TARA REROLLING MILLS Vs. PUNJAB NATIONAL BANK

JUDGEMENT

(1.) This revision is directed against the order dated 14th of August, 1995, whereby the Trial Court has allowed the application of the non - applicant Plaintiff under Section 176 of the Contract Act for custody of the hypothecated goods and issuance of warrant of possession for that purpose.

(2.) The facts of this case are that on or about 19.6.1990 the non - applicant/plaintiff filed a Civil Suit No. 35 - A/90 against the applicants for recovery of loan and prayed for a decree of Rs. 26, 64,071.25 jointly and severally. It also claimed interest on that amount as per Clause - II of the prayer clause. The plaintiff/Bank further prayed for sale of mortgaged property as provided by Order 34, Rules 4 and 5 of the Civil Procedure Code, against the applicant Nos. 1 to 5. Further prayer of the plaintiff/Bank was that the Trial Court should pass a decree for sale of movable property hypothecated with the Bank so that the decretal amount may be recovered. Further prayer was that so far as Rs. 7,52,189/- were concerned, it be held that the applicant No. 6 would be jointly and severally liable to pay that amount and a decree be passed in accordance with Clause V of the prayer clause, mentioned in the plaint.

(3.) The claim of the non - applicant/plaintiff was that the applicant Nos. 2 to 5 are the members of the partnership firm registered under the Indian Partnership Act, as M/s. Tara Rerolling Mills, Rajnandgaon. It was further pleaded that the applicant No. 6 is also responsible along with other applicants for the sum mentioned in Clause V of the prayer clause as per pleading in paragraph 16 of the plaint. The non - applicant asserted that the applicant Nos. 1 to 5 obtained a term loan on 23.2.1987 for purchase of plant and machinery for rolling mills and for construction of building, amount to Rs. 6.30 lacs. The conditions of term loan have been reproduced by the non - applicant in paragraph 3 of the plaint, which show that the Bank was authorised to create equitable mortgage of land, plant and machinery of the factory embedded to the ground and hypothecation of the machinery and other movable assets of the factory. It was further pleaded in the same paragraph that there was also a facility of cash - credit upto the hypothecation limit. Under this facility a cash credit could be granted to the applicants at the hypothecation limit of Rs. 5,00,000/. The Condition No. (b) of cash credit on hypothecation limit, provides that there shall be hypothecation of steel, ingots, billets, finished stocks, M.S. scrap and goods in process etc. There was also provision for equitable mortgage of immovable property. It is alleged that the applicants accepted the terms in respect of loan as well as cash credit loan as mentioned above and the initial agreement was entered on 23.2.1987 for a loan of Rs. 6.30 lac. As per the agreement dated 23.2.1987, the applicants deposited certain documents mentioned in paragraph 4 for creating an equitable mortgage of the property and hypothecated certain goods. However, in paragraph 5 of the plaint it is alleged that the applicants started availing the facility of each credit hypothecation limit of Rs. 5 lacs from 16.7.1987 and for this purpose, an agreement was entered into for hypothecation of steel in gots, billets finished stocks, M.S. scrap and goods in process.