KUPPUSAMY NAICKER Vs. LAKSHMANA GOUNDER

JUDGEMENT

(1.) This civil revision petition is directed against the order of the learned Subordinate Judge, Villupuram, dismissing I.A. 614 of 1987 filed under S.5 of the Limitation Act, to condone the delay in preferring the appeal against the judgment and decree in O.S. 1153 of 1983 on the file of the District Munsif Court, Villupuram. The said suit was disposed of on 12-10-1984, by the District Munsif and the suit was decreed. The appeal against the judgment and decree in O. S. 1153 of 1983 had been filed before the Sub-Court, Villupuram. Since there was some delay in the filing of the appeal the petitioner filed I.A.614 of 1987 for the condonation of the delay. That application, however, came up before the Subordinate Judge, Villupuram, who was none other than the very District Munsif, Villupuram, who disposed of the suit. The learned Subordinate Judge, dismissed the application, the correctness of which is qestioned in this civil revision petition.

(2.) From the facts set out above, it is clearly seen that the trial as well as the appellate Courts had been presided over by the same officer. Even with reference to an interlocutory application in an appeal arising out of a suit disposed of by a particular Officer, the same Officer, in the capacity of the appellate Court, cannot, taking into account the judicial probity and propriety and fairness, deal with the same. The learned Subordinate Judge seems to have been oblivious of this. That the Presiding Officer of the appellate Court had been unaware of the fact that the application for the condonation of the delay arose in the intended appeal against the judgment and decree in a suit dealt with by the same Officer as a trial Court, is proof positive that there was a total lack of application of mind by the Presiding Officer of the appellate Court to the proceedings before it. It is highly regretable that the Presiding Officer of the Sub-Court had proceeded to dispose of the matter overlooking that the very interlocutory proceeding dealt with had arisen out of a main proceeding, which had been dealt with by the same Officer at the stage of suit. In other words, the Presiding Officer of the lower appellate Court, by dealing with and dismissing the interlocutory proceeding, had seen to it, that finality was secured to the adjudication made in the suit by the same Officer. The course so adopted is not only opposed to all known and well accepted and established norms and canons of judicial procedure, but is bound to undermine the confidence reposed by the litigants in the justice delivery system generally and Courts of Appeal in particular. Consequently, the order passed in I.A. No. 614 of 1987 cannot be upheld. The civil revision petition is allowed, and I.A. 614 of 1987 will stand remitted to the Court below now presided over by a different officer, for fresh disposal in accordance with law. There will be, however, no order as to costs. Order accordingly. AIR 1989 MADRAS 271 "In the Matter of P.K. Pattabhiraman" MADRAS HIGH COURT Coram : 1 RAMALINGAM, J. ( Single Bench ) In the Matter of P.K. Pattabhiraman. Petn. No.58 of 1986, Applns. Nos.293, 294 and 304 of 1986, D/- 1 -2 -1988. (A) Presidency Towns Insolvency Act (3 of 1909), S.52(2)(c) - INSOLVENT - Insolvent if ''reputed owner" - Evidence revealing that insolvent did not stop business long prior to filing insolvency petition but was active in business till filing the petition - He cannot be deemed to be "reputed owner" in respect of machineries hypothecated to Bank. (Para 8) (B) Presidency Towns Insolvency Act (3 of 1909), S.52(2)(c) - INSOLVENT - "Trade or business" - Word "business" should be seen in wider content than word "trade" - Person engaged in manufacture is engaged in business - Hypothecation of machineries to Bank for expansion of business and to improve methods of manufacture - Liabilities incurred in course of business remaining undischarged - Business activity is deemed to be continued. (Para 9) (C) Presidency Towns Insolvency Act (3 of 1909), S.52(2)(c) - INSOLVENT - "Reputed owner" Proof - Machinery hypothecated with Bank and in possession of involvent - Failure of Bank to take precautionary measures like giving notice to public - Pledged goods vest in Official Assignee after filing insolvency petition - Insolvent cannot be deemed as "reputed owner" - Bank's remedy is to approach as unsecured creditor. In order to claim the right of 'reputed ownership', the true owner should have taken such precaution that the insolvents did not obtain false credit either by putting a board on the premises or by giving notice to the public by any other adequate means that the insolvents were not absolutely entitled to all the goods which were under their control. Where the insolvent had hypothecated machinery with the Bank of which the possession was with the insolvent and the Bank had taken no precautionary steps like putting board or giving notice to public then the pledged goods would vest in Official Assignee after filing of insolvency petition, the Bank's remedy is to come as "unsecured creditor". (Para 9) The object of the doctrine of "reputed ownership" is to prevent deceipt by a trader from the visible possession of property, which he is not entitled to. Where a Banker allows a businessman possession of goods pledged to the Bank so as to enable the businessman to obtain false credit, then, the owner of the goods, namely, the Banker who has permitted the insolvent to obtain that false credit has to suffer the penalty of losing his goods for the benefit of those who have given the credit. It is well settled that when property possessed by the bankrupt in his character as trustee has become so amalgamated with his general property, the representative of the trust has no other remedy but to come in as a general creditor and prove for the amount of the loss. (Para 10) Cases Referred : Chronological Paras AIR 1978 Mad 46 : (1977) 2 Mad LJ 399 9 (1977) 1 Mad LJ 36 8 AIR 1937 Sind 37 10 AIR 1933 Cal 366 10 (1879) 10 Ch D 591 : 40 LT 15 : 27 WR 346 (CA), Ex. Porte Wingfield 10 Judgement ORDER :- The first two applications have been filed by the learned Official Assignee, against the respondent Canara Bank, T. Nagar, Branch, Madras, under the following circumstances. In these two applications, the prayer of the Official Assignee is for vesting the machineries and stock detailed in Schedule A to the report of the Official Assignee, free from any hypothecation in favour of the respondent by virtue of S.52(2)(c) of the Presidency Towns Insolvency Act. Appln. No. 309 of 1986 is by the Canara Bank, third party, for directing the Official Assignee, to hand over the machineries, electrical equipments, furnitures and fixtures, office equipments, tools, stocks including finished and semi finished goods either found specifically in the security document like hypothecation agreement or not and further permit the Bank to sell and appropriate the net sale proceeds after defraying the expenses of the sale towards the liability due by the insolvents, P.K. Pattabiraman and Mrs. P. Kantha to the Bank, who were adjudicated as insolvents on 19-8-1986. 2. In Appln. No. 293 of 1986, the properties relate to the debtor Mrs. P. Kantha, proprietrix of 'Quality Metal Products'. The properties referred to in Appln. No. 294 of 1986 belong to P. K. Pattabiraman, Proprietor of 'Sree Prosperity Industries'. Mr. Pattabiraman is the sole proprietor of 'Sree Prosperity Industries' at plot No. 3, G.N. Industrial estate, Alapakkam, Madras. Mrs. Kantha is the proprietrix of 'Quality Metal Products' in the same premises. Both the businesses were looked after and managed by the insolvent viz., Pattabhiraman, the husband of Insolvent viz. Mrs. P. Kantha the second wife of Mr. P.K. Pattabiraman. The insolvents have not filed their schedule of affairs till 6th November, 1986 the date of the report of the Official Assignee. However, the insolvents in their application for adjudication have disclosed their over-all joint liability at Rs. 1,34,59,539.36. They include immovable properties belonging to the insolvents separately as well as machinery and stock- in-trade available in the business premises for both the businesses. On their adjudication, the business premises were sealed immediately and the learned Official Assignee has taken over charge of them. Thereafter, the landlord of the business premises filed an application for direction to the Official Assignee to hand over the business premises. Those applications are still pending.

