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PETITIONER: UNITED BANK OF INDIA

       Vs.

RESPONDENT: B.T.W. INDUSTRIES LTD. & ORS.

DATE OF JUDGMENT:       10/12/1997

BENCH: S.C. AGARWAL, S. RAJENDRA BABU

ACT:

HEADNOTE:

JUDGMENT: (WITH CIVIL APPEALS NOS  8596 & 8597 OF 1997 arising other S.L.P.(C) Nos. 9726 of 1997 and 9792 of 1997})                       J U D G M E N T S.C. AGARWAL, J.      Special Leave granted.      These appeals  are directed  against the  orders  dated July 16,1996  passed by  the  Calcutta  High  Court  on  the applications  submitted   by  the   United  Bank   of  India [hereinafter referred  to as the appellant-Bank’] in pending appeals. The  appellant-Bank had  extended credit facilities to the  three companies  who are  respondent No.  1 in these appeals against  hypothecation of stocks, book debts movable assets and  personal guarantees  of the other respondents in the appeals. Three suits (O.S. No. 306 of 1993, O.S. No. 309 of 1993   and  O.S. No.  308 of  1993)  were  filed  by  the appellant-Bank against  the respondents  in these appeals on the original Side of the Calcutta High Court. In these suits the learned  single Judge was pleased to appoint a Receiver, inter alia, over the hypothecated movables. The Receiver was subsequently  redesignated   as  Special   Officer  and  was directed to  make an  inventory of hypothecated movables and inspect the  accounts of  respondent No. 1 in these appeals. The appellant-Bank  also submitted an application before the learned single Judge for appointment of a Charted Accountant and a  Timber Expert  to assess  the value of securities. On January 10,  1994 the learned single Judge passed decrees in all the  three suits  upon admission and awarded interest at the rate  of 6%  per annum of the decretal amount and it was directed  that   the  amount  shall  be  paid  in  quarterly instalments and  that the  defendants will  go on paying the said instalment  together with  interest on reducing balance and that  in the  event of  defendant falling to pay and two instalments, the  plaintiff-Bank will  execute the  decretal amount then  remaining due  and in  that event  the  balance decretal amount  will carry interest 16.5% per annum. It was also directed  that the Special Officer would continue until the entire  payment is  made and  if the defendants make any default as stipulated therein, the Special Officer will take possession of  t he assets charged. Since the amount claimed by the  appellant-Bank was  much more  than  the  amount  of

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decree passed in each suit, the appellant-Bank filed appeals against the  said decrees passed by the learned single judge before the  Division Bench  of the  High Court.  In the said appeals the  appellants-Bank   has challenged the decrees on (i) the  quantum of  decree; (ii)  the rate of interest, and (iii)  the   direction  for  payment  of  decretal  dues  by instalments. It appears that the defendants-respondents have failed to  pay the  dectetal dues as directed by the learned single  Judge  and  the  appellant-Bank  filed  applications wherein the  appellant-Bank has  prayed  that  "the  Special Officers be directed to take possession singly or jointly of the suit  properties being  the securities  of the Bank with the direction to appoint Timber Expert, Chartered Accountant and Engineer  as the  Special Officer  (s) may  deem fit and proper for  the purpose  of making  meaningful and  complete inventory about  quality, quantity  and realisable  value of the  properties".   The  said   applications  filed  by  the appellant-Bank have  been disposed  by the Division Bench of the High Court by the impugned judgment dated July 16, 1996. The High  Court has  rejected the  said applications  as not maintainable and has observed:-      "Upon    consideration    of    the      contextual we  deem it expedient to      record that  in the  event of there      being a  challenge to  the  decree,      question of  further order from the      Appellate Court on the basis of the      decree itself  does not  and cannot      arise. The  Appellant shall have to      exercise it option, to with, either      to  accept   the  decree  and  then      proceed to  take steps  to  execute      the  decree  or  prefer  an  appeal      against the  decree  the  appellant      having  chosen  the  second  course      ought not to be allowed to move the      Appellate  Court   with   such   an      application which  is solely  based      on the  decree  as  passed  by  the      Learned  Trial   Judge.  Court  can      appreciate the  blowing of  hot  or      hotter but not blowing hot and cold      and appropriate  and  reprobate  at      one in  the same  time.  Since  the      decree is  under challenge question      of obtaining  any benefit under the      decree does not arise."      Shri  V.R.  Reddy,  the  learned  Additional  Solicitor General, has  submitted that  the High Court was in error in holding  that   the  appellant-Blank   could  not  move  the application before the Appellate Bench of the High Court for a direction  to the  Special Officers  to take possession of the suit  properties during the pendency of the appeals. The submission is that such a direction is necessary in order to safeguard the security for the advance that was furnished by the residents  to the appellant-Bank and that the High Court was in  error in  holding that such an application could not be moved  in a  pending appeal. Shri Shrish Kumar Misra, the learned counsel  appearing for  the respondents, has, on the other hand,  supported the  impugned judgment  of  the  High Court and  has  urged  that  since  the  appellant-Blank  is seeking to  enforce a  direction  contained  in  the  decree passed by the learned single Judge the proper course for the appellant-Blank was  to move  for the  execution of the said decree and  such an  application could  not be  moved in the

