STATE BANK OF INDIA Vs. VENKATESWARA STORES

JUDGEMENT

(1.) This Let Patent appeal is filed against the order learned single Judge of this Court in A.A.O. No. 612 of 1977, which has reversed the of the Third Asst. City Civil Court Madras dated 17-9-1977 and made in 26126 of 1976 in O.S. No. 7545 of 1976.

(2.) The respondent in this appeal O.S. No. 7545 of 1976 against two can contractors who were running a can Madras Fertilizers Complex at Manali. suit was for the recovery of a sum of Rs. 12100 being the price payable for the rice supplied to the canteen contractors who will hereafter be referred to as the defendants. The supplies were effected during the period from 9-12-1975 to 2-6-1976. Then defendants had borrowed money from the appellant-Bank and had on 16-5-1975 executed an agreement hypothecating the goods, machineries, book debts and other assets. The hypothecation extends to "all the borrowers, present and future book debts, outstanding moneys" receivables, claims bills, contracts, engagements, securities, investments, rights and assets". Simultaneously, the defendants also executed a power of attorney in favour of the Bank authorising them to receive and give full discharge of all the debts due to the firm and all those future debts and other hypothecated under the document. The power of attorney was irrevocable. Pending the suit, the plaintiff-respondent filed and application for attachment before judgement and the Madras Fertilisers who owed a sum of Rs. 15000 to the defendants, brought the money to the credit of the suit. Thereafter, the bank filed I.A. 26126 of 1976 claiming that this money is payable to them and that, therefore, a direction may be given to pay the money to the bank. The learned Third Assistant Judge, City Civil Court, Madras, by his order dated 17-9-1977 held that the Bank's claim for the amount was valid, raised the attachment on the money and directed the payment of the same to the Bank.

(3.) On appeal by the respondent, a learned single Judge of this Court allowed the appeal on the ground that the hypothecation of the debt itself does not give a right to the bank to either claim the debt or recover the money and that until a suit is filed by the Bank and a decree is obtained, the hypothecation is not effective.