The plaintiff in this suit sought for recovery of sums of monies, interest on the monies and costs for failure to honor formal demands. The plaintiff had extended credit facilities to the first defendant by way of loan term, an overdraft, post shipment and pre shipment facilities, which were guaranteed by the second defendant.

The defendants denied liability and contended that the facilities had been advanced with no proper authorization of the directors of the first respondent, and that the same were unenforceable since they had not been advanced for the proper purpose of the first defendant. Further, that they had been vitiated by fraud perpetrated by an employee of the plaintiff and the first defendant’s deceased Managing Director.

The questions which the court had to determine were, whether the loans had been disbursed in accordance with the facility agreement, whether the first defendant was liable to the plaintiff as principle debtor, whether the second to the seventh defendants were liable to the plaintiff as guarantors of the loans, whether the plaintiff was liable for the frauds by his employee, and the remedies that were available to the parties.