1. The plaintiff in O.S. No. 10 of 1978 on the file of the Court of the Subordinate Judge of Kasaragod is the appellant.

2. The suit was filed for recovery of money. It is necessary to briefly state the facts which are relevant for determination of the question raised in the appeal.

3. The 1st defendant who is the Proprietor of a firm by name 'M/s. Paxwell Printers' was given various financial facilities by the plaintiff-Bank under various transactions and as on the date of the plaint, a total of Rs. 5,39,220.93 was due from the 1st defendant. One such facility was open cash credit facility for a sum of Rs. 50,000/- on the strength of a deed of hypothecation and a promissory note. The stock-in-trade and the raw materials which belonged to the 1st defendant were hypothecated to the plaintiff bank. The 1st defendant was also given a key shut cash credit facility for a sum of three lakhs of rupees on the pledge of raw materials belonging to him as security. Subsequently, the 1st defendant also executed a promissory-note for the said sum. The 1st defendant sought a further loan of Rs. 1,80,000/- by way of Term Loan Facility on 14-8-1972 and the same was also granted by the pl