Rajiv Sahai Endlaw, J.

1. The plaintiffs in this suit for recovery of Rs 40 lacs as principal amount, Rs 3,51,250/- as interest @ 15% p.a. till the date of institution of suit and for pendente lite interest and costs, claim decree under Order 12 Rule 6 of the CPC.

2. It is not in dispute that an agreement dated 1st March, 1972 was entered into between the plaintiffs 2 to 17 on the one hand and the defendant No. 1 on the other hand. Under the said agreement, the plaintiffs 2 to 17 as the owners of property No. 24, Barakhamba Road, New Delhi comprising of land admeasuring 0.956 acres or 4628 sq yds and a residential bungalow constructed thereon permitted/allowed the defendant No. 1 company to demolish the residential bungalow existing on the said property and to, at the costs and expense of the defendant No. 1, raise construction of a multi storeyed building for commercial use on the said property, after obtaining sanction of the Government and local authorities for such development, again at the costs and expense of the defendant No. 1 and with no financial commitment or liability in completing the said project on the plaintiffs 2 to 17 except as provided in the said agreement. The defendant No. 1, in consideration of its expense and effort in doing the aforesaid works was to be entitled to transfer and dispose of offices, showrooms and garages covered or uncovered pertaining to 70% share in the proposed multi-storeyed building plus 3000 sq.ft. on the second floor and to appropriate the receipts therefor unto itself. Such agreements in common parlance are known as "Collaboration Agreement". The remaining 30% of the built up in the proposed building was to be of the shares of the plaintiffs 2 to 17 or the plaintiff No. 1 company got incorporated by the plaintiffs 2 to 17 in terms of the said agreement.

3. Under Clause 26 of the aforesaid agreement, the defendant No. 1 was to be responsible to pay the commercialization charges or such other charges under any other name to the authorities concerned, as and when demanded by the authorities. Besides this, the defendant No. 1 also agreed to indemnify the plaintiffs 2 to 17 against any demand with regard to liability for commercialization charges until the entire commercialization charges had been paid by the defendant No. 1 to the concerned authorities, together with any interest or penalty levied by the said authorities in that behalf. It was also agreed that the defendant No. 1 shall furnish such guarantee as may be mutually agreed to upon between the plaintiffs 2 to 17, to ensure payment of the said dues to the authorities concerned.

.4. It is also not in dispute that the predecessor-in-interest of the defendants No. 2 to 4, namely, Shri Dewan Chand and the defendants 2 and 3 also executed a surety bond dated 29th April, 1972 in favour of the plaintiffs 2 to 17 who were jointly described therein as beneficiaries. The said surety bond was executed in compliance of Clause 26 aforesaid of the agreement aforesaid whereunder the defendant No. 1 had undertaken to secure the beneficiaries against all losses, claims and demands with regard to the responsibility for the commercialization charges, penalty and interest detailed as aforesaid. The said Shri Dewan Chand and the defendants 2 and 3, being the persons behind the defendant No. 1, undertook to indemnify the beneficiaries against all losses, claims and demands in case the defendant No. 1 did not fulfill the terms and conditions of Clause 26 aforesaid. Under the said surety bond, the said Shri Dewan Chand and defendants 2 and 3 agreed that all claims and demands of concerned authorities in connection with the payment of any commercialization charges or any other like charges under any other name as demanded by the authorities concerned together with all liability for interest and penalty in respect thereof shall be discharged by the defendant No. 1 on demand of the same, either as a lump sum or by instalments as allowed by th