Tarun Chatterjee, J. - (1.)This appeal is directed against the judgment and final order dated 29th of September, 2000 of the High Court of Karnataka at Bangalore in R. F. A. No. 205/1995 whereby, the High Court had dismissed the appeal filed by the appellants herein.
(2.)The relevant facts, which would assist us in appreciating the controversy involved, are narrated in a nutshell, which are as follows : Lokashikshana Trust (LST) was a public Trust registered under the Bombay Public Trust Act, 1950 which was engaged in the publication of a Kannada daily "Samyukta Karnataka" and some other periodicals. In 1974, the Board of Trustees entered into an agreement with M/s. Karnataka Patrika Pvt. Ltd. (hereinafter referred to as "the KPP") for the transfer of publication and printing rights and machineries as also to create a lease in the buildings owned by the Trust. Some interested persons filed a suit being O. S. No. 4/1977 before the Principal District Judge, Dharwad, praying for removal of trustees, scheme for management of the trust, etc. While this suit was pending, the KPP entered into an agreement with M/s. Jaya Karnataka. News and Printers Pvt. Ltd. - appellant No. 2 (hereinafter referred to as "the JKNP") for transfer of all its rights, interest and liabilities. There was a loan transaction between JKNP and the respondent bank whereby a loan of Rs. 15 lakhs was sanctioned to the former at an interest of 15% p.a. by open cash credit compounded quarterly. Appellant No. 1 along with other office-bearers of the said company allegedly executed a demand note. On the same day, JKNP through its Executive Director requested for an Over draft facility of Rs. 5 lakhs which was granted on an on-demand promissory note with an interest of 15% p. a. compounded quarterly. This loan was secured by book debts and appellant No. 1 Basavaraj (since deceased) along with the Executive Director of JKNP also executed a hypothecation agreement to provide collateral security to the bank. Subsequently, JKNP and its Executive Director executed a pro-note for a term loan of Rs. 2,86,000/- at the same interest rate as before. The appellants herein also executed an agreement of guarantee to the tune of Rs. 13 lakhs with a maximum of Rs. 30 lakhs as seen from Exhibit P-16. JKNP became a public limited company on 28th of September 1978. The respondent bank filed a suit being O. S. No. 119/1984 against the appellants for recovery of the loan amount. Appellants contested the suit and denied material allegations. O. S. No. 119/1984 was decreed by the Principal Civil Judge, Hubli at the Trial Court level on 1st of August 1994 directing the appellant to pay Rs. 19,97,839.51 with future interest at 17% p. a. and other reliefs and costs. Meanwhile, an interim order was passed in O. S. No. 4/1977 appointing JKNP as the receiver of the properties in its possession subject to the conditions mentioned in the order. On 9th of September, 1980, the Charity Commissioner, Belgaum was appointed the new receiver. Again the Court at Dharwad relieved the Charity Commissioner of receivership of the property and instead appointed a District Judge to be the receiver and manage the Trust publication and moveable properties. Meanwhile, the Governor of Karnataka had issued the Lokashikshana Trust (Taking over of Management) Ordinance in 1991 which was later replaced by the Lokashikshana Trust (Taking over of Management) Act (hereinafter referred to as, the LST Act"). The LST Act was aimed at taking over the management of the Trust by the State Government due to the prolonged litigation pending before the Courts at first for two years and extendable to the extent of five years. Accordingly, the trust properties came to be vested in the Administrator appointed by the Government. This action of the Government was validated by a Division Bench of the High Court of Karnataka in Shri R. K. Joshi and Ors. vs. State of Karnataka (1984 (1) KLJ 158) which held that the management of the public trust was a matter of public concern and hence within the ambit of the State Governments powers. Only the explanation to Section 2(c) of the LST Act was declared to be invalid in as much as the same related to the properties sold by the Trust to KPP and which were in the possession of the receiver and, hence, arbitrary. The suits in the High Court were related to three different loan transactions that had taken place between the respondent Banks and the appellants between 1977 and 1981. The first out of these have been taken by the KPP in 1977, the second by JKNP in 1978 and the third loan was taken by the administrator appointed by the Government under the LST Act. The subject matter of these appeals has been to decide as to who should be liable to pay the loan amounts. O. S. No. 4/1977 was dismissed by the District Court, Dharwad. The first set of appeals in the High Court had been against the decree of the Trial Court, which was passed against KPP and JKNP regarding a loan of Rs. 90,000/- from Syndicate Bank where three different appeals were filed by KPP, JKNP and the Bank separately. The issues gone into by the High Court were multifarious and not required to be delved into at this point of time.
(3.)We have heard the learned counsel appearing on behalf of the parties and examined the materials on record. The issues which we have framed to deal with while disposing of this appeal are listed as follows :
(i) Whether the deceased surety and his Legal Representatives are liable to repay the disputed loan amount

(ii) Whether the conduct of parties amounts to novation of the contract between the parties

(iii) Whether the Lokashikshana trust alone is responsible to repay the disputed loan amount being the beneficiary of the same

(iv) Whether the LST having benefited from the loan transaction disputed herein can be estopped from denying its liability