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appeals filed against the decree.      We find it difficult to accept the aforesaid submission of Shri  Misra.  since  the  claim  of  the  appellant-Blank exceeds the  amount for  which the decree had been passed by the learned  single Judge  and the  appeal  relates  to  the balance amount  of the said claim of the appellant-Blank and the security  furnished by  the respondents  is towards  the entire claim,  the appellant-Blank,  in order to protect its interest as  regards the  claim  in  respect  of  which  the appellant-Blank has  filed the  appeals, could  have  sought directions from  the Appellate  Bench of  the High  Court to direct the  Special Officers  to take possession of the suit properties which  are the securities for the appellant-Blank so that the said securities remain available in the event of the appellant-Blank succeeding in the appeals. The fact that the appellant-Blank  could seek  such a  direction by moving for execution  of the  decree passed  by the  learned single Judge could  not, in  our opinion,  preclude  the  Appellate Bench of the High Court from giving an appropriate direction during the  pendency of  the appeals in order to protect the interest of the appellant-Blank.      As regards  the preparation  of the  inventory  of  the stock of timber and appointment of a Timber Expert to assist the Special  Officers for  the purpose, it has been urged by Shri Misra that the said inventory had already been prepared by  the  Special  Offers  and  no  further  inventories  are required to  be  prepared.  In  this  context,  the  learned additional Solicitor  General has  submitted that  after the making of  the said  inventories there has been considerable change  inasmuch   as  the   goods  mentioned  in  the  said inventories have been sold and, therefore, fresh inventories are required  to be  prepared and  that the appointment of a Timber Expert  to assist  the Special  Offers would enable a meaningful and  complete inventory  about quality,  quantity and realisable  value of the suit properties being prepared. Having regard  to  the  fact  that  the  appellant-Blank  is seeking direction  that the  Special Officers be directed to take possession  of the  securities, including  the stock of timber, the  High Court,  if it  gives such a direction, may also  consider   the  request  of  the  appellant-Blank  for appointment of  a Timber Expert to assist the Special Offers in preparing  an inventory  of the  stock of timber of which possession is  taken by  them in  pursuance of the direction given by the High Court.      The  appeals  are,  therefore,  allowed,  the  impugned orders of  the Appellate  Bench of  the High  Court are  set aside and  it is directed that the applications submitted by the appellant-Blank for direction to the Special Officers to take possession  of the  securities and for appointment of a Timber Expert to assist the Special Officers for the purpose of preparing  an inventory  of  stock  of  timber  shall  be considered by the High Court merits. No orders as to costs.