Karnataka High Court
The Karnataka Bank Limited vs Mysore Urban Development Authority on 13 July, 2021
Bench: S.Sujatha, P.N.Desai
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF JULY, 2021
PRESENT
THE HON'BLE MRS.JUSTICE S.SUJATHA
AND
THE HON'BLE MR.JUSTICE P.N.DESAI
REGULAR FIRST APPEAL NO.1179/2011(MON)
BETWEEN:
THE KARNATAKA BANK LIMITED
WILSON GARDEN BRANCH
WILSON GARDEN, BANGALORE - 560 027
REPRESENTED HEREIN BY ONE OF
ITS PRINCIPAL OFFICERS AND
SENIOR MANAGER OF WILSON
GARDEN BRANCH - SRI SURESH NAYAK N.
... APPELLANT
(BY SRI Y.V.PARTHASARATHY, ADVOCATE)
AND:
01. MYSORE URBAN DEVELOPMENT AUTHORITY
A BODY CORPORATE ESTABLISHED
UNDER THE KARNATAKA URBAN
DEVELOPMENT AUTHORITIES ACT
1987, HAVING ITS OFFICE AT
JHANSI LAKSHMI BAI ROAD
(J.L.B. ROAD), MYSORE
REPRESENTED HEREIN BY ITS
COMMISSIONER.
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02. M/S VENU ELECTRICALS
A PROPRIETARY CONCERN HAVING
ITS PLACE OF BUSINESS AT NO.307/18
10TH CROSS, WILSON GARDEN,
BANGALORE - 560 027
REPRESENTED HEREIN BY ITS
PROPRIETRIX SMT. NAGAMANI V.
...RESPONDENTS
(BY SRI T.P.VIVEKANANDA, ADVOCATE FOR R1,
V/O DATED 21.03.2014 SERVICE NOTICE TO R2 IS
HELD SUFFICIENT)
THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION
96 OF CIVIL PROCEDURE CODE PRAYING TO CALL FOR THE
RECORDS IN O.S.NO.765 OF 2004 ON THE FILE OF THE
HON'BLE PRL. JUDGE, SMALL CAUSES AND SENIOR CIVIL
JUDGE, MYSORE AND STAY THE OPERATION OF THE JUDGMENT
AND DECREE DATED 31.03.2011 PASSED IN O.S.NO.765 OF
2004 ON THE FILE OF THE HON'BLE PRL. JUDGE, SMALL
CAUSES AND SENIOR CIVIL JUDGE MYSORE AND SET ASIDE
THE JUDGMENT AND DECREE DATED 31.03.2011 PASSED IN
O.S.NO.765 OF 2004 ON THE FILE OF THE HON'BLE PRL.
JUDGE, SMALL CAUSES AND SENIOR CIVIL JUDGE, MYSORE
AND DISMISS THE SUIT AGAINST THE APPELLANT AND DIRECT
THE PLAINTIFF/1ST RESPONDENT TO PAY COSTS OF THE
APPELLANT THROUGHOUT AND ETC.
THIS REGULAR FIRST APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 12.04.2021 AND COMING ON
FOR PRONOUNCEMENT OF JUDGMENT THIS DAY,
P.N.DESAI. J., DELIVERED THE FOLLOWING:
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JUDGMENT
This appeal is filed challenging the judgment and decree dated 31.03.2011 in O.S.No.765/2004 passed by the Principal Judge, Court of Small Causes and Senior Civil Judge, Mysore, wherein suit of the plaintiff is decreed for sum of Rs.24,23,620/- with future interest at the rate of 24% p.a., from the date of suit till realisation.
2. The appellant was the defendant No.1 before the Trial Court. Respondent No.1 was the plaintiff and respondent No.2 was the defendant No.2 before the Trial Court.
3. The parties in the appeal will be referred to as plaintiff and defendants as per their respective ranks before the Trial Court for convenience. 4
4. The plaintiff filed a suit for recovery of sum of Rs.24,23,620/- with interest at the rate of 24% per annum from the date of suit till realisation.
5. Brief case of the plaintiff is-
Under notification MUDA:DB:TN:14/2003-04 dated 14.01.2003 plaintiff invited sealed bids from experienced and eligible bidders as per details mentioned in notification for work of electrification and providing street lighting for residential sites and services in Sathagalli Zone A and B Extension at Mysore city. The second defendant-Firm offered its bid on 17.03.2003 for the contract price of Rs.2,27,08,196/- and same was accepted by the plaintiff. In this regard necessary agreement was executed by second defendant in favour of plaintiff.
6. It is further contended that the first defendant in its letter dated 26.10.2003 intimated the 5 plaintiff that the second defendant-Firm is one of their esteemed customer and is enjoying sufficient credit facilities with them and they are dealing with second defendant since 1996 and also stated that the Firm has given its proposal for renewal of their existing credit facilities and same was submitted to Head Office and sought time for furnishing Bank Guarantee.
7. The first defendant issued Bank Guarantee dated 08.10.2003. It is mentioned by the first defendant in the said Guarantee that it would undertake to pay the plaintiff upon its first written demand and without cavil argument, any sum within the limits of Rs.22,70,820/- without the plaintiff needs to prove or show grounds or reasons for its demand for sums specified therein. The first defendant also agreed to other conditions by issuing the unconditional performance Bank Guarantee. 6
8. The second defendant-Firm did not carryout his obligation and Sri.K.N.Venugopal representing defendant No.2 died on 25.10.2003. Then his wife-Smt.Nagamani, Proprietrix took over the Firm and undertook the work entrusted to second defendant-Firm. The defendant No.2 was granted time to obtain electrical licence etc. Then it is intimated by the second defendant that it was unable to mobilize the funds as the first defendant did not come forward to assist the Firm to carryout the project and therefore, sought for termination of the contract. Accordingly, plaintiff terminated the contract with second defendant-M/s Venu Electricals and plaintiff intimated the second defendant that performance security provided was also invoked as per the bid clause 63.3 vide letter dated 29.04.2004 (as per Ex.P47) and 11.05.2004 (as per Ex.P4). The first defendant was also intimated by the plaintiff on 7 07.05.2004 that the Bank Guarantee furnished has been invoked by the plaintiff and requested the first defendant to send Rs.22,70,820/- being the Bank Guarantee amount to the plaintiff.
