SANJAY KISHAN KAUL, J.

( 1 ) THE plaintiff is a limited company engaged in the business of manufacture of various varieties of paper which are sold through wholesalers. The arrangement of such sale is stated to be through direct payment or payment against hundies payable on due date with the bank by the such wholesalers.

( 2 ) DEFENDANT no. 1 was working as a wholesale dealer of the plaintiff-company in purchasing material. Defendant no. 2 is stated to be the Managing Director of defendant no. 1 and defendant no. 1 is stated to be controlled by both defendants no. 2 and 3.

( 3 ) THE terms of the sale of the paper to defendant no. 1 was stated to be through limited credit of 45 to 60 days. Fifteen days interest free credit facility from the date of delivery was available and thereafter interest was charged. Any default of payment carried interest of 21 per cent per annum from date of delivery till date of payment and further penal interest at 3 per cent. The arrangement between the plaintiff and defendant no. 1 worked satisfactorily up to september, 1985.

( 4 ) IN October, 1985, defendant no. 2 is stated to have approached the plaintiff personally at the Saharanpur Mills for what was claimed to be a bulk order in their hands from customers. The defendants wanted to lift higher quantity of goods. These huge stocks are stated to have been lifted in the month of november-December, 1985 and January, 1986. The total value of the goods supplied is stated to be worth Rs. 72,27,079/- vide 189 consignments against the terms of direct payment. These goods are stated to have been sold to defendants vide nine consignments worth Rs. 2,99,480/- against the terms of payment through hundi document signed through authorized representatives. The plaintiff claims that all these amounts are due apart form incidental charges levied on certain bills accepted by defendants. Interest is also claimed at the contractual rate.

( 5 ) CERTAIN on-account payments are stated to have been made by defendant no. 1 apart from certain adjustments made. Defendant no. 1 is also stated to have deposited sums against various debit notes towards trade discount deposit, which was adjusted against the balance payment of interest. The detailed calculations have been set out in the annexures to the plaint. The total principal balance amount claimed is Rs 71,82,266/- apart from interest on outstanding bills of Rs 24,59,499. 31/- totalling to the suit amount of Rs 96,41,765. 31. The liability is sought to be affixed on defendants no. 2 and 3 also on account of allegation of dishonest intention of manipulation of funds and stocks of defendant no. 1.-company.

( 6 ) THE suit has been contested by the defendants. Defendants no. 2 and 3 have denied any personal liability. Defendant no. 1 is a public limited company which was converted from an original partnership firm in the year 1976. It is a case of the defendants that the disputes really arose on account of the change of the management of the plaintiff which was earlier controlled by the family of the bajorias who were closely related to defendants no. 2 and 3. Subsequently, the goenkas took over the business. Defendant no. 1, in fact, has claimed settlement of accounts on account of ad hoc payments made from time to time. The defendant no. 1 in sum and substance has claimed that there was actually no supply of paper made to the said defendant but the whole arrangement was a subterfuge for tax gains, though defendant no. 1 also participated in the same. This arrangement is stated to be originally perceived by the Jaipurias whereby defendant no. 1 was to receive certain bills drawn on them on account of the fact that the plaintiff intended to sell certain quantity of paper in the open market at a price higher than the mill price. This paper could not be taken out of the mill until the bills were accepted by one of the wholesaler/dealer. The defendants claimed to have come under pressure since they were wholesalers/dealer