( 1 ) THIS is a suit for recovery of Rs. 3,99,438. 25 paise, filed by the plaintiff-Bank against the defendants on the allegations that defendant No. 1, the sole proprietory concern of defendant No. 2, requested the Bank for the grant of financial assistance and agreed to hypothecate the entire raw material/stock in trade and machinery as security. On the request of the defendants, the plaintiff Bank sanctioned a cash credit hypothecation limit to defendants on 16th February, 1985. The defendants executed a deed of hypothecation dated 16th February, 1985 and also furnished a personal guarantee of defendant No. 3 vide a deed of guarantee dated 16th February, 1985 and also agreed to pay interest at the rate of 6. 5 per cent per annum over the Reserve Bank of India rate of minimum of 16. 5 per cent per annum with quarterly rest. The defendants I and 2 executed also demand promissory note for Rs. 3,00,000. 00. Guarantee for repayment of the aforesaid sum alongwith same rate of interest was executed by defendant No. 3. Letter of continuing security was also executed by defendants I and 2. Defendant Nos. 1 and 2 availed the cash credit hypothecation limit sanctioned by t