(3.) While so, a letter was received from the counsel for Canara Bank No. 132 Usman Road, T. Nagar, Madras setting forth details of the credit facilities granted to 'Sree Prosperity Industries' belonging to Pattabiraman as well as the facilities granted to 'Quality Metal Products' belonging to Mrs. P. Kantha. In that letter, the contention of the Bank is that credit facilities have been granted on the security of the fixed assets belonging to the two firms and that necessary open cash credit agreement and hypothecation agreement were executed. As such, the Bank claimed a charge over the machinery and stock-in-trade. Copies of the hypothecation deed executed by the Insolvents were also filed. A detailed inventory was taken in the presence of a representative of the Bank by the staff of the Official Assignee on 27-9-1986. The staff of the Official Assignee found no display of any board as to indicate that the machineries have been hypothecated to the Canara Bank, nor any one of the machineries carry any mark or writing to indicate that they have been hypothecated to the Canara Bank. Schedule 1 to the reports contains all the items found in the premises of 'Quality Metal Products' and in the office room as well as in 'Sri Prosperity Industries' respectively. Schedule B of the reports of the Official Assignee filed in Appln. No. 293 of 1986 mentions list of machineries hypothecated to the Canara Bank by 'Quality Products'. Schedule C of the aforesaid report mentions the list of goods and commodities referred to in the agreement.