9. It is further contended that the first defendant sent a letter on 05.06.2004 to the plaintiff stating that Sri K.N.Venugopal, Proprietor of M/s Venu Electricals expired on 25.10.2003 before the plaintiff could issue the work order to him and therefore, Bank is not liable to pay the amount on the strength of Bank Guarantee issued to it. Then plaintiff issued legal notice and in spite of demand, the first defendant has not paid amount covered under Bank Guarantee furnished and invoked by the plaintiff.
10. It is further averred that Bank Guarantee furnished by the first defendant is in relation to Firm of M/s Venu Electricals and not in favour of individual. 8 As such, the first defendant cannot deny its liability. There is no allegation of fraud on the part of the second defendant/Firm. The only ground is that, Sri K.N.Venugopal expired before the work order could be issued, the Bank cannot be made liable to pay the amount. It is contended that the Bank Guarantee is an independent and distinct contract between the first defendant-Bank and the plaintiff beneficiary and it is not qualified by any underline transaction and the Bank Guarantee has been invoked by the plaintiff in accordance with terms of Bank Guarantee. The general principle is that Banker is bound to honour the Bank Guarantee on its face value. But as the Bank denied its liability in spite of demand and issue of legal notice, the suit came to be filed for recovery of the same from both the defendants.
11. The defendant No.1/Bank in its written statement though admitted about the plaintiff inviting 9 the sealed bid but denied the other plaint averments. It is further contended that late Sri K.N.Venugopal was doing business in the name and style of M/s Venu Electricals and he was its Proprietor. It is he who participated in the said tender, but not the second defendant. Though the first defendant admitted that the Bank Guarantee referred by the plaintiff was issued to the plaintiff but it was on behalf of late Venugopal, the Proprietor of M/s Venu Electricals and not on behalf of the second defendant. Exchange of legal notice is admitted. It is further contended that that the second defendant i.e. M/s Venu Electricals represented by its Proprietrix is a stranger to the contract that was entered into between the plaintiff and the first defendant and she is neither necessary nor proper party to this suit.
12. It is further contended by the first defendant-Bank that at the request of said Venugopal 10 and upon executing necessary documents furnishing security, the first defendant on 08.10.2003 issued a Bank Guarantee on its behalf to the plaintiff as a security, but before issuance of any work order he expired. Therefore, their contract got frustrated because of death of Sri K.N.Venugopal.
13. It is further contended that the second defendant filed a suit in O.S.No.33/2004 against the plaintiff restraining it from enforcing the Bank Guarantee against the first defendant. But the plaintiff has independently dealt with Smt. Nagamani and proceeded to issue work order on 01.01.2004. The said second defendant had no expertise or experience in carrying out the work, failed to carryout the work, which was entrusted to her. At no point of time the plaintiff informed the first defendant regarding entrustment of work to Smt.Nagamani and at no point of time it obtained the consent of the first defendant 11 to substitute Smt. Nagamani in place of late Venugopal. The Bank had not consented for extending the Bank Guarantee to Smt. Nagamani. Therefore, in view of frustration of contract and substitution of Smt.Nagamani after death of Sri K.N.Venugopal the first defendant is discharged from its obligation. Hence, the first defendant is not liable to pay the amount and prayed to dismiss the suit.
14. The second defendant filed written statement contending that the averments of the plaint are to be strictly proved by the plaintiff. It is contended that it was the late Venugopal Proprietor of M/s Venu Electricals who participated in the said tender, the defendant No.2 never participated in the alleged bid. Hence, the contention in this regard are all baseless. The Bank Guarantee issued by the Karnataka Bank to the plaintiff is with reference to late Sri.Venugopal, the Proprietor of M/s Venu 12 Electricals and not on behalf of defendant No.2. The other allegations were denied as all false, except the death of Sri. K.N.Venugopal. It is further contended that after death of late K.N.Venugopal, the second defendant did not take over the said business M/s Venu Electricals, but after his death Smt.Nagamani started her own business in the name and style as M/s Venu Electricals. There is no agreement or contract between plaintiff and Smt.Nagamani. The second defendant is not a party to any of alleged tender or contract. There is no privity of contract between second defendant and MUDA and the first defendant. The developments subsequent to the demise of late Venugopal do not bind second defendant. The second defendant is not legal heir of said Venugopal instead of she is a Proprietrix of M/s Venu Electricals. The work order was not issued to late Venugopal during his life time. So the second defendant is not bound by 13 any contract entered between plaintiff i.e. Mysore Urban Development Authority (hereinafter referred to as 'MUDA' for short) and late Sri.Venugopal and first defendant. With these main contentions, the second defendant prayed to dismiss the suit.
15. On the basis of the above pleadings, the Trial Court framed the following issues:
(i) Whether plaintiff proves that defendants 1 and 2 are jointly and severely liable to pay Rs.24,23,620/- to plaintiff?
(ii) Whether the plaintiff is entitled for future interest at the rate of 24% p.a., from the date of suit till realisation of entire amount?
(iii) Whether plaintiff is entitled for the relief sought for?
(iv) Whether 2nd defendant proves that the suit is bad for mis joinder of parties?
(v) What orders or decree?
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16. In order to prove the case, the plaintiff got examined the Asst. Executive Engineer of MUDA as PW.1 and got marked fifty-five documents, which were marked as Exs.P1 to P55. Defendant No.1-Bank got examined its Senior Manger as DW.1. Defendant No.2 got examined as DW.2 and got marked two documents, which were marked as Exs.D1 and D2.
17. After hearing the arguments, the Trial Court decreed the suit with costs holding that defendant Nos.1 and 2 are jointly and severally liable to pay Rs.24,23,620/- with future interest at the rate of 24% p.a. from the date of suit till realization. It is further ordered that defendant No.1-Bank has to make payment of decreetal amount in favour of plaintiff-Institution and thereafter, defendant No.1 is at liberty to recover the same from defendant No.2 in accordance with law.
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18. Aggrieved by the same, defendant No.1 has preferred this appeal. The second defendant has not preferred any appeal challenging the impugned judgment and decree.
