NATIONAL AND GRINDLAYS BANK LIMITED Vs. GLOBE MOTORS

JUDGEMENT

(1.) M/s. Globe Motors Limited (hereinafter called ''the company"), now being managed under a scheme approved by this court claims to have created an. equitable mortgage by deposit of title deeds pertaining to approximately 3250 square yards in EH No. 152, G.T. Road, Jullundur City, Jullundur, to the extent of Rs. 40 lakhs on 17th February, 1967 to be held as security by the National and Grindlays Bank, Connaught Place, New Delhi (hereinafter called "the bank") for obligants account or several accounts with the bank in respect of cash credits or overdrafts now due, overdue or pending and/or which may be granted to the obligants hereafter and for all present and future indebtedness of any kind of the obligant to the Ba.nk in any manner whether solely or jointly, primary or collateral, accrued or accruing with all relative interests, charges, costs (as between attorney and client) and expenses." The documents were deposited by Mr. B. K. Bedi, who was duly authorised under resolution of the company to do so by a resolution of the company, dated 7th January, 1967, true copy of which resolution is Exhibit A.W. 1/5 and proved by Mr. S. K. Kholi, Chief Accountant of the company (A.W.2). A record of the same was made in the equitable mortgage register kept by the Bank, true copy of which has been marked as Exhibit A. W. 1/3 and was also duly proved by R. L. Anand (A.W.I), an Officer-in-charge of the Bank. He also spoke to the amounts due to the bank, which was supplemented by Mr. S. K. Kohli(A.W. 2), Chief Accountant of the company and Mr. R. P. Mehta (A.W. 3) Credit Officer, National & Grindlays Bank, H-Block Connaught Place, New Delhi.

(2.) Another equitable mortgage in identical terms was also executed on the same day, copy of which is Exhibit A.W. 1/7 concerning property in Rambag, Delhi, with which, however, we are not concerned because that property was sold and the proceeds credited to the loan account.

(3.) In the meantime, an application for winding up the company was filed in March 1968 (C.P. 33 of 1968). In November 1968, Mr. V. K. Mundra, submitted a scheme under Section 391 of the Companies Act. This court appointed a Chairman to preside over the meeting of the creditors, which was duly held; thereafter Company Petition No. 35 of 1969 was filed for accepting the scheme, which had been approved at the said meeting. On 31-5-1969, Hardy J., (as he then was) passed an order provisionally accepting the scheme subject to the propounder entering into appropriate arrangements for payment of dues to the bank, which was a secured creditor. It was realised that being a secured creditor, the bank was strictly speaking outside the winding up and that if it took any steps to enforce the security, the whole scheme would topple over. Eventually, the scheme was sanctioned by S. N. Andley J., (as he then was) on 3rd February, 1970.