CORPORATION BANK Vs. LALITHA H HOLLA

JUDGEMENT

(1.) RESPONDENTS Nos. 1 to 52, herein filed a petition for winding up against respondent No. 53 (hereinafter referred to as 'the company') in Company Petitions Nos. 43 to 94 of 1992 (later clubbed with Company Petition No. 43 of 1992). The said petitions were admitted on August 28, 1992. The company is the owner of premises No. 48, Church Street, Bangalore. An order has been made by this court on September 22, 1992, in C.A. No. 988 of 1992, directing the tenants of the company to deposit the rents from September, 1992, and onwards into court, to preserve the assets of the company and proper management thereof, so that the interests of the large body of unsecured creditors can also be protected.

(2.) THE applicant bank (hereinafter also referred to as 'the bank') claims to be a secured creditor of the company. According to the applicant, a sum of Rs. 98 lakhs was advanced by the bank to the company and in that behalf the company had executed an on -demand promissory note, an agreement for term loan and other documents on September 30, 1986, copies of which are produced as exhibits B to I to the application; and premises bearing No. 48, Church Street, Bangalore, belonging to the company were equitably mortgaged in favour of the applicant bank confirmed by memorandum dated September 30, 1986 (annexure G); and a power of attorney was executed by the company on September 30, 1986, irrevocably authorising the applicant to demand and receive from the State Bank of India or any other person' in possession of the portion of premises No. 48, Church Street, Bangalore, measuring 45,460 square feet described in the schedule to the said power of attorney; and in view of the said documents, the applicant claims that there is an equitable assignment of the rents in favour of the bank and, therefore, the bank is entitled to receive the monthly rent of Rs. 1,36,380 for the said portion from the State Bank of India and as there is an equitable assignment of the said rent in favour of the bank, only the bank is entitled to receive the rent for the said portion and not the company; and the order of September 22, 1992, directing all the tenants to pay the rents into court requires to be modified and the bank should be permitted to receive rents in regard to the portion in the occupation of the State Bank of India; and that on the date of filing of the application, a sum of Rs. 1,11,77,879.45 was due to the bank and now as on date about Rs. 125 lakhs is due to the bank.

(3.) ON these rival contentions, the question that arises for consideration is whether the execution of the power of attorney dated September 30, 1986, or the other documents by the company in favour of the bank, created an equitable assignment of the rents payable in regard to a portion of premises No. 48, Church Street, Bangalore, in favour of the bank to be appropriated by the bank, towards the amounts due by the company and whether it entitled the bank to receive the same, to the exclusion of the company.