19. The respondent No.1 has filed application in I.A.No.1/2020 under Order 41 Rule 27 of CPC seeking production of additional evidence. The respondent No.1 has mentioned in the affidavit filed along with I.A.No.1/2020 that in the cross examination the appellant witness admitted that 20% of the Bank Guarantee amount as deposit is still with the Bank. The Bank has not produced any document to show that the said amount was refunded to M/s Venu Electricals or not. Even during cross examination DW.1 has stated that there are three to four bulky files relating to M/s Venu Electricals but no such files were produced before the Court deliberately. It is further contended that the Bank has published public 16 notice for sale of property belonging to M/s Venu Electricals and borrowers and reply given to the letters sent by the respondent No.1, which indicate that the recovery of dues which were outstanding under O.D. Account No.18 availed by M/s Venu Electricals for working capital purpose and also housing loan availed by Smt.Nagamani. Therefore, even after death of Sri Venugopal on 26.10.2003 the appellant-Bank continued the account of M/s Venu Electricals and the O.D. Account No.18 was permitted to be operated by Smt.Nagamani. Therefore plaintiff intends to produce public auction notice and letter written by respondent No.1 as additional evidence.
20. The appellant has filed objections to this application contending that the said document No.1 was not in existence when the judgment was passed. Regarding document No.2 it is not necessary to produce the said document as it does not indicate 17 anything since the defendant No.2 is still due large amount to the Bank, so refund of 20% deposit does not arise. The other allegations are denied as false. Mere death of person holding account does not debar the Bank for claiming interest from the date of death till the date of realisation. With these main objections, appellant-defendant No.1 prayed to dismiss the application.
21. We have heard Sri Y.V.Parthasarathy, learned counsel for the appellant and Sri T.P.Vivekananda, learned counsel for the respondent No.1. Respondent No.2 though served remained absent.
22. The learned counsel for the appellant argued that the performance Bank Guarantee gets frustrated after the death of Sri Venugopal. The Firm is different and person is different. The Bank entered 18 into execution of performance of Bank Guarantee to plaintiff as Venugopal had experience and capacity to perform the contract. The learned counsel also referred to the meaning of "performance" contract in Black's Law Dictionary, Sixth edition wherein it is stated that the "performance" means-"Performance- The fulfillment or accomplishment of a promise, contract, or other obligation according to its terms, relieving such person of all further obligation or liability thereunder." The learned counsel also referred to the meaning of "Proprietory" as-"Proprietary- Belonging to ownership; owned by a particular person; belonging or pertaining to a proprietor; relating to a certain owner or proprietor."
23. Learned counsel further argued that the contract gets frustrated on the death of Sri Venugopal. Therefore, the question of invocation of Bank Guarantee does not arise. The fresh work order 19 was issued after the death of Sri Venugopal. Therefore, no contract remain to be performed between Sri Venugopal and in turn first defendant. The frustration of the contract was within the knowledge of MUDA. In fact the MUDA called fresh bid. Therefore, acting on a new bid MUDA is estopped from invoking Bank Guarantee under previous contract. There is no communication made to the Bank about death of Sri Venugopal or calling fresh bid or acting on a new bid. The transaction between defendant No.2 and plaintiff is a different transaction in view of fresh bid.
24. The learned counsel further argued that second defendant filed a suit in O.S.No.33/2004 denying liability. The Bank also issued letter dated 05.06.2004 denying its liability. The evidence of PW.1 and his admission clearly demonstrate that the contract got frustrated. So when there is frustration of 20 contract, the dissolution of contract occurs automatically, in spite of that the Trial Court wrongly decreed the suit. It is further argued that upon death of Sri.Venugopal the proprietary concerned ceased to exist automatically, not like a partnership Firm where it can be continued. The Trial Court mistook it.
25. There is also no pleading about the rate of interest at 24% p.a as claimed. It is the plaintiff and defendant No.2 committed fraud on the Bank. Therefore, the judgment and decree of the Trial Court is perverse, contrary to the pleadings and evidence and prayed to set aside the judgment and decree. The learned counsel further argued that for the reasons mentioned in the objection filed to I.A.No.1/2020 the additional evidence sought to be produced be rejected. The learned counsel for appellant in support of his contentions relied on decision of Calcutta High Court in the case of Shree Ram Cloth Stores vs. 21 M/s Trading Corporation of Bangladesh & Ors. reported in (1980) 1 CHN 132.
26. Against this, the learned counsel for the respondent No.1 argued that the Bank Guarantee- Ex.P1 terms clearly show that it was "unconditional guarantee". Whether Smt.Nagamani informed the Bank about continuing Bank Guarantee, is not for the plaintiff to verify. The learned counsel argued that when the plaintiff issued notice of demand of Bank Guarantee, the Bank sold the other properties of the defendant No.2 and adjusted the amount received to its other loan dues by the second defendant. This is nothing but just to defraud the payment of Bank Guarantee amount. The Bank issued public notice of sale of second defendant property and assets on 01.10.2011 i.e. after the judgment in this suit was passed. The total liability to be recovered according to Bank was Rs.3,82,95,586/- from defendant No.2. The 22 Bank Guarantee was dated 08.10.2003 for Rs.22,70,820/- The documents produced by the plaintiff clearly indicates that it is M/s Venu Electricals which entered into agreement and it is M/s Venu Electricals which offered the Bank Guarantee. The work order, all orders and letters were issued by plaintiff in favour of M/S Venu Electricals but not in individual name of Sr.K.N.Venugopal or Smt.Nagamani.
27. The learned counsel argued that Bank cannot now say that they have adjusted the amount received from sale of defendant No.2 property in respect of their other loans without making payment to plaintiff. There is no pleading by the Bank that there is any fraud. The Bank can very well recover the amount from the defendant No.2. The Bank has not withdrawn the Bank Guarantee till the demand is made by plaintiff.
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28. The learned counsel supported the judgment of the Trial Court stating that the learned Judge of the Trial Court has properly appreciated both oral and documentary evidence and the judgment and decree is neither any erroneous nor perverse. The second defendant has not challenged the judgment. Therefore, the Bank cannot commit fraud on the public authority like respondent MUDA and deprive them the amount meant for public welfare. Contract of Bank Guarantee is not frustrated. The learned counsel further argued that the respondent No.1 has produced documents as additional evidence in I.A.No.1/2020 to show that the Bank dealt with the account of M/s Venu Electricals subsequent to death of Sri.Venugopal and even after passing judgment. The learned counsel prayed to allow the application for the reasons mentioned in the affidavit filed along with the application. With these 24 main arguments, he prayed to dismiss the appeal. In support of his arguments, the learned counsel for the respondent No.1, relied on the following decisions:
1) AIR 2011 Madras 179 in State Bank of India and Anr. Vs. Mrs. Jayanthi and Ors.;
2) (2003) 4 SCC 690 in Daewoo Motors India Ltd. Vs. Union of India and Others;
3) AIR 1996 SC 2268 in Hindustan Steel Works Construction Ltd. Vs. Tarapore and Co. and another;
4) AIR 1997 SC 1644 in U.P.State Sugar Corporation Vs. M/s Sumac International Ltd.
