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Raja Bahadur Motilal Shivlal Vs. the Poona Cotton and Silk Mfg. Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 62 of 1916
Judge
Reported inAIR1917Bom151; (1917)19BOMLR602; 41Ind.Cas.246
AppellantRaja Bahadur Motilal Shivlal
RespondentThe Poona Cotton and Silk Mfg. Co. Ltd.
DispositionAppeal dismissed
Excerpt:
.....effected under another court's order pending suit-transfer ineffective against parties to suit-suit on mortgage-company-liquidation of the affairs of company-liquidators authorised to create charge-charge when created gains no priority over claims of parties.;pending a suit in the bombay high court by the first mortgagee to recover the money due from the mortgagor, a limited liability company, the affairs of the latter were ordered to be compulsorily wound up. the suit, however, was allowed to proceed with the leave of the court. subsequently, the liquidators applied to the poona district court, in which the liquidation proceedings were going on, for sanction to raise rs. 25,000 for costs of litigation on the security of the assets of the company except the goods pledged to the..........with this suit against the company in liquidation. subsequently, the liquidators applied to the poona district court in which the liquidation proceedings were going on for sanction to raise rs. 25000 for costs of litigation on the security of the assets of the company except the goods pledged to the plaintiff. on this application both the plaintiff and the second mortgagees contended that the sanction should not be given so as to affect their security as the ' assets ' would not include the interests in the property held by the mortgagees. the district judge, however, on the 22nd november 1915, gave the liquidators the sanction and apparently decided that the mortgaged property was assets which could be charged. the liquidators, thereafter, on the 10th july and the 19th august 1916,.....
Judgment:

Basil Scott, Kt., C.J.

1. This is a mortgage suit instituted in this High Court by the present appellant against the mortgagor, the Poona Cotton & Silk Manufacturing Co. in liquidation, the Poona Bank, the second mortgagees and the Poona Swadeshi Company.

2. On the 9th October 1915, leave was obtained from the Court for the plaintiff to proceed with this suit against the Company in liquidation. Subsequently, the liquidators applied to the Poona District Court in which the liquidation proceedings were going on for sanction to raise Rs. 25000 for costs of litigation on the security of the assets of the Company except the goods pledged to the plaintiff. On this application both the plaintiff and the second mortgagees contended that the sanction should not be given so as to affect their security as the ' assets ' would not include the interests in the property held by the mortgagees. The District Judge, however, on the 22nd November 1915, gave the liquidators the sanction and apparently decided that the mortgaged property was assets which could be charged. The liquidators, thereafter, on the 10th July and the 19th August 1916, executed two documents of charge for Rs. 10,000 each in favour of the present plaintiff reciting the decision of the District Judge and agreed that upon the sale of the mortgaged premises the sums so charged and all interest due thereon should be payable out of the sale proceeds in priority to all other payments.

3. On notice of motion for sale of the mortgaged properties made in this suit on the 17th November 1915, an order had been passed by consent on the 13th March 1916 for sale of the mortgaged properties by the liquidators reserving the contentions of all the parties. The surplus sale-proceeds after satisfaction of the plaintiff's mortgage claim in the suit amount to Rs. 81,000 or thereabouts and the plaintiff now claims by virtue of the documents of charge to be paid the amount secured thereby in priorty to the claim of the second mortgagees, the Poona Bank.

4. Kemp J. has decided that the Bank as second mortgagees have priority on the ground that the District Judge had no jurisdiction to sanction the first charge of mortgaged property as assets of the Company in liquidation to the prejudice of the mortgagees.

5. It is not contended that the decision of the learned District Judge can be supported as a correct decision in law but the appellant relies upon it as effective as an estoppel because the second mortgagees appeared before the District Judge and did not appeal against his decision.

6. It appears to us that whether or not the decision is binding as a sanction in face of the mortgagees' protest to the charging by way of first charge assets already mortgaged, the second mortgagees are as parties to the pending mortgage suit protected by Section 52 of the Transfer of Property Act, against any postponement of their security by the charges created pendente lite, by the liquidators, for the authority of the District Court in Poona cannot affect orders in a pending suit in the Bombay High Court. We cannot hold that the liquidators' charges were transfers in execution of an order of a Court within the scope of Section 2(d) of the Transfer of Property Act. The Poona Court's sanction was not an order capable of execution but merely an authority to the liquidators to act in a certain manner if occasion should arise.

7. We affirm the order of the lower Court and dismiss the appeal with costs.


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