M.S Joshi, J.:— This suit was instituted on November 8, 1974, by the State Bank of India to recover Rs. 58,685.55 from M/s. Sawhney Finance Co. and seven other defendants. It was alleged by the plaintiff that M/s. Sawhney Finance Co. (defendant No. 1) was a partnership firm and Amrik Singh, Mrs. Rajinder Sawhney and Jaspal Singh (defendants 2 to 4) were its partners. The firm applied for cash credit facilities to the National Bank of Lahore, Delhi, and it was sanctioned an overdraft limit of Rs. 2,00,000. Defendants Nos. 1 to 4 executed a cash credit agreement on November 29, 1968, on the security of the property and the conditions stated therein. They also executed an agreement of hypothecation by way of security for repayment of the amounts to be advanced to them and remaining unpaid. Amarjit Kaur, Joginder Singh, Harnam Kaur and Ravinder Singh (defendants Nos. 5 to 8) signed an agreement of continuing guarantee simultaneously and made themselves thereby jointly and severally liable to pay the amounts as should become due to the bank from defendants Nos. 1 to 4. The guarantors created, moreover, an equitable mortgage in favour of the bank by depositing the deed of their title to the property bearing Municipal No. XII/7819-20 (new)and No. 8671 (old) at Roshanara Road, Delhi, as collateral security in respect of the cash credit limit granted by the bank to defendant No. 1. Defendants Nos. 1 to 4 executed, again, a demand promissory note in favour of the National Bank of Lahore for a sum of Rs. 2,00,000 to be paid with interest at the rate of 8 per cent. above the Reserve Bank of India rate subject to the minimum of 13 per cent. per annum with monthly rents. It was undertaken by the defendants to pay the amount owed by them to the bank under the promissory note without its presentation for payment. They also executed a letter of continuity on the said date.

2. The National Bank of Lahore was amalgamated with the State Bank of India in 1970 and in consequence the State Bank of India became entitled to all the rights, interests, etc., of the National Bank of Lahore. On the change of the situation in this manner the borrower-defendants submitted to the plaintiff a revival letter dated November 27, 1971, acknowledging and renewing their liability under the demand promissory note dated November 29, 1968, so as to keep it in force with all the connected securities, agreements and obligations. They confirmed on the same date the fact that a sum of Rs. 89,183.74 was due to the bank as on November 6, 1971. The guarantors also confirmed, vide their letter dated November 27, 1971, the correctness of the aforesaid debit balance and they further acknowledged their liability in terms of the guarantee dated November 29, 1968, keeping it in full force and effect. The borrower-defendants were irregular in payments and they did not discharge their liabilities in spite of demands. After making adjustments for all the payments made by them the plaintiff-bank found that a sum of Rs. 58,685.55 was owed to it by the defendants and it filed, therefore, a suit to recover that amount. It prayed to the court that a decree be passed in its favour on the following terms:

“(a) For payment of Rs. 58,685.55 against all the defendants.

(b) A mortgage decree against defendants Nos. 5 to 8 for the sale of the mortgaged property described in paragraph 8 of the plaint for realisation of the aforesaid amount (with interest under section 34, C.P.C) under Order 34 of the C.P.C

(c) For sale of the hypothecated properties under the agreement of hypothecation dated 29-11-1968 with a charge thereon in favour of the plaintiff.

(d) For a right to apply for a personal decree against defendants Nos. 5 to 8 should the sale proceeds of the aforesaid mortgaged properties be found to be insufficient to satisfy the amount due.

(e) Further interest at the agreed rate of 8 per cent. above the Reserve Bank of India rate from the date of the suit up to the date of the decree, and at the same rate from the date of decree till actual realisation, or at such rate as this court deems proper.

(f) All costs of the suit.”

3. In their written statement the defendants contended that the suit was barred by time; that it was liable to be dismissed also because the National Bank of Lahore had been guilty of breach of the terms on which the loan had been advanced to the defendants; that out of the amount in suit, Rs. 47,294 was interest only and the plaintiff was not entitled to recover any interest on the principal amount of Rs. 11,391; that the National Bank of Lahore as well as the State Bank of India broke the terms of the agreement by stopping the loan facilities abruptly on January 10, 1970, and they had no right to charge any interest whatever from the aforesaid date; that the plaintiff had failed to give credit to the defendants in respect of the marginal guarantee amount along with interest up to date due by it to M/s. Dharam Singh Babek Singh, a sister concern of the defendants, and if credit be given for that amount nothing would be found payable to the plaintiff. It was contended, moreover, that the plaint had not been signed and verified and the suit instituted by a duly authorised person.

