Ramachandra Rao, J.
1. The second defendant in O. S. No. 5/1969 on the file of the Court of the Subordinate Judge, Kakinada is the appellant. The suit was filed by Sri Rama Motor Finance Corporation Kakinada against the two defendant E. John Cyriac and Vasireddi Seetharamaiah, for recovery of a sum of Rs. 31,516-81 Ps. due on a promissory note dated 10-9-1965 executed by the defendants for Rs. 49,817/- payable with interest thereon at 12% per annum, and for a charge on the lorry bearing Registration No. APV 5313.
2. The plaintiff alleged as follows: The defendants borrowed the sum of Rs. 49,817/- from the plaintiff on 10-9-1975 and executed the promissory note. The first defendant entered into a hire-purchase agreement on the same date with the plaintiff firm in respect of a new lorry bearing Registration No. APV 5313 agreeing to pay the pronote amount in 24 monthly instalments, the first installment being Rs. 2092 payable on 10-10-1965, the other instalments of Rs. 2075/- payable on the 10th of each succeeding month and the last installment being payable on 10-9-1967. The plaintiff paid cash consideration of Rs. 40,000/- to M/s. Sri Ramadas Motor Transport (P) Ltd., Kakinada, towards the price of the Chassis of the lorry Rs. 9642/- towards finance charges, Rs. 75/- towards stamp duty, and Rs. 100/- towards deposit, in all aggregating to Rs. 49817/-. The second defendant joined in the hire-purchase agreement as a guarantor and executed the suit pronote along with the defendant. The first defendant paid only nine instalments, and thereafter defaulted in payment of the amount. The plaintiff therefore sued for the recovery of the balance of the amount payable under the hire-purchase agreement after giving credit to the payments made, and a sum of Rs. 5,000/- out of Rs. 10,000/- received by them from the Insurance Company towards repairs. The defendants delivered the vehicles to M/s. Prakash Automobiles, Motor Workshop at Visakapatnam, for repairs and the said workshop retained the vehicle claiming a lien over the same for the repair charges due to them which the defendants failed to pay. The plaintiff gave a notice on 4-11-1967 and another notice through a lawyer on 7-3-1968 and filed the suit for recovery of a sum of Rs. 31,516-81 Ps.
3. The first defendant remained ex parte.
4. The second defendant filed a written statement contending as follows. The second defendant did not borrow any money under the suit promissory note but executed the same as a collateral security for the hire-purchase agreement for the lorry purchased by the first defendant and he (D-2) stood as a guarantor for the first defendant in the hire-purchase agreement. The second defendant did not admit, that only nine instalments were paid, and also the statement of account filed along with the plaint. The plaintiff never made any demands on the second defendant for payment of the instalments. The plaintiff and the first defendant were colluding together to the defendant of the second defendant and the suit filed with a view to harass him. The plaintiff allowed the first defendant to ply the vehicle and utilise the income. When the first defendant (the hirer) committed the default in payment of the instalments, the plaintiff should have recovered the money either by seizure or otherwise and informed the same to the second defendant , which they never did. The plaintiff kept quiet without seizing the vehicle when the default was committed by the first defendant. The vehicle met with an accident and the value of the vehicle dwindled to the detriment of the 2nd. The plaintiff was negligent in not proceeding to seize the vehicle. The insurance company paid Rs. 10,000/- to the plaintiff which should go in part payment of the debt. The plaintiff having received Rs. 10,000/- from the Insurance Company, did not pay the amount to the repairer and get back the vehicle; and allowed it to remain in open space exposing it to sun and rain which resulted in rapid deterioration. It is the plaintiff that committed breach of the agreement in not taking prompt action to recover the vehicle. The plaintiff was therefore precluded from enforcing the agreement and making the second defendant liable as guarantor.
5. The plaintiff filed a rejoinder stating that the suit pronote and the hire-purchase agreement were parts of the same transaction, and that the second defendant was a co-executant of both the pronote and the hire-purchase agreement. As soon as the plaintiff learnt that the vehicle was with the repairer, Prakash Automobiles at Visakhapatnam, the plaintiff wanted to seize the vehicle but Prakash Automobiles refused to part with the vehicle claiming a lien, for their repair charges. The plaintiff attempted to contract the first defendant but he could not be found and he clandestinely removed the vehicle and therefore it could not be recovered. The non-seizure of the vehicle would not affect the liability of the first or the second defendant. The collusion between the plaintiff and the first defendant is denied. On the other hand, it is averred that the defendants were in collusion with Prakash Automobiles and prevented the plaintiff from taking possession of the lorry. Out of the sum of Rs. 10,000/- received from the Insurance Company, a sum of Rs. 5,000/- was paid to the first defendant towards repair charges; for the balance of Rs. 5,000/- credit was given to him, and only for the balance, the suit was filed.
6. The second defendant filed an additional written statement traversing the several allegations in the rejoinder.
7. The learned Subordinate Judge framed the following issues :-
(1) Whether the payment of Rs. 5000/- alleged by the plaintiff to the first defendant is true, valid, enforceable and binding on the second defendant
(2) Whether the plaintiff has committed breach of the terms of the hire purchase agreement and is not entitled to claim the suit amount ?
(3) Whether the plaintiff is negligent in enforcing the terms of the hire-purchase agreement for recovery of the amount due under the hire-purchase agreement and is not entitled to claim the suit amount by enforcing the personal liability against the second defendant ?
(4) Whether the payments pleaded by the first defendant are true ?
(5) Whether the account filed by the plaintiff is true, valid, genuine and binding on the second defendant ?
(6) To what relief ?
(1) Whether this Court has no territorial jurisdiction to try this suit ?
(2) Whether the second defendant's liability ceased on account of plaintiffs failure to seize the lorry?
(3) Whether the suit as framed is not maintainable ?