Decided on March 26,2003



A.Subbulakshmy, - (1.)THE appellant Bank filed IA-1 before the Tribunal for attachment of 'A', 'B1 and 'C' schedule properties. THE DRT allowed the same and permitted the Bank to sell sugar, etc., in exercise of Bank's rights under hypothecation agreement. THE Bank then filed IA-2 for police protection for implementing the order passed in IA-1 and that was also allowed. THE Tribunal directed that the sale proceeds of the sugar stock shall be kept in separate account and the amount of sale proceeds shall be adjusted towards loan liability after deciding the objection of workers, etc. THEn the Bank filed IA-3 for deletion of that portion of the order passed in IA-2 "directing, to keep the sale proceeds in a separate account". That petition was dismissed by the Tribunal. Aggrieved against that order, the Bank has preferred this appeal.
(2.)While passing the order, Presiding Officer, DRT, Bangalore has observed that "the direction assailed cannot be characterized as an error and on the other hand it is quite valid and lawful". The learned Counsel appearing for the appellant Bank submitted that the sugar which was sold is only pledged goods and the Bank is at liberty to sale proceeds towards the loan amount and so the order passed by Presiding Officer, DRT, directing the appellant to keep that amount in a separate account is not sustainable and the Bank must be given the right to appropriate the sale proceeds towards the loan amount. He drew my attention to the hypothecation agreement in respect of the machineries and the pledge agreement in respect of sugar. Even though on the top of that agreement it is not clear and it is stated as both hypothecation and pledge, the resolution passed by the respondent sugar factory reveals that a sum of Rs. 150 lakhs have been secured as loan on overdraft by pledge of the goods. So, it is evident from this document that the sugar was pledged with the Bank. Counsel for appellant Bank submits that only the Bank was in possession of the pledged sugar and it was lying in the godown under the custody of the Bank. So, it is evident that even on pledged articles, a sum of Rs. 150 lakhs has been availed by the respondent factory on the overdraft facility.
Since the sugar was pledged with the Bank and the Bank was in possession of sugar, the Bank can appropriate the sale proceeds from the sugar towards the loan amount. Hence, I feel that the direction given by the DRT in IA-2 that the sale proceeds of sugar stock shall be kept in a separate account, has to be deleted and it is deleted.

(3.)THE Bank is directed to adjust the sale proceeds of sugar towards the loan liability. Appeal allowed.

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