Decided on April 11,1969



Sadanandaswamy, J. - (1.)These two appeals are filed against an order made by the learned company judge on Company Application No. 143/67 and No. 20 of 1968 in Company Petition No. 4 of 1967 in the matter of Sree Yellamma Cotton, Woollen & Silk Mills Company Ltd. (in liquidation). The appellant in O.S.A. No. 9/68 is the International Cotton Corporation (Private) Ltd. an unsecured creditor; respondent No. 1 is the Bank of Maharashtra Ltd., Poona which claims to be a secured creditor, and the second respondent is the official liquidator. The Bank of Maharashtra Ltd. filed Company Application No. 143/67 preen for permission to continue to retain its possession of the properties mortaed to it and to allow it to remain outside the windin up proceedings and to enforce its rights as mortaed. The Company application No. 20/68 was filed by the official liquidator prayin for an order declarin that the motaes and hypothecations by the company of this properties in favour of the bank are invalid and not bindin on the company, that the bank has no power of sale of the land and building belonin to the company in liquidation, to direct the bank to deliver possession of the properties of the company to the official liquidator, and for ancillary reliefs.
(2.)The learned company judge framed the following points for consideration :
"1. Whether the liquidator's Application No. 20 of 1968 is unsustainable either because the liquidator should have filed suit or because the court fee should have been paid on its as for a suit; 2. Is the bank entitled to sell the lands and building s machinery papers and parts mortgaged or hypothecated to it, without the intervention court? 3. Is the bank entitled to retain possession of the said properties, inmovable and movable, for the purpose of exercising the right of private sale claimed by it? 4. Are the mortagaes and hypothecations claimed by the bank invalid for contravention of the provisions of section 293 of the Companies act?"

(3.)On the first point he held that the official liquidator's Application No. 20/68 is competent and sustainable, and points Nos. 2,3 and 4 were decided in favour of the bank. He, accordingly, held that the bank is a mortgagee of the immovable properties and hypothecated of the movable properties of the company described in exhibits R-8, R-15, R- 21, R-31, R-34, and R-39, and that in exercise of the rights and powers conferred upon it by the said documents, it is entitled to take and retain possession of the properties described in the said documents for the purpose of recovering monies due to it by enforcing its security against the said properties, that it has also the power of selling the said properties without the intervention of court for the purpose of recovering the moneys due to it in accordance with the provisions of the Transfer of Property Act and the Contract Act, that the bank will be accountable to the company in liquidation as a mortgagee in possession and if it exercise its power of sale without the intervention of court, it will be accountable for the moneys realised by sale in accordance with the terms of section 69 of the Transfer of property Act. He expressed no opinion as to the exact amount due to the bank and directed the bank to deliver all articles liquidator. It is against that common order in the above two applications that the present appeals have been filed.

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