Judgement

SHAH, J. : On October 9, 1950, a deed styled an "indenture of mortgage" was executed by the Cochin Chemicals and Refineries Ltd. - hereinafter called the Company , and N. C. John, a Director of the Company, in favour of the State of Travancore-Cochin. The relevant terms of the indenture were :

"In consideration of the sum of Rupees 2.5 lakhs (2,50,000) borrowed by the mortgagor No. 1 from the mortgagee (the receipt of which sum mortgagor No. 1 cloth hereby admit and acknowledge) mortgagor No. 1 hereby covenants with the mortgagee us follows :

"(a) That the mortgagor No. 1 shall supply to the mortgagee 3,000 tons of ground-nut cake at the rate of 600 tons per month within a period of five months commencing with the first day of November 1950 and ending with the last day of March 1951.

(b) That the account for the groundnut cakes supplied by mortgagor No. 1 to the mortgagee will be settled and adjusted against the loan amount of Rs. 2.5 lakhs and interest thereon at 41/2 per cent per annum at the end of March 1951, the groundnut cakes supplied being valued at the average price fixed by the Government during the period for purchases from other sources. If on such adjustment any