STATE BANK OF HYDERABAD SECUNDERABAD BRANCH Vs. SUSHEELA

JUDGEMENT

(1.) This appeal came before Ramchandra Rao, J. for hearing. Before him, Shri C. Poorniah, the learned counsel for the appellant-Bank contended that it is not necessary for the plaintiff-Appellant to file a suit under Order 21, Rule 63, C. P. C. as by the date of the withdrawal of the claim petition filed under Order 21, Rule 58 the plaintiff had already filed a regular suit with regard to the declaration of its title. In support of his contention, the learned counsel for the appellant relied upon the decisions reported in K. Palaniappa Chettiar v. Ramswami Servai AIR 1937 Mad 582 and P. Umanath Bhandary v. Pedru Souza, AIR 1950 Mad 19. He also brought to the notice of the learned Judge a decision of the Division Bench of the Madras High Court in Sivaraman v. P. M. Shanmugasundara Mudaliar AIR 1969 Mad 166 in which it was observed that the earlier decisions in Palaniappa Chettiar v. Ramswami Servai AIR 1937 Mad 582 and P. Umanath Bhandary v. Pedru Souza AIR 1950 Mad 19 must be deemed to have been overruled in view of the Full Bench decision of the Madras High Court in Seethamma v. Kotareddi, AIR 1949 Mad 586 (FB). Ramachandra Rao J. felt that a question of law of consideration importance was involved and that it should be decided by a Division Bench and accordingly he made a reference for the same. The appeal thus came before a Division Bench consisting of Chinnappa Reddy, J. (as he then was) and one of us (Punnayya J.). One of the contentions that was raised by Shri Poorniah in the Second Appeal is that it was not necessary for the plaintiff to file a suit under Order 21 Rule 63 as it had already, i.e. even before the dismissal of the claim petition "as not pressed" filed a suit to declare its title. Mr. Poorniahs contention was supported by the decisions of the two single Judges of the Madras High Court in K. M. M. Pallaniappa Chettiar v. Ramswami Servai AIR 1937 Mad 582 and P. Umanath Bhandary v. Pedru Souza AIR 1950 Mad 19. However in Sivarams case AIR 1969 Mad 166 it was pointed out that these two decisions must be deemed to be bad law in view of the Full Bench decision in Seethamma v. Kotareddi AIR 1949 Mad 586 (FB). The decisions of the two learned single Judges were not expressly overruled by the Full Bench . They were not even considered by the Full Bench. Having regard to the importance of the question, the Division Bench considered it desirable that this case should be heard by a Full Bench and the Honourable Chief Justice was, therefore addressed for the same. The reference has thus come before us.

