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of <h1>Court upholds bank's pledge on company assets despite lack of registration. Creditor ordered to pay specified amount.</h1> <h3>Ideal Bank Ltd. (In Liquidation) Versus Pride of India Pictures Ltd. (In Liquidation) and another</h3> Ideal Bank Ltd. (In Liquidation) Versus Pride of India Pictures Ltd. (In Liquidation) and another - TMI Issues Involved:1. Whether the petitions are barred by timeRs.2. Whether this court has no jurisdiction to entertain the petitionsRs.3. Whether there was any valid and subsisting pledge in favor of the bank and, if so, in respect of what propertyRs.4. Whether C.A. No. 327 of 1972 seeks to enforce any pledgeRs.5. To what relief, if any, is the bank entitled and against whomRs.Issue-wise Detailed Analysis:Issue No. 3:The primary question was whether there was a valid and subsisting pledge in favor of the bank and, if so, in respect of what property. The bank's claim that the outstanding balance in the cash credit account was secured by the pledge of the company's assets was substantiated by the statement of P.W. 1, W. C. Khurana, and several documents executed by the company. Exhibit P-14, an agreement dated March 26, 1946, detailed the assets pledged, including cinematographic films, exhibition rights, and assets of certain cinemas. The court found that the agreement did not need registration as it did not deal with immovable property. The charge created by Ex. P-14 over the various assets of the company by pledge was valid despite not being registered with the Registrar of Companies. The court concluded that there was sufficient description of the assets in the agreement, making the schedules unnecessary. The constructive delivery of the pledged goods to the bank was established, satisfying the requirements of a valid pledge. The court held that all the assets of the company were pledged/hypothecated or charged, excluding the leasehold rights in the various cinemas, and the debt was fully secured.Issue No. 4:This issue questioned whether C.A. No. 327 of 1972 sought to enforce any pledge. The court noted that C.A. No. 327 initially sought an order for the company to pay the bank's outstandings without explicitly seeking to enforce the security. However, C.A. No. 322 sought to enforce the security by directing the creditor to deposit all realizations made by it. The applications were amended to explicitly seek the enforcement of the securities. The court concluded that C.A. No. 327 did seek to enforce the security.Issue No. 1:This issue addressed whether the claim was barred by time. The agreement of pledge was dated March 26, 1946, and the bank was wound up in July 1954. The applications were filed in May 1972. The period of limitation stopped running after the winding-up order by virtue of s. 45-O of the Banking Regulation Act. The court found that the payment made by the company to the bank on October 29, 1949, extended the limitation period. The acknowledgment of liability extended the limitation for the enforcement of the liability, and enforcement of the security is one mode of enforcing the liability. The court held that the claim was not barred by time.Issue No. 2:This issue questioned whether the court had jurisdiction to entertain the applications. The plea of lack of jurisdiction was based on s. 45D(10) of the Banking Regulation Act, which applies only if the matter involves a proprietary right in immovable property. The court found that no part of any immovable property formed the subject matter of the pledge, hypothecation, etc. Therefore, s. 45D(10) was inapplicable, and the court had jurisdiction to deal with the applications.Issue No. 5:This issue concerned the relief to which the bank was entitled. The court directed the company to pay the bank Rs. 1,16,775.67 with interest at 6% p.a. from the date of the applications until payment. The bank was entitled to recover the amount from any asset of the company, whether in the hands of the company or its creditor, which could be identified as forming the subject matter of the deed of pledge. The bank was also entitled to the realization of its outstandings from the proceeds of the call on the contributories of the company for the uncalled capital and the shares of Vanguard Insurance Company. The creditor was directed to render a true and proper account of all its dealings with the assets of the company under the deed of mortgage to the District Judge within six weeks and to pay the surplus, if any, to the bank within two weeks of the rendition of such accounts. If the creditor failed to render the accounts, the District Judge would take necessary steps to obtain a complete account of the dealings.Conclusion:The court concluded that the company was liable to pay the bank the amount claimed, and the bank was entitled to enforce the security. The creditor was directed to render accounts and pay any surplus to the bank. The stay of proceedings before the District Judge was vacated, and the District Judge was directed to dispose of the proceedings for compromise in accordance with the law. There were no costs awarded.
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