4. The aforesaid pleadings of the parties led to the drafting of the following issues:

“Whether the plaint has been signed and verified by a duty authorised person on behalf of the plaintiff?

2. Whether the suit is within time?

3. Whether the plaintiff is not entitled to interest after 10-1-1970?

4. Whether the plaintiff committed a breach of the terms of the agreement as stated in paras. Nos. 2 and 4 of the preliminary objections in the written statement and if so what is its effect?

5. Whether the plaintiff should have given credit for the amount of the marginal guarantee as stated in para. No. 5 of the preliminary objections and para. No. 13 of the objections on merit in the written statement and if so what is its effect on the relief claimed by the plaintiff?

6. What rate of interest the plaintiff is entitled to charge?

7. Relief?”

5. The parties have adduced oral as well as documentary evidence. I have given a patient hearing to the counsel appearing for them. The issues may be taken up one by one for consideration.

Issue No. 1:

6. The plaint was signed by Shri H.D Kohli who claimed to be the Manager of the Clock Tower, Subzi Mandi Branch of the State Bank of India at the relevant time. Shri S.L Bhandari, the present manager of the said branch (PW 1), has identified the signature of Shri Kohli and testified that Shri Kohli was the manager and principal officer of the branch concerned on the crucial date. It was stated by Shri Bhandari further that under reglns. 76 and 77 of the State Bank of India Regulations 1955, a branch manager was fully competent to institute a suit on behalf of the bank. He produced the original regulations in court and placed an extract thereof on the record (Ex. PW 1/1). He also proved an extract from the original Gazette containing notification dated September 17, 1959 (Ex. PW ½), to prove that at the time of the reorganisation of the State Bank of India in 1972 the designation of “agent” was changed to “branch manager” : vide Ex. PW 2/2, an extract from the Gazette of India dated May 31, 1975. Shri H.D Kohli, a grade-I officer, assumed complete charge of Clock Tower, Delhi Branch, on 14th February, 1974, and he was relieved of that charge, vide Ex. PW ⅔ by Shri V.P Bansal on April 26, 1975. As per r. 1 of O. 29 of the CPC, in suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary or by any director or other principal officer of the corporation who would be able to depose to the facts of the case. Regulation 77 of the State Bank of India Regulations referred to above provides that a plaint, written statement, petition, etc., may be signed and verified and all other documents connected with legal proceedings may be made and completed on behalf of the State Bank of India by any officer or employee empowered under regln. 76 and such an authority was conferred, vide Ex. PW ½, Gazette notification dated September 26, 1959, apart from others, on an agent. The designation of agent was changed to branch manager as per notification dated June 21, 1972 (Ex. PW 2/1). In this perspective there is no fault to be found with the signing and verification of the plaint or with the institution of the suit under consideration. The issue is, therefore, decided in favour of the plaintiff.

Issue No. 2 :

7. The suit was instituted on November 8, 1974, though the advance of loans started in 1968. Defendants Nos. 1 to 4 executed a revival letter in respect of the promissory note dated November 29, 1968 on November 27, 1971 (Ex. P-9) and they confirmed that a sum of Rs. 89,183.74 was due from them to the bank on the same date (Ex. P-10). Defendants Nos. 5 to 8 confirmed their execution of the guarantee dated November 29, 1968, as well as their liability in respect of the balance of Rs. 89,183.74 referred to above (Ex. P-11). There can in the circumstances be no two opinions about the suit being within time and the issue is decided accordingly. Issues Nos. 3 and 4. :

