K.V. LAKSHMINARAYANA SASTRY Vs. VIJAYA COMMERCIAL BANK LTD. (IN LIQUIDATION)

JUDGEMENT

(1.) The official liquidator of the Vijaya Commercial Bank Ltd. has made this petition for an order adjudicating on the claim of Mullapudi Thimmaraju, a secured creditor of the bank, for interest beyond the date of winding up order and any priority in respect of payment of the same in the following circumstances;

(2.) The contention of the respondent was that he had a floating charge on the assets of the bank evidenced by the documents in his possession. The first floating charge, according to him, was created under a deed, exhibit A-5, for a sum of Rs. 2,00,000 which was paid in two instalments under pronotes dated July 9, 1953, and July 15, 1953, each being for Rs. 1,00,000. Similarly, a second deed of floating charge, exhibit A-15, was executed by the bank on Aug. 20, 1953; but, by that date, actual loans advanced on various occasions after the first floating charge aggregated to only a sum of Rs. 1,53,000. A promote for that sum was executed on that date. Thereafter, between Aug. 22, 1953, and Sept. 1, 1953, further sums aggregating to Rs. 46,000 were advanced. Thus, the total advances under the second deed of floating charge aggregated to Rs. 1,99,000. He, therefore, claimed in his affidavit the entire principal sum of Rs. 3,99,000 together with interest up to date as a secured creditor of the bank. The other creditors of the company disputed the legality and validity of the alleged floating charge, and consequently, his status as a secured creditor. In view of this dispute, the official liquidator by his Application No. 26/1954 sought for an order from the court adjudicating upon the claim of the respondent for a charge for his debt on the assets of the bank. This application came up for hearing before Viswanatha Sastri J., who after considering the claims of the parties and the evidence on record, passed an order on Aug. 10, 1956, holding that the floating charge under exhibit A-5 was valid and enforceable as a charge on the assets of the bank and that in respect of this charge, the respondent is a secured creditor for Rs. 2,00,000 and interest thereon at the contract rate. He further held that the respondent was entitled to a charge on the foot of exhibit A-15 only to the extent of Rs. 46,000 with a subsequent interest at 5% per annum from the dates of several advances making up the total sum of Rs. 46,000. In relation to the balance, i.e., a sum of Rs. 1,53,000 advanced after the first floating charge by the respondent by the date of exhibit A-15, the learned judge observed that the respondent would rank only as an unsecured creditor.

(3.) Aggrieved by this order, the respective parties preferred their appeals O.S.A. No. 1 of 1958 is the appeal preferred by the respondent secured creditor and O.S.A. No. 11 of 1958 is the appeal preferred by the unsecured creditors. Both the appeals are still pending.