BANK OF BARODA Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) This appeal on behalf of the unsuccessful plaintiffs which was instituted originally in the Count of the District Judge, Mangalore, South Kanara, as RANo.7 of the 1971 on its file, and withdrawn to this Court, arises out of and is directed against the judgment and decree dated 17-4-1971 in OSNo.131 of 1969 on the file of the Civil Judge, Mangalore, dismissing the suit in which plaintiffs sought a declaration of their entitlement to the sale, proceeds of 365 bags of supari held in deposit in IPNo.7 of 1958 on the file of the Civil Judge, Mangalore.

(2.) The material facts leading up to the institution of the suit, briefly stated, are the following : The third defendant-Annappa Subraya Nayak & Company, a firm of partners, carrying on business in supari is stated to have approached the second plaintiff at Bombay in 1958 for a loan on the pledge of certain bills of lading, allegedly representing a cargo of 4011 bags of supari on the steam-ship. "Margaret Rose", and obtained from the second plaintiff a loan of Rs. 975,000/- on the security of the goods represented by the said bills of lading. The second plaintiff, in turn, is seated to have borrowed the said sum from the first-plaintiff by endorsing the said Bills of Landing in favour of the latter. It is alleged by the plaintiffs that the Bills of Lading so delivered to the second plaintiff, and, in turn, by the latter to the first-plaintiff, were not genuine, no. goods allegedly represented there by having been delivered to the shipping Company for carriage. The plaintiffs further say that the third defendant thereafter offered to supply fresh consignments of supari to secure the loan of Rs.9,75.000/- already obtained by it, and, that accordingly, sent a consignment of 200 bags of supari to the second plaintiff by Lorry transport. The way-bill covering the said goods was, in turn, transferred by the second-plaintiff in favour of the first-plaintiff pursuant whereto, the latter , through its clearing agents D.Abraham and Sons (P) Ltd., Bombay, obtained delivery of the said goods. Thereafter, the third defendant is stated to have made a further despatch from Mangalpre to Bombay to the second plaintiff two more consignments of 60 bags and 105 bags respectively of supari through Lorry transport covered by two way bills. The second-plaintiff claims to have endorsed the said two way-bills also in favour of the first-plaintiff. The plainiiffs thus claim rights as pledgees in respect of the said total quantity of 365 bags of supari. ft is not disputed that pursuant to certain complaints lodged by certain Banks alleging, inter-alia;, 'that the said goods were, stolen from the Banks godowns, the Mangalore Police seized the first consignment of 200 bags of supari from the godowns of the said clearing agents of the second-plaintiff at Bombay and that the subsequent two consignments of 60 bags and 105 bags respecting which the corresponding way-bills had been delivered to the second-plaintiff were seized from the carriers during transit The said quantity of 365 bags of supari was sold on 7-12-1958 as. per the order of the District Magistrate, Mangalore, and a sum of Rs.99,150/- kept in deposit. The Criminal Case against the partners of the third-defendant firm in connection with which the said 365 bags of supari came to be seized having ended in an acquittal, consequential directions were issued for the return of the proceeds of the sale of seized goods to the persons from whose custody the goods were seized. However, at the instance of the official Receiver in IPNo.7 of 1958 on the file of the Civil Judge, Mangalore, the said Court called for the said amount of Rs.99,150/- and the amount is now in deposit therein. In the said IP.7 of 1958 plaintiffs made an application RIA.914 of 1964 claiming that the said sum of Rs.99,150/- constituted substituted security in place of the said 365 bags of supari already pledged in their favour by the insolvent. The Official Receiver by his report dated 22-8-1963 also sought for orders directing payment of the said sum to him on the ground that it constituted a part of the insolvent's estate. By its order dated 15-4-1966, the Insolvency Court deferred a decision thereon and refused, for the time being, the prayer of the Official Receiver and directed that the said proceeds of sale of 365 bags be invested in a Bank for a period of one year. So far as the prayer by the plaintiffs in RIA.914 of 1964 was concerned, the Insolvency Court made an order that the said petition be closed, however, reserving to plaintiffs the liberty to renew the prayer at the appropriate time. The plaintiffs thereafter instituted the present suit from which the appeal arises as OSNo.703 of 1968 in the Court of the Munsiff at Mangalore, The suit was transferred to the file of the Civil Judge, Mangalore, pursuant to the order dated 13-10-1969 of the Distriat Judge, Mangalore South Kanara, in Mis.Case No. 17 of 1968. On transfer to 'he Court below the suit was renumbered as OSNo.131 of 1969. The official Receiver was impleaded as a party-defendant to the suit; so were the several Banks, which in several proceedings separately instituted by them had urged their preferential claims respecting the sale proceeds of the said 365 bags. The Official Receiver and the Banks contested the suit. Defendants 2 to 4 however remained ex parte. On the pleadings before it, the trial Court settled a number of issues of which, issues-1, 4 and 8 are material. The said issues read : 1. Whether the suit is barred under Sec.4 of the Provincial Insolvency Act ? 2. Whether the suit is barred limitation ?

(3.) Whether the 1st plaintiff is entitled to claim by way of substituted security for 365 bags of supari, their sale price of Rs.99,150/- ?