29. In the light of the arguments advanced, the following points arise for our consideration:
1. Whether the documents produced along with I.A.No.1/2020 to lead the additional evidence are necessary to enable this Court for just decision of the controversy 25 involved between the parties or for any other substantial cause?
2. Whether the plaintiff is entitled for the recovery of Bank Guarantee for sum of Rs.22,70,820/- under performance of unconditional Bank Guarantee dated 8.10.2003 with interest at the rate of 24% p.a. from the date of suit?
3. Whether the judgment of the Trial Court is erroneous, illegal and needs interference by this Court?
30. Reasons for Point No.1:- On considering documents produced along with I.A.No.1/2020 it is evident that those documents are not essential for just decision of the case. They are subsequent to suit and they are not denied by the appellant. On the other hand, an affidavit was filed by the appellant- Manager as referred in subsequent paras regarding the Bank proceedings with the account of defendant 26 No.2 after death of Sri.Venugopal. Looking into the nature of documents and the reasons assigned for their production at this stage and also the objections filed by the applicant, in our view, these documents are not at all essential for just decision of the case. Therefore, the said application deserves to be dismissed. Accordingly, I.A.No.1/2020 is rejected.
Reasons for Point No.2:-
31. We have perused the judgment of the Trial Court.
32. The learned Judge of the Trial Court has answered issue Nos.1 to 4 together. The contention of defendant No.2 regarding Order 30 Rule 10 of the CPC was negatived and it is held that description of defendant No.2 was proper. The learned Judge also held that Ex.P1 the Bank Guarantee indicates that it was issued in favour of M/s Venu Electricals but not in 27 the name of any particular person. The learned Judge of Trial Court held that the defendant No.1-Bank has undertaken the liability under said guarantee and they have waived any change or addition or modification in the contract. The said deed is unconditional Bank Guarantee executed on behalf of defendant No.2-Firm in favour of plaintiff. The learned Judge held that simply because Sri. Venugopal died it cannot be said that Institution ceases to exist. On the other hand, the said Institution continued its business through wife of Sri.Venugopal. In fact, the bid applied by defendant No.2 was accepted and the same was communicated to defendant No.2 by letter of acceptance as per Ex.P.15 on 10.09.2003. Ex.P16 letter dated 10.09.2003 indicates that M/s Venu Electricals has thanked the plaintiff for awarding the work to M/s Venu Electricals.
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33. It is further held by the Trial Court that the defendant No.1 has written a letter to the plaintiff for extension of time for furnishing Bank Guarantee. The learned Judge of the Trial Court held that even after the death of Sri. Venugopal, the defendant No.2-Firm continued to be represented through Smt.Nagamani. The defendant No.1-Bank had knowledge about the death of Sri Venugopal. They confirmed issue of Bank Guarantee on behalf of M/s Venu Electricals in favour of plaintiff after his death.
34. The defendant No.1-Bank continued its transaction with M/s Venu Electricals. As the defendant No.2 could not start the said work as per agreement, the plaintiff terminated the contract. Then the plaintiff issued notice with regard to forfeiture of Bank Guarantee and to compensate the loss caused to the plaintiff-Institution. The Trial Court held that defendant No.1 who had issued an unconditional Bank 29 Guarantee on behalf of M/s Venu Electricials is liable to pay the said amount. But in spite of issue of notice, the said amount is not paid. Hence, the Trial Court based on oral and documentary evidence on record held both are liable to pay the claim amount. However, the Bank has issued unconditional Bank Guarantee it has to pay the amount to the plaintiff- Institution and can recover the same from defendant No.2. Accordingly, decreed the suit.
35. We have perused the pleadings, evidence and materials placed on record and reassessed the evidence.
36. PW.1-Assistant Executive Engineer of MUDA, Mysore, has given evidence as PW.1. He has deposed that the Bank Guarantee issued by the defendant No.1 is in relation to Firm-M/s Venu Electricals and not in favour of any individual. The 30 contractor is M/s Venu Electricals and not Mr. K.N.Venugopal in his individual capacity. PW.1 has produced documents in favour of plaintiff. These documents also support the case of the plaintiff. He has denied the suggestion that after death of Sri Venugopal the liability of the Bank get discharged. He has stated that defendant No.2 Smt. Nagamani has represented the said M/s Venu Electricals and given a letter to the plaintiff to continue the contract.
37. The plaintiff has produced Ex.P1 the performance guarantee, which shows it is an unconditional Bank Guarantee. At page-2 of Ex.P1 it is mentioned as under:
"Now therefore we hereby affirm that we are the Guarantor and responsible to you, on behalf of the Contractor, up to a total of Rs.22,70,820/- (Rupees Twenty two lakhs seventy thousand eight hundred and twenty only), such sum being payable in 31 Indian Rupees in which the contract price is payable, and we undertake to pay you, upon your first written demand and without cavil argument any sum within the limits of Rs.Twenty-two lakh seventy thousand eight hundred twenty only [amount of Guarantee] as aforesaid without your needing to prove or to show grounds or reasons for your demand for the sum specified therein.
We hereby waive the necessity of your demanding the said debt from the Contractor before presenting us with the demand.
We further agree that no change or addition or other modification of the terms of the Contract or of the Works to be performed there under or of any of Contract documents which may be made between you and the Contractor shall in any way release us from any liability under this guarantee, and we hereby waive notice of any such change, addition or modification."32
38. On perusing terms of Ex.P1 it is crystal clear that it is an unconditional deed of guarantee. The defendant No.1 has agreed that no change or other modification of the terms of contract of the works performed thereunder or any of the contract which may be made between MUDA and contractor shall any way release them, even they waived notice of any such change, addition or modification.
