Delhi High Court (August 21, 2001) 2001 (TLS)125785 2002-AD (Del)-1-118 :: 2001-ILRDLH-7-169 STATE BANK OF INDIA Vs. Rachna Consuner Company Op. Store Limited V. S. AGGARWAL ( 1 ) STATE Bank of India has preferred the present suit for recovery of Rs. 6,69,188. 12 against the defendants. ( 2 ) THE facts alleged are that defendant no. 1 is a registered cooperative society registered under the delhi Cooperative Societies Act. Defendants 2 to 10 are members of the executive body of defendant no. 1. Defendant no. 1 is engaged in the business of trading in confiscated goods as per name and style of Rachna consumer Cooperative Store Ltd. ( 3 ) DEFENDANT 1 through Its authorised representative approached the plaintiff bank on 2/2/1991 for grant of credit facilities for smooth running of the business. The plaintiff bank scrutinised the proposal and sanctioned lent and released a cash credit limit of Rs. 5. 00 lakhs to defendant no. 2 on 22/3/1991. In consideration of granting of the said credit facility defendant no. 1 and defendant 2 in his personal capacity executed and delivered in DP Note of Rs. 5. 00 lakhs, DP Note delivery letter executed by defendants 1 and 2; agreement of Hypothecation executed by defendant no. 1 agreeing to hypothecate entire stocks of goodsr an agreement of guarantee. executed by defendant no. 2 that his guarantee will be continuing in nature. ( 4 ) DEFENDANTS agreed to submit the stock statements regularly to the plaintiff bank and also agreed to route their sales through the plaintiff bank. The defendants agreed thai the amount availed under the said cash credit limit will be paid by the defendant. on demand with interest. As a security for proper re-payment defendant no. l hypothecated its entire stock uith the plaintiff and defendant no. 2 stood as the guarantor. As collateral security for proper adherence defendant no. 2 mortgaged his Immovable property with the plaintiff with an intention to create a charge of the bank over the said property. The details of the property have been given in the plaint to be northern portion of property measuring 123-1/2 sq yds bearing No. B-,6/1 Krishna Nagar, Delhi the title deeds were deposited. ( 5 ) IT is asserted that defedants failed to maintain financial discipline and they neither submitted the stock statement to the plaintiff nor routed their sales through the plaintiff bank. ( 5 ) IT is asserted that defedants failed to maintain financial discipline and they neither submitted the stock statement to the plaintiff nor routed their sales through the plaintiff bank. Thus they committed breach of these conditions. The amount had been released. In this process the plaintiff claims Rs. 6,69,188,12 including interest. ( 6 ) NOTICE had been issued to the defendants and on 9/3/1999 the defendants were proceeded exparte. ( 7 ) IN support of its case the plaintiffs have led the evidence by filing the affidavit. The affidavit has been filed by the Chief Manager and Principal officer, State Bank of India Clock Tower Delhi. He has sworn to the effect that earlier he was Chief manager and Principal Officer of Krishna Nagar Branch and that he was authorised by the bank to sign and verify plaints and file suits on behalf of the bank. Defendant no. 1 is stated to be a cooperative society with defendants 2 to 10 as its members. He proved the dp note executed by defendants which is Exhibit P1 and defendant no. 2 stood as the guarantor. He also has proved the endorsement on the back of the DP note which is Exhibit P2, Defendant ,2 is stated to have mortgaged his property referred to above by deposit of the title deeds. Defendants are alleged to have failed to maintain the financial discipline and not re-paid the amount despite notice. ( 8 ) THE evidence on the record clearly show that so far as defendant no. 3 to 10 are concerned they were simply members of the executive body of defendant no. 1. They had not executed any document in favour of the plaintiff bank to make them personally liable. Therefore? in the absence of any other material as against defendants 3 to 10 the suit must fail. ( 9 ) HOWEVER as regards defendants 1 and 2 It is patent that defendant no. 1 has taken the loan. Defendant no. 2 has stood as the guarantor and even has crested a mortgage with respect to his property by deposit of title deeds. The amount as such has not been paid end therefore the plaintiff is entitled to the preliminary decree at the, rate of 18. 75% per annum with quarterly rests from the date of the suit till actual payment. Defendant nos. The amount as such has not been paid end therefore the plaintiff is entitled to the preliminary decree at the, rate of 18. 75% per annum with quarterly rests from the date of the suit till actual payment. Defendant nos. 1 and 2 are granted six months time to make the said payment. If within six months payment is not made the plaintiff would be at liberty to seek a final decree in terms of Order 34 of the Code of Civil Procedure and that sale of the property that had been mortgaged. --- *** --- .