UNION BANK OF BIJAPUR Vs. BHIMRAO SHRINIVASRAO JORAPUR

JUDGEMENT

(1.) In this case, the applicant, the defendant bank, claimed to be secured creditors of one Nenchand Rayachand, now an insolvent, by reason of certain provisions in the articles of association of the bank, For instance, Art. 14 provides: "The company shall have a first and paramount lien upon all the shares of any member for all moneys from time to time due or payable to the company from him alone, or jointly with any other person or persons". It was also given power to sell the shares to satisfy the lien, then, there are other articles! such Secs.141 and 142, which allowed the company to deduct any money due to it from the shareholder out of any dividend or bonus payable to the shareholder.

(2.) Stopping there for a moment, we thinly it clear that the lien given by Art. 14 is not confined to the corpus of the shares, but covers as well the produce of the shares, viz., the dividends. Therefore, to that extent, we cannot agree with the judgment of the learned Judge, For instance, a mortgage or charge of land covers the income or rents and profits without express mention.

(3.) Now it appears that this insolvent, Nemchand Rayachand, held some partly paid up shares in the bank, and that he became insolvent, o we are told, many years ago, viz., in 1922. The bank claimed that at that date he was indebted to them in a sum of approximately Rs. 874. We are told that their claim is in respect of a money bond. I should explain that we have to rely for the facts very much on the statements of counsel, because, unfortunately, the detailed facts have not been set out in any clear documents that are at the present moment before us. It also appears, from what we are told, that the bank proceeded to put in a proof in the insolvency for the whole amount of their debt, notwithstanding the fact that they were secured creditors. Further than that, they received a dividend on their proof for the whole amount of the debt. Subsequently the present proceedings have been initiated by the Receiver in the insolvency claiming payment from the bank of the dividends due on these particular shares.