SOUTH INDIAN BANK LTD Vs. V. KRISHNA CHETTIAR

JUDGEMENT

(1.) THE plaintiff in O.S. 85 of 1966 on the file of the Subordinate Judge, Salem, is the appellant Defendants 2 to 8, as partners of a registered partnership firm, known as V. Krishna Chettiar and Bros, had on application obtained financial aid from the plaintiff Bank under four different heads, such as, key loan advances, cash credit open loans, bills purchases account and cheques discounting account. From time to time, under one or the other of the heads of advances, moneys were lent by the plaintiff Bank to the partnership firm. The partnership was running an oil mill and a ginning factory. The premises in which the machinery of the mill and the factory was situate belong to some of the partners of the firm. But in connection with the advances made by the Bank to the partnership firm, in connection with the partnership business, two kinds of securities were offered by the partners. The first one was under Ex. A -24, dated 15 -5 -1964, wherein some of the partners of the firm, who are the owners of the premises which contained the machinery deposited the title deeds of the premises at Coimbatore, with the intention of creating an equitable mortgage thereon. The other security which they offered was under Ex. A -29, dated 20 -5 -1964, which was in connection with an express loan granted by the Bank to the tune of Rupees 80,000 on a hypothecation of the machineries and moveables contained in the mill premises, but delineated into a particular schedule attached to Ex. A -29, which was the deed of hypothercation.

(2.) THE case of the plaintiff is that the defendants were operating on the various accounts under which financial aid was given by the Bank to the partnership firm. Originally, the rate of interest at which the amount so advanced by the Bank was repayable by the defendants, was agreed to at 9 per cent per annum with quarterly rests. Later, admittedly, under Ex. A -33, having regard to the increased demand in the rate of interest by the Reserve Bank of India, the rate of interest was increased from 9 per cent to 11 per cent per annum. The plaintiff has come to court for the realisation of the amount due and payable by the defendants under the various heads of account and under the various heads of account and under which advances were made by the Bank to the defendants' partnership firm. The suit was laid for the recovery of a sum of Rs. 1,52,941 -50 made up of a sum of Rs. 83,941 -77 or the cash credit open loan and a sum of Rs. 66,725 -20 under the Fully Secured Account and a sum of Rs. 95 -87 under the cash credit account. The plaintiff claims that it would be entitled to a concurrent remedy against defendants personally for the recovery of the suit debt and also sought for a charge decree against the immovable property, which is the mill premises which was equitably mortgaged with it, under Ex. A -24, and also sought a charge on the machineries enumerated in the deed of hypothecation Ex. A -29, dated 20 -5 -1964.

(3.) IN so far as the defence is concerned, the defendants do not dispute the accounts and the principal amount due. Inter alia, the main contention raised by the defendants was that the plaintiff, by virtue of the deed of hypothecation, Ex. A -29, is not entitled to claim a charge on the machineries and moveable properties in the mill premises, as according to the defendants, the said machineries have got embedded themselves with the premises, which contained them and, therefore, such moveable properties or machinery enumerated in the deed of hypothecat on should be deemed to be annexed to the immoveable property and in the absence of a regular instrument of mortgage, as contemplated under the Transfer of Property Act, and registered under the Registration Act, the deed of hypothecation, by itself, cannot create a right in the plaintiff to seek for a charge decree as against the moveables which are the subject -matter of the deed of hypothecation.