39. Therefore, the defendant No.1-Bank now cannot go back against the terms of deed of Guarantee and contend that in view of the death of Sri Venugopal the contract get frustrated. On the other hand, the contract continued with the M/s Venu Electricals. Only difference is the wife of Sri Venugopal is representing the M/s Venu Electricals after his death. It is also pertinent to note that on 24th March 2004 i.e. even after the death of Sri Venugopal the 33 defendant No.1-Bank has confirmed the issuance of Bank Guarantee dated 08.10.2003 for Rs.22,70,820/- on behalf of M/s Venu Electricals as per its letter at Ex.P3. In view of said letter the plaintiff has issued work order. Ex.P4 is the letter written by plaintiff to the Bank. Ex.P8 is letter written by defendant No.1- appellant which indicates that the plaintiff has informed the defendant No.1 that the death of Sri Venugopal has nothing to do with the Bank Guarantee. But the Bank refused to pay the said amount stating that as without knowledge and the consent of the defendant No.1-Bank, the plaintiff dealt with M/s Venu Electricals represented by Smt.Nagamani. Such contention is not tenable in view of the letter of confirmation Ex.P3 issued by Bank after death of Sri Venugopal. Terms of Ex.P1, indicates that defendant No.1 waives any such notice or consent and also modification or change in contract 34 with M/s Venu Electricals. In fact, the plaintiff has issued the letter of acceptance to M/s Venu Electricals on 10.09.2003 as per Ex.P15. Further, Ex.P18 the letter issued by Bank dated 26.09.2003 indicates that the Bank has sought time from the plaintiff informing as under (at para 1, 2 and 3):
"We write to inform you that the said firm M/s Venu Electricals, Wilson Garden, Bangalore, has given the letter of Acceptance, vide your above reference, for the works of MUDA amounting to Rs.227-08 lakhs.
The firm is our one of the esteemed customer and is enjoying sufficient credit facilities with us and are dealing with us since 1996. The firm has submitted their proposal for renewal of their existing credit facilities with a request for enhancement in their fund based and non-fund based limits. The proposal has been submitted by us to our sanctioning authorities at Head Office, Mangalore, which is under consideration.35
We are expecting the sanction in a
fortnight's time. Under these
circumstances, we request you to grant time to the said firm for furnishing the Bank Guarantee to the work allotted, as a special case."
40. Therefore, in view of Ex.P18 it is evident that the M/s Venu Electricals have transaction with Bank since 1996. Therefore, based on Ex.P3 letter plaintiff issued work order and agreement was also entered between M/s Venu Electricals and plaintiff as per Ex.P23. The subsequent correspondence was made by Smt.Nagamani for M/s Venu Electricals with plaintiff. The plaintiff has produced several documents to show that Smt. Nagamani defendant No.2 represented M/s Venu Electricals.
41. It is not that the said M/s Venu Electricals has no other transaction with Bank except transaction 36 with the plaintiff. It has several transactions with the defendant No.1-Bank. Several properties were mortgaged. The same is also admitted by DW.1 in his evidence. It is also evident that subsequent to demand made by plaintiff and after the judgment is passed, the Bank has auctioned the property belonging to M/s Venu Electricals and mortgaged in its favour and also properties of sureties showing Smt. Nagamani representing M/s Venu Electricals as its proprietor.
42. The defendant No.1 got examined one of its Senior Manager Sri Suresh Nayak N. as DW.1. He deposed that the contract was no more in existence in view of death of Sri. Venugopal. On the other hand he has admitted that they have issued unconditional Bank Guarantee Ex.P1 in favour of M/s Venu Electricals. He has also contended that Ex.P1 does not contain any recital to show M/s Venu Electricals is 37 represented by Sri. Venugopal. He has also admitted that M/s Venu Electricals was transacting with Bank since 1996. They have opened over draft account with Bank and he cannot say whether there is current account of defendant No.2 with them. He has also admitted that they have given some other Bank Guarantee other than disputed Bank Guarantee in favour of M/s Venu Electricals. He has admitted that at the time of giving Bank Guarantee 20% amount was kept deposited in their Bank and said amount is still with them.
43. Defendant No.2 has given her evidence as DW.2. She has admitted that she continued M/s Venu Electricals after death of her husband-Sri K.N.Venugopal. She has admitted about the Bank Guarantee issued in favour of M/s Venu Electricals. She has admitted that she has mortgaged one house 38 to defendant No.1.It is evident that the defendant No.2 has not challenged the judgment and decree.
44. This Court on 22.03.2021 passed an order directing the Branch Manager of the appellant-Bank to file an affidavit giving particulars of the financial transactions of M/s Venu Electricals dealt with the appellant-Bank as well as the liabilities and the amount realized towards the said liability, if any. The status of the collateral security of building property made with the appellant-bank by M/s Venu Electricals, pursuant to the application dated 08.10.2003 submitted by the then proprietor Mr.K.N.Venugopal, representing M/s. Venu Electricals for issue of bank guarantee relating to performance security for electrification and providing the street lights to the residential sites and services of Mysore Urban Development Authority, Mysore shall be placed on record.
39
45. In pursuance of the order, the Manager of the Bank has filed an affidavit dated 08.04.2021, which indicates that M/s Venu Electricals availed overdraft facility of 150 lakhs and bills/cheques purchase facility to a limit of Rs.15.00 lakhs and Bank Guarantee facility to a limit of Rs.25.00 lakhs and there were co-obligants and Smt. Nagamani extended mortgage of her property bearing No.170. Even Smt.Nagamani has also borrowed Rs.10.00 lakhs. According to Bank the account becomes non performance account on 29.02.2004. Accordingly, they initiated action under SARFAESI Act and issued demand notice on 30.04.2011 demanding payment of Rs.2,14,43,396.16 due in overdrafts and a sum of Rs.7,04,366/- as a termed loan. So as the amount was not paid, the property mortgaged by Smt.Nagamani was sold on 04.11.2011 and Mr.N.R.Dayanand and Mr.N.R.Manjunath the 40 mortgagers paid Rs.50.00/- lakhs. Totally Bank has received Rs.2,26,50,000/-. Simultaneously they also filed recovery proceedings and recovery certificate was issued and it provides for interest @ 13% p.a. compounded monthly relating to dues in respect of overdraft account of M/s Venu Electricals. The Bank has also received 20% of it as a cash margin in respect of Bank Guarantee in question. This amount of Rs.4,55,000/- is still with the Bank. According to them no mortgage security is available which is referred to in the application for issue of Bank Guarantee in question.
