RADHA AGENCIES Vs. VIJAYA BANK

JUDGEMENT

(1.) The plaintiff filed a suit for a preliminary and final decree for sale of the plaint 'B' schedule mortgaged property of the defendants 2, 6 and 7 and for recovery of Rs. 4,92,387.50 ps. against the defendants. The Court passed a decree that the defendant shall pay a sum of Rs. 5,17,441.10 ps with subsequent interest on Rs. 4,92,387.50 ps @ 12% per annum from 19-1-1989, the date of the suit, till the date of realization. The Court also passed a decree that on such payment the plaintiff shall bring into Court all documents in his possession or power relating to the mortgaged property and clear off the said mortgaged property from all encumbrances created by the plaintiff or any person claiming under him and deliver to the defendant peaceful possession of the said property. The Court also ordered that, in default of payment by the defendant the plaintiff may apply to the Court for a final decree for sale of the mortgaged property and on such application the property shall be directed to be sold and for this purpose the plaintiff shall produce before the Court or such officer as it appoints all documents in his possession or power relating to the mortgaged property. The Court also gave the liberty to the plaintiff to apply for a personal decree against the defendant if the money realised by such sale is not sufficient to payment in full satisfaction of the amount due to the plaintiff. This judgment and decree has been challenged by way of this appeal.

(2.) The suit was based by the Bank on the fact that the defendants approached the Bank for open loan cash credit facility and the plaintiff Bank granted the loan to the extent of Rs. 2,50,000/- subject to the terms and conditions laid down by the plaintiff Bank. Defendants 1 to 5 executed a promissory note on 20/01/1986 for Rs. 2,50,000/- undertaking to pay the said amount with interest @ 7.5% per annum over the Reserve Bank of India rate with minimum of 17.5% per annum with quarterly rests for the value received. Defendants 1 to 5 also executed an agreement for demand cash credit on the hypothecation of movable property on the same day i.e., 20/01/1986 hypothecating the stock of various varieties of fertilizers and pesticides stored in their shop at PP Road godowns. The 6th defendant is the wife of the second defendant and the 7th defendant is father of the second defendant. They created an equitable mortgage against the properties described in 'B' schedule by depositing title deeds and other documents mentioned in 'A' schedule for repayment of the loan advanced and to be advanced and Bank guarantee by the plaintiff to the defendants 1 to 5. The defendants availed the said loan facilities. Subsequently at the instance of defendants 1 to 5 the plaintiff enhanced the loan facility from Rs. 2,50,000/- to Rs. 3,00,000/- to the defendants 1 to 5. The defendants executed another promissory note for Rs. 50,000/- on 30-10-87 adhering the conditions with regard to interest etc., therein. The defendants 2, 6 and 7 also consented for the continuation of equitable mortgage against the 'B' schedule property for the additional loan facility provided to the defendants 1 to 5. Therefore, the defendants 1 to 5 in all utilized the loan facility of Rs. 3,00,000/-.

(3.) The 1st defendant remained ex parte. The second defendant filed written statement denying certain averments in the plaint and certain averments were admitted by him. Defendants 3 to 5 also filed written statement. They also admitted certain assertions in the plaint and denied some. Defendants 6 and 7 filed their written statements, denied some of the allegations. Following issues were framed by the trial Court: