MADHOLAL SINDHU Vs. OFFICIAL ASSIGNEE OF BOMBAY

JUDGEMENT

(1.) This is an appeal from a judgment of a division bench of the High Court at Bombay setting aside a decree of a single Judge of that Court. The material facts are these :-

(2.) By January 1940 Mr. Meyer Nissim (hereafter referred to as Nissim), defendant No. 4, had borrowed from defendant No. 2 bank Rs. 75,000 on the security of 26,000 shares of the first defendant company and passed two letters of hypothecation in the same terms in favour of the bank. The letter of hypothecation provided that all securities which may from time to time be held by the bank of Nissim's account shall be security for repayment of the outstanding general balance of all and every loan or account of his with the bank, including interest. It further provided as follows :-" With power to you (the bank) at your discretion to sell or a sufficient portion of such securities in the event of my not maintaining a margin of 40 per cent, on the market value of the securities for the time being or on my failing to repay the amount of any loan made by you to me on the due date of such loan," On these shares the company claimed a lien for Rs. 1,10,000. When Nissim pledged the shares with the bank, he had signed five transfer forms (Ex. A-S) in blank and had given them to the bank. Barring Nissim's signature as transferor, which was witnessed, the forms were blank. The name of the company, viz. the Assian Assurance Company Ltd. was however filled in.

(3.) Nissim was also a debtor to the bank in other accounts. He had underwritten the issue of new shares of the bank and Rs. 95,000 were due to the bank by Nissim on that account. The bank claimed a lien on those shares. Nissim had further guaranteed repayment to the bank of loans standing to the debit of Kuberdas Raghavji and Issac Mera.