Anantanarayanan, J.-

This appeal is instituted by the third defendant in the Court below. The Nadar Bank, Ltd., Madurai, against the

judgment and decree of the learned Additional Subordinate Judge of Madurai in O.S. No. 155 of 1952, which was a

suit instituted by the Canara Bank, Ltd. (Plaintiff) for recovery of a sum of Rs. 21,017-6-0 from two merchants, first

and second defendants, which was decreed with costs. As the appeal involves certain interesting questions of law and

fact relating to the priority of what are known in mercantile and banking practice as loans upon the security of goods

under the “ open credit” system, as against similar advances under the “ key-loans” system, we shall first set forth the

broad and indisputable facts, before formulating the points that arise for our determination.

The facts are that defendants 1 and 2 are members of an undivided Hindu family carrying on business in grains and

cereals under the name and style of ‘V.M. Sankarapandia Nadar’ at Madurai. The Madurai branch of the Nadar Bank

Limited (hereinafter termed the appellant Bank) was giving credit facilities to defendants 1 and 2, as regular customers,

for the past nearly 15 years. The acco

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