46. The said affidavit shows after filing of this suit, the Bank started proceeding for recovery of the amount due to the M/s Venu Electricals and in fact after the judgment is passed they have sold the property by auction to recover their due from M/s Venu Electricals. This conduct of the defendant is 41 nothing but just to defeat the fruits of the decree. Knowing full well that there are properties belonging to M/s Venu Electricals the Bank instead of paying Bank Guarantee amount and adjusting it with the amount recovered by selling them, but stated that it has adjusted the sale proceed to some other dues of M/s Venu Electricals.
47. The defendant No.1-Bank has not produced documents to show how and in what manner they proceeded against M/s Venu Electricals and its property after death of Sri Venugopal. Who represented M/s Venu Electricals in all these proceedings is not forthcoming though no documents are produced by Bank to show what was the amount due by M/s Venu Electricals towards the Bank. Admittedly, the proceedings are in respect of loan borrowed by M/s Venu Electricals. Therefore, the defendant No.1 now cannot contend that in view of 42 death of Sri.Venugopal the said M/s Venu Electricals is not in existence and contract is frustrated.
48. On the other hand, the amount of 20% of Bank Guarantee is with them only. It is not returned to M/s Venu Electricals. Therefore, the defendant No.1 is estopped from contending that in view of death Sri. Venugopal their liability for M/s Venu Electricals comes to an end. On the other hand, they proceeded against the said M/s Venu Electrials to recover the amount due by it. Immediately after the judgment is passed, sold the property belonging to the M/s Venu Electricals and also Smt.Nagamani to adjust their other account amount. Therefore, in view of contents of Ex.P1 unconditional bank guarantee and also issuing of Ex.P3 letter after death of Sri Venugopal confirming issuance of Bank Guarantee, appellant's contention that immediately after death of Sri Venugopal, their 43 transaction with M/s Venu Electricals ceases to exist cannot be accepted.
49. It is also evident that as per Ex.P51 letter of M/s Venu Electricals dated 28.04.2004 though Smt.Nagamani has requested plaintiff to terminate the said contract as M/s Venu Electricals could not perform the agreement.
50. On the other hand, the defendants have raised untenable reasons when the documentary evidence and evidence of DW.1 and affidavit clearly indicate that defendant No.1-appellant is trying to avoid the liability by taking untenable grounds. Therefore, none of the contentions raised by the appellant are tenable. The defendant No.1 cannot avoid its liability. The plaintiff only after receiving letter from M/s Venu Electricals represented by Smt.Nagamani decided to issue work order to M/s 44 Venu Electricals. In fact they got confirmed the Bank Guarantee through defendant No.1 who has confirmed by issuing confirmation letter Ex.P3 on 24.03.2004 i.e. long after death of Sri.Venugopal.
51. The decision relied by the learned counsel for the appellant of Calcutta High Court in Shree Ram Cloth Sotres (supra) will not help to the case on hand. In that case, it was only a performance of guarantee by way of security. In that decision, it is held that whether Bank Guarantee has become enforceable can be decided at the trial of the suit. Therefore, that decision regarding appeal in respect grant of injunction order will not help the appellant. On the other hand, in the suit based on the oral and documentary evidence, the Trial Court held that the Bank Guarantee is enforceable. Hence, the principle stated in that decision will not help the appellant. 45 There is no question of frustration of contract after death of Sri.Venugopal.
52. The learned counsel for respondent No.1 has relied on the judgment of the Madras High Court reported in AIR 2011 Madras 179 in the case of State Bank of India and Anr. Vs. Mrs. Jayanthi and Ors. The Court held that while considering the liability as guarantor after his death held that the liability does not stand extinguished and at paragraph- 8 it is held as under:
"8. From the aforesaid conclusion, it is clear that the learned Single Judge, without disputing the stand of the appellant-bank that it can retain the documents as a lien on the basis of the power conferred by Section 171 of the Indian Contract Act, took a view that having regard to the fact that the respondent's husband Mahendran, who was the guarantor in respect of the loan advanced to one M/s. Somerset Tea Plantation, died and therefore, on his death, the liability as against the guarantor stands extinguished. With due respect, the learned Single 46 Judge is not correct in law in holding that the liability under the guarantee stands revoked or extinguished on the death of the Guarantor. Section 131 of the Contract Act clearly provides that in case of death of Guarantor, the date of guarantee/continuing of the guarantee executed in favour of the bank stands revoked in respect of future transactions. Hence, we have no hesitation in holding that the liability of the guarantor cannot be extinguished on his death so far the liability which existed on the date of the death of the guarantor. It is well settled that on the death of the guarantor, the liability exists and such liability can be fastened on the estate of the deceased, being inherited by his legal heirs, and the creditor can recover the dues out of the estate of the deceased."
53. Further, the learned counsel relied upon the decision of the Hon'ble Supreme Court reported in (2003) 4 SCC 690 in the case of Daewoo Motors India Ltd. vs. Union of India and Others wherein the Hon'ble Supreme Court dealt with unconditional and absolute terms of Bank Guarantee and held that when the obligation could not be 47 performed the respondent is entitled to revoke the Bank Guarantee and the Bank is liable to encash the same. The terms of contract between the parties has no relevance and it is held at paragraphs 13 and 14 as under:
"13. From a perusal of the above clauses, it is abundantly clear that the bank guarantee furnished by the Bank is an unconditional and absolute bank guarantee. The Bank has rendered itself liable to pay the cash on demand by the President of India "notwithstanding any dispute raised by M/s. Daewoo Motors India Limited in any proceeding before any court or tribunal". It is worth noticing that the clause in the bank guarantee specifically provides that the demand made by the President of India shall be conclusive as regards the amount due and payable by the bank under this guarantee and the liability under the guarantee is absolute and unequivocal. In the face of the clear averments, it is trite to contend that the bank guarantee is a conditional bank guarantee. Therefore, the Bank has no case to resist the encashment of the bank guarantee. Inasmuch as we have held that the bank guarantee is an 48 unconditional bank guarantee, the case M/s. Hindustan Construction Company Limited, v. State of Bihar and Ors., reported in [1999] 8 SCC 436 is of no avail to the appellant.
14. It is true that the bank guarantee has to be read in conjunction with the terms of the contract but when the bank itself is in absolute terms, the agreement between the company and the first respondent would be of no avail to the Bank."
