K. Ramamoorthy, J.

( 1 ) THE plaintiff bank has instituted the suit for the recovery of a sum of Rs. 1,32,962. 00 against defendants 1 to 3 with interest @ 19. 5% p. a. from 16. 1. 1986 onwards. The suit was instituted on the 31st of January, 1986. Defendants 2 and 3 had been set ex parte. The allegations in the plaint could be abridged in the following terms:

( 2 ) THE second defendant, M/s. Dhanarjan Enterprises, was borrowing money from the plaintiff. The stocks at the defendant No. 2 factory premises were hypothecated with the plaintiff bank. The first defendant was permitted to take delivery of stocks of 3,000 pairs of ladies white shoes from the factory of the second defendant vide letter dated the 25th of February, 1983. The first defendant undertook that the stocks would continue to be under the charge of the plaintiff and defendant No. 1 was taking delivery of those shoes for reprocessing. The first defendant undertook that at the time when the goods were handed over to the clearing agents for export, the receipt would be issued in favour of the plaintiff and by letter dated the 9th of August, 1984, the first defendant assured that the dues due to the plaintiff would be cleared. The first defendant had taken shoes of the value of Rs. 90,000. 00 but the first defendant had not paid any money. By letter dated the 26th of September, 1985, the first defendant offered to pay the amount due in four monthly instalments of Rs. 25,000. 00 each and the first of such instalment would be paid on the 10th of October, 1985. The first defendant did not pay any amount as promised. The plaintiff issued a notice dated the 29th of August, 1985 claiming the sum of Rs. 90,000. 00 towards principal amount and Rs. 42,962. 00 towards interest @ 16. 5% p. a. and the total amount claimed was Rs. 1,32,962. 00.

( 3 ) THE first defendant filed the written statement stating that the first defendant was not liable to pay the amount and this Court has no territorial jurisdiction. In paragraph 8 of the written statement,it is stated:-

"that para No. 8 of the plaint is not admitted as stated. There was no undertaking as such by the answering defendant but as the custody of stocks was emanating from defendant No. 2 which in turn was under the charge of the plaintiff, the receipt, against delivery of stocks to the clearing agent, would be got issued in the name of the plaintiff and the plaintiff is not complaining about the receipts. The question of payment or of sale of stocks did not in any way create any privity between the plaintiff and the answering defendant as the money was to be received to the account of defendant No. 2 at Ghaziabad, not within the jurisdiction of this Hon ble Court. In that sense of the matter the value of the stocks was payable at NOIDA, Ghaziabad, from where the stocks were lifted for reprocessing with a promise to restore the custody of the stocks to defendant No. 2 at NOIDA, Ghaziabad. The letter dated 9th August, 1984 may kindly be perused for its true interpretation. It is stated that at all times the defendant No. 1 was trying to help defendant No. 2 in clearing the dead stock in order to enable defendant No. 2 to repay its debt to the plaintiff bank and as the stocks were under the charge of the plaintiff bank the correspondence between the plaintiff and answering defendants was necessitated. The transaction thus was one of principal to principal between defendant No. 1 on the one part and defendants No. 2 and 3 of the second part and it was not even a tripartite transaction. "

( 4 ) ADMITTING the letter dated the 26th of September, 1985, the first defendant would state:-

"that in reply to para No. 9 of the plaint, it is stated that the answering defendant did write to the plaintiff bank and intimated in the said letter dated 26th September, 1985 that the amount payable against the goods of defendant No. 2 would be released to the plaintiff bank in four instalments as stated in the letter, but the perusal of the contents o

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