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Judgment
Aravind Kumar, J.—1. Decree holder in E.P. Nos. 377/1985 to 382/1985 is questioning the correctness and legality of the judgment and decree passed by the Additional District Judge and Presiding Officer, Fast Track Court-IV at Raichur, in R.A. Nos. 1/2004 to 6/2004 dated 29.10.2005 whereunder appeals filed by 2nd respondent came to be allowed and order passed by the Court of Additional Civil Judge (Senior Division), Raichur, in Miscellaneous Nos. 126/1985 to 131/1985 dated 12.11.2003 rejecting the applications filed by 2nd respondent herein under Order XXI Rule 58 r/w. Section 151 of CPC came to be allowed.
Parties are referred to as per the rank in Miscellaneous Nos. 126/1985 to 131/1985.
Facts in brief which has lead to the filing of these appeals can be crystallized as under:
Second respondent in Miscellaneous Nos. 126/1985 to 131/1985 had filed suits in O.S. Nos. 102/1981 to 106/1981 and 111/1981 against 1st respondent Messrs. Krishnadevaraya Straw Board and Allied Industries Private Limited, Raichur, for recovery of money due to them contending inter alia that certain machineries had been purchased by said industry and bills raised had not been paid and on account of non-payment of amounts due suits came to be filed. Those suits having been decreed and in order to enjoy the fruits of decree, 2nd respondent therein filed Execution Petition Nos. 377/1985 to 382/1985. During the pendency of the suits, plaintiff-decree holder had obtained order of attachment on 02.05.1981 by attaching plant and machinery belonging to 1st respondent-industry and same was sought to be sold in execution proceedings and got issued sale proclamation.
Petitioner in Miscellaneous Nos. 126/1985 to 131/1985 filed separate applications under Order XXI Rule 58 r/w. Section 151 of CPC for declaration that the properties shown in the schedule annexed to the proclamation of sale issued under Order XXI Rule 66 of CPC in E.P. Nos. 377/1985 to 382/1985 are not liable for sale and they are in possession and enjoyment of the Karnataka State Financial Corporation (for short ''Corporation'') i.e., petitioner and to declare that Corporation being entitled to hold the said properties. Those six applications or Miscellaneous Petitions came to be numbered as Miscellaneous Nos. 126/1985 to 131/1985 in E.P. Nos. 377/1985 to 382/1985. Said applications were supported by the affidavit of Branch Manager of Corporation whereunder it was stated that loan of Rs. 30,00,000/- had been furnished by Corporation to 1st respondent on 28.12.1976 and communicated the same on 19.01.1977. It has been further stated that pursuant to said loan having been borrowed by 1st respondent, hypothecation deed dated 20.04.1978 and 02.09.1978 came to be executed and charge had been created thereunder over the plant and machinery and land and building in favour of Corporation. As such, it was contended that subsequent attachment before the judgment passed on 02.05.1981 would not be binding on the Corporation, since 1st respondent had first charge over the properties. By denying said contention, decree holder filed objections and contended that Corporation did not possess first charge and as such, attached properties which is sought to be sold by issuance of proclamation as contemplated under Order XXI Rule 66 be proceeded with. After considering rival contentions, executing Court by common order dated 12.11.2003 dismissed the applications filed by 2nd respondent - Corporation concluding thereunder that hypothecation of plant and machineries was subsequent to the order of attachment and as such, Corporation does not have any preferential right to claim that it has first charge over the plant and machineries including the land and buildings.
Being aggrieved by said order, 2nd respondent-Corporation preferred appeals in R.A. Nos. 1/2004 to 6/2004 before the Additional District Judge and Presiding Officer, Fast Track Court-IV at Raichur, and on re-appreciation of entire evidence tendered by the parties and after considering the rival contentions canvassed by respective learned Advocates appearing for parties formulated following points (common in all the appeals) for its determination:
i. Whether the petitioner proves that the corporation (KSFC) has right over the properties shown in the schedule of proclamation of sale issued U/o. 21 rule 66 in execution petition Nos. 377/1985 to 382/1985 and that those properties are not liable to he attached and sold in auction for recovery of the amount in execution petitions of respondent No. 2?
ii. What order?
