Padma Khastgir, J. - (1.) The present application has been taken out on behalf of defendants Nos. 1 to 4 for an order staying the Suit No. 758 of 1978 and proceedings thereunder, injunction restraining the Plaintiff Bank from proceeding with the suit and other consequential reliefs.
(2.) The facts of this case shortly are that Mercantile Bank Limited has filed this suit against these defendants along with defendant no. 5 for recovery of a sum of Rs. 21,64,360.66 p. interest at the rate of 15%, declaration that the goods as' mentioned in Annexure 'H' and book debts as mentioned in annexure 'H' are hypothecated and/or charged to the plaintiff by way of first and paramount charge for the payment of plaintiff's dues to the exclusion of all others, sale of the said goods ; declaration that the plaintiff has a statutory title and/or interest in respect of the securities mentioned over the 5th defendant and also for an injunction restraining the 5th defendant from proceeding with or executing the decree passed in Suit No. 514 of 1977 against.the securities mentioned above, receiver, injunction, costs, etc.
(3.) The plaintiff's case is that on 4th of June, 1969 an agreement was entered into by and between the plaintiff and the first defendant at its branch office at Nctaji Subhas Road, Calcutta whereby the plaintiff at the request of the first defendant agreed to grant accommodation/loan to the first defendant by way of overdraft facilities for a maximum limit of Rs. 3,CO,000.00 on condition that the first defendant would hypothecate stocks of finished and semi finished dryers, embossing machines, plywood machines, industrial machines, work in progress and all other stores and raw materials and moveable plants and machinery lying at 117, Raja Dinendra Street Calcutta and Jessore Road, Dum Dum, Calcutta including goods as might be in course of shipment, transit or delivery and document of title negotiable instrument, policies of insurance, present and future book debt, outstanding bills and moneys receivable by the first defendant etc Interest was agreed to be paid at the rate of 4% over the Reserve Bank of India rate with the minimum 9i% per annum and other necessary and consequential reliefs. It was further agreed that on default being made by the first defendant of payment of any money thereby secured the plaintiff could take possession and appoint receiver, sell by public auction or by private treaty or otherwise dispose of or deal with in any manner with the said goods hypothecated. Pursuant to the said agreement the plaintiff granted and/or continued granting overdraft and/or cash credit facilities to the first defendant. On 31st of January, 1970 at the request of the first defendant the limit was increased from Rs. 3,00,000.00 to Rs. 3.50.000.00 but, however, all the provisions of the agreement dated 4th June, 1969 remained in full force and effect and by another supplemental agreement dated March 18, 1970 the limit was increased from Rs. 3,50,-000.00 to Rs. 3,80,000.00 and all other provisions of the said agreement dated 4th June, 1969 remained in full force and effect. There was another supplementary agreement dated 28th of August, 1970 whereby the limit was increased to Rs. 4,00,000.00 on the same terms and conditions. By another agreement dated 3rd of May, 1972 the limit was increased to Rs. 5.00.000.00 on the same terms and conditions. On 26th of December, 1975 the limit was increased to Rs. 10,00,000.00 on the same terms and conditions as before save and except that the rate of interest was increased to 6% over the Reserve Bank of India minimum 15% per annum. The plaintiff granted overdraft and/or cash credit facilities up to the limit of Rs. 10,00,000.00. On 7th of July, 1976 by another agreement on same terms and conditions the said limit was increased to Rs. 16,00,000.00. By way of further security the first defendant on 7th of July, 1976 executed on demand a promissory note for Rs. 16,00,000.00. By a separate letter dated 7th of July, 1976 the first defendant agreed that the said promissory note was to stand and be regarded as continuing security and would be enforceable for any of the moneys which then and at any time in future became due and payable by the first defendant. On 7th of July, 1976 the first, second, third, fourth defendants jointly and severally guaranteed repayment to the plaintiff on demand all sums of moneys and liabilities upto a sum of Rs. 60,00,000.00. This guarantee was given in respect of the amount for which the suit has been filed and also in respect of other accounts. By agreement dated 8th of June, 1977 overdraft facilities on the same terms and conditions was increased to Rs. 20,00,000.00 and by way of further security the first defendant on 8th of June, 1977 on demand executed a promissory note for Rs 20,00,000.00 on the same terms and conditions.;