 had claimed that all the properties of defendant No. 1 namely M/s Jamshedpur Card Board Company Pvt. Ltd was purchased by Adarsh Paper Board Co. Pvt. Ltd. through one of the directors namely Sashi Kant Jha vide registered sale deed dated 27.10.1989, therefore, Adarsh Paper Board Co. Pvt. Ltd. is also jointly and severally liable for the payment of the dues to the plaintiff Bank and as such, the said company has been impleaded as defendant No. 9. Plaintiff has claimed that cause of action accrued to it for filing the suit on and from 1.9.1986 when the loan was advanced and on 23.8.1988 when the defendants acknowledged the liability and on 27.1.1990 when the demand notice was issued against the defendants, though notices were issued to the defendants, but the defendants 1 to 4 did not appear to contest the suit. Though notices were issued to the defendants 1 to 4 did not appear at, nor offered any contest. Defendants 5 to 9 had offered contest to the suit by filing written statement and by adducing evidence on their behalf.
(3.) THE contesting defendants who are the appellants herein, have denied and disputed their liability to pay the money as demanded by the plaintiff Bank, besides pleading that the suit is not maintainable against them and the plaintiff has no cause of action against the contesting defendants and also that the suit is barred by limitation and under the provisions of the Bihar Money Lenders Act and Indian Contract Act as well as on the principle of waiver and estoppel. The contesting defendants had also pleaded specifically that the suit is bad for non -joinder of necessary party since Bihar State Financial Corporation, Jamshedpur Branch, is a necessary party, whereas the defendants 5 to 8 have been wrongly made parties to the suit. In addition to the above mentioned pleadings, the contesting defendants have specifically stated that they were never admitted as directors of the defendant No. 1 company namely the Jamshedpur Paper Board Company and they had never shouldered any responsibility in any capacity on behalf of the said company, nor had they ever approached the plaintiff Bank for any loan whatsoever, nor had executed any document whatsoever to suggest that they had accepted or received any amount as loan from the plaintiff Bank or to have offered to stand as guarantors or even to have acknowledged any debt payable to the plaintiff Bank. It is further stated that the contesting defendants had never joined as directors of defendant No. 1 Company either on 2.11.1988 or on any subsequent date. The specific case of the contesting defendants is that they constitute a body of directors of Adarsh Paper Board Pvt. Ltd (defendant No. 9) which was a company registered under the Companies Act in the year 1989. To their knowledge, the defendant No. 1 through its directors defendant Nos. 2 to 4, was sanctioned a term loan of Rs. 30.00 lakhs by the Bihar State Financial Corporation on 28.1.1982 to enable the company to set up an industrial Unit. The defendant No. 1 had executed and registered the loan agreement in favour of the said corporation on 17.12.1982 by mortgaging the land with the buildings standing thereon besides the entire plant and machinery. The defendant No. 1 thereafter availed the entire amount of loan sanctioned to it by the corporation. Later on, due to default in payment of the corporation's dues and after reviewing of the affairs of the defendant No. 1, the Advisory Board of the Corporation, by a notice called upon the defendant No. 1 to clear its dues by 31.1.1989. When despite receipt of demand notice the defendant No. 1 had failed to pay of its dues, the corporation proposed to sell the mortgaged property of defendant No. 1 by inviting tenders. In response to the invitation, the defendant No. 9 through one of its directors Shashi Kant Jha, submitted its tender and on approval of the tender, defendant No. 9 purchased all the properties of the defendant No. 1 by virtue of registered sale deed dated 27.10.1989. The properties of defendant No. 1 were specifically detailed and enumerated in Schedule A, B and C in the sale deed which was signed and presented and executed by the Manager of the concerned Branch of the Bihar State Financial Corporation. The claim of the contesting defendants is that to their knowledge, on the date of the aforesaid purchase, the mortgaged Unit of defendant No. 1 was free from all encumbrances charges or dues except that of the Bihar State Financial Corporation and the contesting defendants had purchased the Unit in good faith and without prejudice. The proposal of putting the Unit of defendant No. 1 for auction sale by the Bihar State Financial Corporation and invitation of tender issued by the Corporation was very well within the knowledge of the plaintiff Bank and yet, the Bank had never put forth its claim against the defendants Nos. 1 to 4, nor had the plaintiff Bank ever served any notice on any of the contesting defendants even to inform them about any claim which the Bank may have had against the defendant No. 1.;