54. Further, the learned counsel also relied on the decision of the Hon'ble Supreme Court reported in AIR 1996 SC 2268 in the case of Hindustan Steel Works Construction Ltd. Vs. Tarapore and Co. and another wherein the Hon'ble Supreme Court considered the nature of unconditional Bank Guarantee and held that no distinction can be drawn between the guarantee for due performance of contract or towards security deposit. Referring to its earlier decision the Hon'ble Supreme Court held that 49 the obligation is same. Paragraphs 13 and 14 reads as under:
"13. It is, therefore, difficult to appreciate the attempt of the High Court to distinguish that decision and to raise a doubt whether in India also the same principles apply in case of a performance guarantee issued by a bank. In our opinion, the High Court was not right either in its attempt to distinguish that decision or to raise a doubt regarding the correct position of law.
14. The High Court also committed a grave error in restraining the appellant from invoking bank guarantees on the ground that on India only a reasonable amount can be awarded by way of damages even when the parties to the contract have provided for liquidated damages and that a term in a bank guarantee making the beneficiary the sole judge on the question of breach of contract and the extent of loss or damages would be invalid and that no amount can be said to be due till and adjudication in that behalf is made either by a Court on an arbitrator, as the case may be. In taking that view the High Court has overlooked the correct position that a bank guarantee is an independent and distinct contract between the bank and the beneficiary and is 50 not qualified by the underlying transaction and the primary contract between the person at whose instance the bank guarantee is given and the beneficiary. What the High Court has observed would applicable only to the parties to the underlying transaction or the primary contract but can have no relevance to the bank guarantee given by the bank, as the transaction between the bank and the beneficiary is independent and of a different nature. In case of an unconditional bank guarantee the nature of obligation of the bank is absolute and not dependent upon any dispute or proceeding between the party at whose instance the bank guarantee is given and the beneficiary. The High Court thus failed to appreciate the real object and nature of a bank guarantee. The distinction which the High Court has drawn between a guarantee for due performance of a works contract and guarantee given towards security deposit for that contract is also unwarranted. The said distinction appears to be the result of the same fallacy committed by the High Court of not appreciating the distinction between the primary contract between the parties and a bank guarantee and also the real object of a bank guarantee and the nature of bank's obligation thereunder. Whether the bank guarantee is towards 51 security deposit or mobilisation advance or working funds or for due performance of the contract if the same is unconditional and if there is a stipulation in the bank guarantee that the bank should pay on demand without a demur and that the beneficiary shall be the sole judge not only on the question of breach of contract but also with respect to the amount of loss or damages, the obligation of the bank would remain the same and that obligation has to be discharged in the manner provided in the bank gurantee. In General Electric Technical Services Company Inc. vs. Punj Sons (p) Ltd. (1991 (4) SCC
230): (1991 AIR SCW 2136), while dealing with a case of bank guarantee given for securing mobilisation advance it has been held that the right of a contractor to recover certain amounts under running bills would have no relevance to the liability of the bank under the guarantee given by it. In that case also the stipulations in the bank guarantee were that the bank had to pay on demand without a demur and that the beneficiary was to be the sole judge as regards the loss or damage caused to it.
This Court held that notwithstanding the dispute between the contractor and the party giving the contract, the bank was under an obligation to discharge its liability as per the terms of the bank 52 guarantee. Larsen and Toubro Limited vs. Maharashtra State Electricity Board (1995) (6: (1995 AIR SCW 4134), and Hindustan Steel Workers Construction Ltd. Vs. G.S. Atwal & Co. (Engineers) Pvt. Ltd. (1995) (6) SCC 76: (1995 AIR SCW 3821), were also cases of work contracts wherein bank gurantees were given either towards advances or release of security deposits or for due, performance of the contract. In both those cases this Court held that the bank gurantees being irrevocable and unconditional and as the beneficiary was made the sole judge on the question of breach of performance of the contract and the extent of loss or damages an injunction restraining the beneficiary from invoking the bank guarantees could not have been granted. The above referred three subsequent decisions of this Court also go to show that the view taken by the High Court is clearly wrong."
55. Further, the learned counsel also relied on the decision of the Hon'ble Supreme Court reported in AIR 1997 SC 1644 in the case of U.P.State Sugar Corporation vs. M/s Sumac International Ltd wherein the Hon'ble Supreme Court considered two 53 exceptions for realization of unconditional Bank Guarantee one is fraud, second-one is irretrievable injustice. Here both the things either pleaded or proved. It is held at paragraph 12 as under:
"12. The law relating to invocation of such bank guarantees is by now well settled. When in the course of commercial dealings an unconditional bank guarantee is given or accepted, the beneficiary is entitled to realise such a bank guarantee in terms thereof irrespective of any pending disputes. The bank giving such a guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer. The very purpose of giving such a bank guarantee would otherwise be defeated. The Courts should, therefore, be slow in granting an injunction to restrain the realisation of such a bank guarantee. The Courts have carved out only two exceptions. A fraud in connection with such a bank guarantee would vitiate the very foundation of such a bank guarantee. Hence if there is such a fraud of which the beneficiary seeks to take advantage, he can be restrained from doing so. The second exception relates to cases where allowing the encashment of an unconditional bank guarantee would result in 54 irretrievable harm or injustice to one of the parties concerned. Since in most cases payment of money under such a bank guarantee would adversely affect the bank and its customer at whose instance the guarantee is given, the harm or injustice contemplated under this head must be of such an exceptional and irretrievable nature as would override the terms of the guarantee and the adverse effect of such an injunction on commercial dealings in the country. The two grounds are not necessarily connected, though both may co-exist in some cases. In the case of U.P. Co-operative Federation Ltd. v. Singh Consultants and Engineers (P) Ltd. (1988 [1] SCC 174), which was the case of works contract where the performance guarantee given under the contract was sought to be invoked, this Court, after referring extensively to English and Indian cases on the subject, said that the guarantee must be honoured in accordance with its terms. The bank which gives the guarantee is not concerned in the least with the relations between the supplier and the customer; nor with the question whether the supplier has performed his contractual obligation or not, nor with the question whether the supplier is in default or not. The bank must pay according to the tenor of its guarantee on demand without proof or condition.55
There are only two exceptions to this rule. The first exception is a case when there is a clear fraud of which the bank has notice. The fraud must be of an egregious nature such as to vitiate the entire underlying transaction. Explaining the kind of fraud that may absolve a bank from honouring its guarantee, this Court in the above case quoted with approval the observations of Sir John Donaldson, M.R. in Bolivinter Oil SA v. Chase Manhattan Bank NA (1984 [1] All ER 351 at 352): "The wholly exceptional case where an injunction may be granted is where it is proved that the bank knows that any demand for payment already made or which may thereafter be made will clearly be fraudulent. But the evidence must be clear both as to the fact of fraud and as to the bank's knowledge. It would certainly not normally be sufficient that this rests on the uncorroborated statement of the customer, for irreparable damage can be done to a bank's credit in the relatively brief time which must elapse between the granting of such an injunction and an application by the bank to have it charged". This Court set aside an injunction granted by the High Court to restrain the realisation of the bank guarantee."56
56. Therefore, in view of the principles stated in above decisions and also discussion made above, we are of the considered view that the contention of the appellant that, it is not liable to pay the Bank Guarantee amount does not hold good. In spite of demand and issuing notice, the appellant has not paid the amount. On the other hand, immediately after the judgment and the decree sold the properties belonging to M/s Venu Electricals and adjusted it with other loan amount of M/s Venu Electricals and Smt.Nagamani. According to appellant still the M/s Venu Electricals is due some amount. The appellant can very well pay the Bank Guarantee amount to the plaintiff and recover the same from the properties of M/s Venu Electricals or Smt.Nagamani or as is deemed fit in accordance with law. But the very conduct of the appellant in hurriedly auctioning the property and adjusting it with its other loan due of M/s Venu 57 Electricals is just to deprive the plaintiff the fruits of the decree. This conduct of the appellant itself disentitle to any relief to it.