(2.) Before we answer the reference it is necessary for us to state the relevant facts leading to the Second Appeal. The appellant-Bank granted a loan upto a limit of Rs. 7,500.00 to the defendant Y. Narasayya on the hypothecation of the goods in his shop bearing No. 7-2-871 Subhash Road, Secunderabad after obtaining an agreement Ex. A-1, dated 8-5-1959, from him. The plaintiff came to know by about 20-3-1961 that the defendant was not conducting his business satisfactorily and hence it called upon the defendant Narsayya by a letter the original of Ex. A-2 dated 21-2-1961 (sic) to pay the amount due on the cash credit or give pledge under Banks lock and key of the stock of cotton goods already hypothecated to the Bank. The defendant Narsayya gave a reply under Ex. A-3 agreeing to give pledge of the goods to the plaintiff and executed a pledge agreement, Ex. A-4. In pursuance of Exs. A-3 and A-4, the goods were shifted to the plaintiffs godown bearing Municipal No. 1920 situated at Pawn Bazaar, Secunderabad. Later, defendants 10 to 12 who were the creditors of Narasayya filed three Small Cause suits Nos. 217, 218 219 of 1961 in the Court of the First Judge., City Small Causes, Hyderabad and obtained attachment of goods before Judgment under the orders of the said Judge as if the goods stocked therein belonged to Narasayya free of encumbrances. The plaintiff filed three petitions I. A. Nos. 68, 69 and 70 of 1961 in Small Cause Suits Nos. 217, 218 and 219 of 1961 respectively requesting for raising attachment; 9th defendant filed a suit O. S. No. 52/1961 in the Court of the Assistant Judge, City Civil Court, Secunderabad, against late Narasayya. In the meanwhile some other creditors of Narsayya filed application I. P. No. 3/1961 before the Chief Judge, City Civil Court, Secunderabad seeking to adjudge Narsayya as insolvent. The Court appointed interim receiver in the said proceedings. The interim receiver obtained possession of the goods that were pledged under Ex. A-4 to the plaintiff by late Narasayya. The interim receiver, in order to avoid the goods being eaten away by white ants, obtained permission from the Insolvency Court for the sale of goods. The Court granted permission and hence the interim. Receiver sold the goods for Rs. 4,000.00 and deposited the sale proceeds in the insolvency court. As by the date of the hearing of the petitioners Exs. A-5 to A-7 the insolvency proceedings came into operation the petitions Exs. A-5 to A-7 were not heard but were closed. During the pendency of I. P. No. 3/1961 Narasayya died, and consequently the insolvency petition was dismissed since not pressed. Defendants 10 to 12 obtained decrees in Small Causes Suits 217, 218 and 219 of 1961 and filed E.Ps. 85 to 87 of 1963 and obtained attachment of amount representing the sale proceeds of the said cotton goods. 9th defendant also obtained a decree in his suit O.S. No. 52/1961 and filed E. P. No. 20/1963 and also obtained attachment of the same sale proceeds by an order of the Court. The Plaintiff-Bank filed E. As. 84 to 86 of 1963 in E. Ps. 85 to 87 of 1963 in Small Cause Suits 217, 218 and 219 of 1961 before the Chief Judge, Small Cause, Hyderabad and also E. P. No. 105/1963 in E. P. No. 20/1963 in O. S. No. 52/1961 on the file of the Assistant Judge, City Civil Court, Secunderabad, praying for raising the attachment in each of these E. Ps. on the ground that the attachment order in each of these cases is not valid since the sale proceeds related to the goods pledged by late Narasayya in favour to the plaintiff for valuable consideration and the plaintiff is bona fide pawnee of the said goods and was in possession of the same even before the date of attachment. While E. As. 84 to 86 of 1963 and E. A. No. 105/1963 were pending the plaintiff filed Tr. C. M. P. No. 10064/1963 in the High Court praying for transfer of E. As. 84 to 86 of 1963 in E. Ps. 85 to 87/1963 in Small Cause Suits 217, 218 and 219/1961 from the file of the Chief Judge, Small Causes, Hyderabad, to the file of the 1st Assistant Judge, City Civil Court, Secunderabad, to be heard and disposed of along with E. A. No. 105/1963 in E. P. No. 20/1963 in O S. No. 52/1961 on the file of the 1st Assistant Judge, City Civil Court, Secunderabad, for avoiding conflict of decisions. But the 9th defendant filed C. M. P. Nos. 10858, 10854 and 10865 of 1963 in Tr. C.M.P. 10064 of 1963 in the High Court requesting to vacate the interim stay granted previously in the stay petitions. The High Court vacated the stay and permitted the 9th defendant to withdraw the amount after furnishing security to the satisfaction of the 1st Assistant Judge, City Civil Court, Secunderabad. Ultimately the High Court passed orders transferring the E. As. 84 to 86 of 1963 from the file of the Chief Judge, Small Causes Court to the file of the 1st Assistant Judge, City Civil Court, Secunderabad for disposal along with E. A. No. 105/1963. Since the 9th defendant withdrew an amount of Rupees 2565-95 which is the decretal amount from out of Rs. 4,000.00 in pursuance of the orders of the High Court, the plaintiff filed suit O. S. No. 290/1963 on 9-12-1963 for declaration that the plaintiff is entitled to sale proceeds of the pledged goods viz., Rs. 4,000.00 deposited in the insolvency court to the credit of I. P. No. 3/1961 and for a decree against defendants 1 to 8, legal representatives of Narasayya for the said amount and for an order of injunction against defendants 10 to 12 restraining them from proceedings with the execution of the decrees in Small Causes Suits 217 to 219 of 1961 and from withdrawing the amount already deposited into the Court by the Official Receiver and for a direction that defendants 9 to 12 should redeposit the amount into the Court if they had already withdrawn the same from the Court.

(3.) E. A. No. 105/1963 was called along with the suit till 16-6-1964. Then the plaintiff made an endorsement that the E. A. may be closed as the suit had been filed. The Court passed an order that the E. A. was closed as per the endorsement. The trial Court in its judgment observed that the other claim petitions (E. As. 84 to 86 of 1963) and the orders thereon are not filed into the Court. 3-A. The record does not disclose whether the claim petitions E. As. 84 to 86/1963 were closed in view of the fact that the suit was filed as in the case of E. A. No. 105/1963. But the learned Assistant Judge made it clear in para 19 of his judgment that he proceeded on the footing that all the four petitions filed by the plaintiff were dismissed.