The first appellant is a company which is the principal borrower. The rest of the appellants are guarantors/mortgagors. On 29.12.2001, the Corporation Bank sanctioned a credit facility called “Crop-Vypar Limit” for ₹25 lakhs against hypothecation of goods such as radios/audios/black and white and colour TVs/ CDs/VCD/DVD systems. The facility was guaranteed by appellants Nos. 2 to 5. Collateral security of the fifth defendant’s flat situated at Dadar, Mumbai was also created by a mortgage. Apart from that, a demand promissory note hypothecation agreement and letters of acknowledgement were executed in favour of the bank. In 2002, the second appellant approached the bank for sanctioning a pledge loan of ₹150 to 200 lakhs for purchasing 2000 sets of music systems in semi-knocked-down (SKD) condition from the Mumbai Customs lying at the Bombay Port Trust. It was informed that a well-known international company which had imported the goods were yet to get it cleared from the customs department. Hence, the first appellant wanted to seize the opportunity to get those goods in tender. The bank sanctioned an ad-hoc pledge loan of ₹150 lakhs vide letter dated 18.11.2002 repayable in three months. Defendants Nos. 2 to 5 again provided a guarantee and extended the mortgage. On 27.01.2003, the second defendant requested the bank for another ad-hoc pledge loan of ₹75 lakhs to Bombay Port Trust against the pledge of 1000 numbers of high-wattage music system VC 58 in semi-knocked down condition. That request was also accepted on similar conditions. The bank was in 2