57. In answer to Issue No.2, the Trial Court has awarded future interest at the rate of 24% p.a. from the date of suit till realization of decreetal amount. The appellant has taken a contention that performance bank guarantee does not contain any clause for payment of interest. Plaint also does not make any allegation as to how the plaintiff is entitled to interest. There is no evidence led by the plaintiff to show how plaintiff is entitled to interest at the rate of 24% p.a. Therefore, judgment and decree in this regard needs to be modified. The learned counsel for the respondent No.1 has also not placed any material to show as to how the plaintiff is entitled for interest at the rate of 24% p.a. 58
58. Admittedly, the Performance Bank Guarantee does not contain payment of interest. The plaintiff demanded the defendant No.1 to pay the Bank Guarantee amount. In view of termination of contract as requested by M/s Venu Electricals, the defendant No.1 without any valid reasons withheld the payment. As we have observed above, the defendant No.1-Bank is not justified in withholding the amount. Therefore, for delayed payment and withholding the amount without any valid reasons, the defendants are liable to pay the interest even though there is no agreement in this regard.
59. The Section 34 of Code of Civil Procedure deals with grant of interest which reads as under:
"34. Interest.- (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, Order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit 59 to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, 1[with further interest at such rate not exceeding six per cent per annum as the Court deems reasonable on such principal sum], from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit:2
[Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.
Explanation I.-In this sub-section, "nationalised bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 (5 of 1970).60
Explanation II.-For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.] (2) Where such a decree is silent with respect to 3 the payment of further interest [on such principal sum] from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie.
60. In view of the above Section, it is evident that the Court has got discretion to award interest pendente lite and future interest. The plaintiff has calculated the claim amount as Rs.22,70,820/- + interest on it at the rate of 24% p.a. and calculated it as Rs.1,52,300/- and calculated totally as Rs.24,23,620/-. The plaintiff has not shown as to how and on what basis he is entitled for interest at the rate of 24% p.a. from the date of suit till the date of filing 61 of suit. He has not shown any such agreement or any authority as to how he is entitled interest prior to the filing of suit under Section 34 of CPC. Unless there is some provisions or authority or document to pay such interest, the plaintiff is not entitled for interest at the rate of 24% p.a. on the principal sum of Rs.22,70,820/-. Admittedly, transaction is commercial transaction which has arisen out of a commercial contract. It is evident that in the absence of any agreement to pay interest at the rate of 24% p.a. and in view of Section 34 of CPC in respect of commercial transaction, the rate at which the moneys are lent or advanced by nationalized banks in relation to commercial transactions fixed by the Bank during the year of transaction will have to be taken into consideration. Since the transaction is of the year 2004, we deem it appropriate to award pendente lite and future interest at the rate of 10% p.a. The Trial 62 Court has not given any reasons as to why and how the plaintiff is entitled for future interest at the rate of 24% p.a. from the date of suit till realisation. Therefore, the same needs to be modified and the plaintiff is entitled for the interest at the rate of 10% p.a. on principal sum adjudged at Rs.22,70,820/- from the date of suit till the realisation of entire decreetal amount. Therefore, the finding regarding issue Nos.1 and 2 are answered partly in favour of the plaintiff.
61. Reasons for Point No.3:- The learned Judge of the Trial Court has considered both oral and documentary evidence and assigned proper reasons by appreciating the evidence on record. We find no error or illegality in the judgment of the Trial Court. Therefore, the appeal being devoid of merits is liable to be dismissed. Accordingly, we pass the following: 63
ORDER
(i). The appeal is allowed in-part.
(ii). The judgment and decree dated 31.03.2011 passed in O.S.No.765/2004 by the
Principal Judge, Small Causes and Senior Civil Judge, Mysore, directing the defendants to pay Rs.24,23,620/- (Rupees Twenty-four lakhs twenty-
three thousand six hundred twenty only) is hereby modified holding that the defendant Nos.1 and 2 are jointly and severally liable to pay a sum of Rs.22,70,820/- (Rupees Twenty-two lakhs seventy thousand eight hundred twenty only) with future interest at the rate of 10% p.a. to the plaintiff from the date of suit till the realisation of entire decreetal amount.
(iii). The order of the Trial Court directing the defendant No.1-Bank to make payment of the 64 decreetal amount in favour of plaintiff and thereafter defendant No.1 is at liberty to recover the same from defendant No.2 in accordance with law is hereby confirmed.
iv). I.A.No.1/2020 filed under Order 41 Rule 27 of Code of Civil Procedure, is hereby dismissed.
(v) In view of disposal of main appeal, I.A.No.2/2020 does not survive for consideration.
In view of facts and circumstances of the case, the parties shall bear their own costs.
Sd/-
JUDGE Sd/-
JUDGE sdu