8. The defendants' plea as reflected by these issues is that no interest is claimable by the plaintiff with effect from January 10, 1978, because it stopped advancing further loans against hire-purchase agreements with effect from that date. As a matter of fact, the National Bank of Lahore ceased functioning under the orders of the government on January 10, 1970, and it was amalgamated with the State Bank of India with effect from January 23, 1970. The National Bank of Lahore had no inhibitions against advancing loans on the security of old motor vehicles but the State Bank of India would not make any advance unless the vehicle offered as security was new. It was provided by cl. 16 of the original agreement between M/s. Sawhney Finance Co. and the National Bank of Lahore (Ex. P-1) that “the bank will always be at liberty to stop making fresh advances at any time without previous notice, which notice is hereby expressly waived, and without assigning any reason even though the said limit has not been fully availed of”. The bank had thus absolute discretion to stop making fresh advances as and when it thought fit and by refusing to offer loans against the security of old vehicles, in which M/s. Sawhney Finance Co. dealt, it violated no term of the agreement with the defendants. There is no reason, therefore, why the interest stipulated to be paid by the defendants should not be charged. The issues are determined against the defendants.

Issue No. 5:

9. It has been pleaded by the defendants that a sister concern of M/s. Sawhney Finance Co. sent letters to the agent of the plaintiff-bank stating that a sum of Rs. 4,750 was lying to its credit by way of margin money against guarantees for delivery of vehicles, that the vehicles had since been delivered and that the said amount along with interest be transferred to M/s. Sawhney Finance Co. It is to be noted, however, that through their letter dated February 6, 1971 (Ex. PW-⅛) M/s. Dharam Singh Babek Singh told the State Bank of India that since the delivery of the vehicles mentioned therein had been taken, the credit for the guarantee amounts with interest up to date be given to them, i.e, M/s. B. Dharam Singh Babek Singh. There was no demand made as such for the transfer of the relevant amount to M/s. Sawhney Finance Co. By way of the other letter dated February 3, 1971.February 25, 1971 (Ex. PW 1/9) M/s. D. Dharam Singh Babek Singh did ask the State Bank of India to transfer a sum of Rs. 4,500 from their account No. 2189 to the account of M/s. Sawhney Finance Co., 12, Poshanara Road, Delhi. According to the defendants' counsel the requisite amount was owed by the bank to M/s. Dharam Singh Babek Singh in respect of the guarantees referred to in Ex. PW-⅛. It is not disputed now that the date of the four guarantees for Rs. 1,000 each mentioned in Ex. PW ⅛ was December 18,1963 and not December 18, 1965, and the last guarantee was executed on March 18, j 1965. The guarantees were to be effective admittedly just for one year and thus the amounts deposited by B. Dharam Singh Babek Singh with the bank became due to it at the latest on March 18, 1966. All the amounts referred to in Ex. PW ⅛ had become statute barred by the time M/s. Dharam Singh Babek Singh asked the bank to transfer the credit in respect of Rs. 4,500 to M/s. Sawhney Finance Co. and the bank was thus under no obligation to honour the instructions being given to it. Even otherwise no capital out of the said instructions can be made by the defendants. The amount of Rs. 4,500 in question was owed by the bank, if at all, to M/s. Dharam Singh Babek Singh and only they could take legal steps to recover the same from the bank. If the bank failed to pass on the credit asked for to M/s. Sawhney Finance Co. the latter did not become entitled to recover the amount from it. The bank might have been guilty of negligence or even of mala fides in not meeting the demand of M/s. Dharam Singh Babek Singh to transfer the amount of Rs. 4,500 to the account of M/s. Sawhney Finance Co. but it is not liable to give credit for that amount to the defendants. The issue has, therefore, to be found against the defendants.

Issue No. 6 :

10. The plaintiff has charged interest at the rate of 13% per annum and that rate has been allowed to it by the agreement between the parties, Ex. P-1, and the promissory note, Ex. P-4.

11. I have not been shown any law why the relevant stipulation as to the rate of interest should not be enforced against the defendants. The plaintiff is obviously entitled to recover interest at the rate of 13% per annum.

12. In the end a decree for Rs. 58,685.55 is passed in favour of the plaintiff. It shall be executable straightaway against defendants Nos. 1 to 4, Defendants Nos. 5 to 8 are, however, given six months' time to satisfy the plaintiff's claim. On such payment the plaintiff shall return to them all documents in its possession relating to the property subject to the equitable mortgage but if default is made in this behalf the plaintiff may apply to the court for a final decree for the sale of the said property. In the event of the sale proceeds falling short of the amount due to the bank the plaintiff shall have a right to a personal decree being passed against the said defendants for the amounts still remaining due. In the peculiar circumstances of the case there shall be no order as to costs.