P K PATTABHIRAMAN Vs. STATE

JUDGEMENT

(1.) 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.