1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. SUIT NO.3327 OF 1997 Andhra Bank ..Plaintiff. Vs. Manju Textiles and others ..Defendants. .... Mr. Manish Acharya i/b Pandya Gandhi & Co. for the Plaintiff. Mr. I.M. Vohra i/b Bipin Joshi for Defendants 2 and 3. .... CORAM : DR. D.Y. CHANDRACHUD, J. 27th July, 2009. P.C. : 1. The suit has been instituted for the recovery of monies lent and advanced. The claim on the date of the institution of the suit was Rs. 7,33,925/-. Further interest has been claimed. In April 1993 the Plaintiff, on the request of the Second Defendant, granted an inland letter of credit facility to the First Defendant in the amount of Rs.2,50,000/-. The facility was enhanced to Rs.5 lacs in January 1994 on the request of the First and Second Defendants. In consideration for the facilities granted, the First and Second Defendants executed an agreement dated 2 11th January, 1994 whereby the First Defendant hypothecated and/or charged to the Plaintiff all movable property of the First Defendant. The Second and Third Defendants executed a guarantee on 11th January, 1994 for the due repayment of a sum of Rs.5 lacs. Similar guarantees were executed by the Fourth and Fifth Defendants. The Fourth and Fifth Defendants deposited with the Plaintiff title deeds in respect of Shop No. 11, more particularly described in Exhibit A to the Plaint with an intent to create a mortgage by deposit of title deeds. A memorandum of deposit of title deeds was drawn up on 11th January, 1994. On the request of the First Defendant the Plaintiff opened irrevocable inland letters of credit in favour of a third party who had sold goods to the Defendants. Documents were duly negotiated in respect of the goods sold to the First Defendant and the Plaintiff made payment thereunder to the beneficiary from time to time. The Plaintiff maintained an account of the transactions in the usual course of the business. The Plaintiff made payments in respect of nine bills aggregating to Rs.4,99,999/-. On 28th October, 1994 and 28th November, 1994 a sum of Rs.1,30,645.30 was adjusted by the Plaintiff, being the 25% cash margin which was deposited 3 with the Plaintiff by the Defendants in fixed deposit. An amount of Rs. 55,123/- lying in the Current Account of the First Defendant was also adjusted. According to the Plaintiff the third party which had allegedly supplied goods to the First Defendant was as a matters of fact a sole proprietary concern of the Third Defendant and it has been alleged that the Second and Third Defendants in collusion practiced a fraud upon the Plaintiff. Under the facility granted by the Plaintiff, the First Defendant through Defendant No.2 would make an application for opening letters of credit in favour of Defendant No.3. Defendant No.3 would thereafter negotiate documents of title with the Plaintiff against which the Plaintiff would make payment to Defendant No.3. However, no goods were as a matter of fact supplied to Defendants 1 and 2. 2. The suit has been filed for the recovery of amounts due and payable and for the enforcement of the mortgage by deposit of title deeds. 3. The Defendants have been served with the writ of summons. Though the Second and Third Defendants have entered appearance 4 through an advocate, no written statement has been filed. In these circumstances, the averments which are contained in the Plaint have not been controverted. The Plaintiff has relied upon an affidavit in lieu of examination in chief of its Senior Branch Manager. A compilation of the original documents is tendered and taken on the record. The witness has duly verified what has been stated in the affidavit. There is no cross examination. The compilation of documents contains the relevant documents which have been proved in the course of the affidavit in lieu of the examination in chief. In the absence of any defence, the suit shall have to be decreed and is accordingly decreed in terms of prayer clauses (a) to (d) with the modification that the Plaintiff will be entitled to interest at the rate of 9% p. a. from the date of the institution of the suit until payment or realization. *****