PUNJAB NATIONAL BANK Vs. UNION OF INDIA

JUDGEMENT

(1.) The dispute in this suit is between the Punjab National Bank, a Banking Company nationalised under the Acquisition and Transfer of Undertakings Act, 1970, and M/s. Atherton West and Co. Ltd. Kanpur, a public company whose management" was taken over by the Central Government by an Ordinance known as "The Laxmirattan and Atherton West Cotton Mills" (Taking over of Management) Ordinance No. II of 1976 (now Act No. 98 of 1976).

(2.) The relevant facts are that M/s. Atherton West and Company Limited, a limited company was carrying on the business of manufacturing and sale of textiles at Kanpur (hereinafter called the Company). The Company had taken credit facilities from the plaintiff Bank against hypothecation and pledge or its goods. On the coming into force of the Ordinance No. II of 1976 the Custodian of the Company under a threat of prosecution obtained possession of the pledged and hypothecated goods and sold the same. The value of the hypothecated pledged goods according to the plaintiff Bank was Rs. 79,15,552. The Plaintiff Bank has filed this suit for recovery of Rs. 79,15,552 on the allegation that the recovery of the goods by the defendants from the Bank was illegal, unwarranted and unauthorised and they are entitled to recover the price of the goods which were taken into possession by the defendants from the plaintiff Bank and sold. The plaintiff Bank has alleged that although the amount due to the Bank from the company as on 31st December 1977 amounted to Rs. 1,27,32,578 but the Bank was limiting its claim against the defendants to the value of the pledged and hypothecated goods. The plaintiff also claimed interest at the rate of 17 per cent per annum from the date the defendants had taken possession of the goods and until the recovery of the value of the goods.

(3.) The suit is contested by the defendants. It is not disputed that the defendants had taken into possession all the goods lying in the godowns of the Punjab National Bank. The defendants have disputed the value of the goods of which possession was taken by them. According to the defendants the value of the stock of stores and spares was taken at 40 per cent less as the condition of the stock was unsatisfactory and the value of the stock of cloth bales was taken 30 per cent less due to the unsatisfactory condition of the stocks. Defendant No. I denied that the alleged goods were pledged or hypothecated by the defendants. The defendants further submitted that the action taken by defendents Nos. 2 and 3 in recovering possession of the goods in dispute was in accordance with law and was taken in good faith to protect the interest of the company. The defendants pleaded that in view of sub-section (7) of section 3 of Act No. 98 of 1976 the plaintiff has no claim against the defendants.