REHABOOTH TRADERS Vs. OFFICIAL ASSIGNEE MADRAS

JUDGEMENT

(1.) APPLICATION No: 140 of 1994 in I.P. No. 34 of 1991 This is an appeal filed by the claimant under Section 86 of the Presidency Towns Insolvency Act, 1909 against the order of the Official Assignee passed in Claim No. 127 of 1991 on 30.11.1993. The appellant herein Canara Bank preferred a claim in a sum of Rs. 13,23,588.51p. with future interest. The Official Assignee held an enquiry on the claim. On behalf of the claimant the Manager of the Bank and another witness were examined. On behalf of the insolvent the third insolvent was examined. The Bank produced documents which were marked as Exs. A-1 to A-36 while P-I was marked on the side of the insolvent. The Official Assignee by his order holding that the claimant Bank is not a secured creditor of the insolvents, admitted the claim in a sum of Rs. 12,68,740 and to rank them as unsecured creditor. Aggrieved by the said order of the Official Assignee, this appeal is filed under Section 86 of the Presidency Towns Insolvency Act. S. 86 provides that if the insolvent or any of the creditors or any other person is aggrieved by an act or decision of the Official Assignee, he may appeal to the Court and the Court may confirm, reverse or modify the act or the decision, comply or make such an order, as it thinks just.

(2.) IT is first of all necessary for the purpose of deciding this appeal to determine the nature of the interest the bank has over the property. According to the Bank all the goods stored in different places were hypothecated to the plaintiff/Bank. Therefore it is necessary to decide about the right of the plaintiff/Bank with regard to the goods. The insolvents applied to the plaintiff/Bank for credit facilities and advances. The Bank accordingly sanctioned the advances sought for by the insolvents. The insolvents hypothecated the goods in favour of the Bank and executed necessary documents. Now we have to consider the nature and effect of those documents, viz. what is the interest that is created in favour of the Bank over those goods. IT is in this connection to be pointed out that one of the insolvents was once employee of the Bank and served in the very same Bank for nearly 9 years. This is an important factor because the Official Assignee has chosen to give importance, to certain aspects which in my opinion are not of any significance at all.

(3.) NOW the two important documents referred to by the Official Assignee in his order are Exs. A-27 and A-28 and on the basis of these two documents the finding has been arrived at by the Official Assignee to the effect that the Bank is not a secured creditor. NOW we have to see whether this finding by the Official Assignee merits acceptance.