On re-appreciation of entire evidence both oral and documentary evidence, First Appellate Court disagreeing with the finding recorded by the Trial Court held that Hypothecation Deed dated 02.09.1978 executed by industry would clearly create first charge in favour of the Corporation and communication dated 23.09.1978 would also fortify this fact and therefore, contention of the decree holder about mortgage deed having been executed on 05.07.1984 being subsequent to the order of attachment, as opined by the Trial Court to stave off the claim of Corporation was erroneous and as such, it rejected the contention of decree holder, accepted plea of the Corporation and allowed the appeals by reversing the finding of the Trial Court by the judgment and decree dated 29.10.2005. Being aggrieved by said judgment and decree, 2nd respondent in Miscellaneous Nos. 126/1985 to 131/1985 has preferred these second appeals.
It is contention of Sri Venkatesh C. Mallabadi, learned Advocate appearing for Sri Ameet Kumar Deshpande, Advocate for appellant that First Appellate Court committed a serious error in reversing the finding of Trial Court inasmuch as, hypothecation deed dated 02.09.1978 would not disclose about details of machineries attached on 02.05.1981 being subject matter of hypothecation. Ex. P9-Mortgage Deed which had also been relied upon by the Corporation is of the year 1984 i.e., 05.07.1984 and communication accompanying the said mortgage is Ex. P7 was concocted by the Corporation in collusion with the borrower so as to defeat the rights of the decree holder and as such, he contends that mortgage deed relied upon by the Corporation does not create charge over the movable i.e., plant and machineries and it is not a hypothecation in the eye of law and as such, he contends that substantial question of law formulated in the appeal memorandums would arise for consideration and prays for same being formulated, adjudicated and answered in favour of the appellant.
Per contra, learned Advocate Sri Shivanand Patil, appearing for respondent No. 2 - Corporation would support the judgment and decree passed by First Appellate Court.
Having heard the learned Advocates appearing for parties and on perusal of judgment and decree passed by First Appellate Court, it would clearly disclose that on re-appreciation of entire material evidence available on record namely, oral and documentary, First Appellate Court has noticed that under the Hypothecation Deed dated 02.09.1978-Ex. P8, 1st respondent borrower had not only mortgaged plant and machinery, accessories as found in factory premises as on the date of execution of Hypothetic Agreement but had also agreed that said mortgage would also be extended to the machinery that would be installed, erected or be brought in the factory premises for the purposes of its business. Thus, prima facie it would clearly indicate that borrower had not only executed Hypothecation Deed on 02.09.1978 but had also agreed for such other machinery that would be installed in the industry for the purpose business to be part of hypothecation.
There is also no dispute with regard to the fact that land and building where the factory premises is located had been mortgaged to Corporation by executing Mortgage Deed dated 05.07.1984-Ex. P9. It is because of this reason, First Appellate Court has rightly come to the conclusion that Corporation not only has right over machinery but also has right over items which acquired subsequent to loan granted by Corporation. In view of 1st respondent having agreed to execute such other documents in favour of Corporation for the purpose of security of loan and as could be seen from Hypothecation Deed-Ex. P8 itself indicating that borrower having agreed that plant and machinery existing or to be acquired is being hypothecated, subsequent documents executed by borrower in favour of Corporation clothe the Corporation a right to claim first charge. Since there was already charge in favour of petitioner over the plant and machinery existing in the factory premises of 1st respondent - industry, further charge created in the year 1984 would only fortify the claim of Corporation. The properties attached by virtue of attachment before judgment on 02.05.1981 would not nullify Corporation''s claim or its right to first charge which was already in existence and charge had already been created in favour of Corporation. Hence, decree holder cannot be heard to contend that those properties were not subject matter of hypothecation and at the same time contend that they had been subsequently acquired and as such attachment prevails over the first charge. In fact, witness examined on behalf of decree holder R.W. 2 has admitted that 1st respondent - industry had borrowed loan from Corporation and it was the decree holder who was supplying machinery to industry and as such he cannot plead ignorance about transaction between Corporation and borrower. This would clearly indicate that decree holder had knowledge of pledge and hypothecation of both movable and immovable properties in favour of Corporation and subsequent correspondence between Corporation and 1st respondent would also fortify said contention.
The other fact that is to be noticed by this Court is 1st respondent is not denying of having executed Hypothetic Deed and Mortgage Deed and other relevant documents in favour of petitioner which have been produced before Court below and as such, 1st respondent having executed the Hypothecation Agreement hypothecating plant and machinery in favour of petitioner for the amounts borrowed prior to date of attachment (02.05.1981), decree holder cannot be heard to contend that Corporation is colluding with the borrower or it does not have first charge.
For these myriad reasons aforestated, this Court is of considered view that contention raised by appellants cannot be accepted and finding recorded by First Appellate Court is a finding of fact not giving raise for any substantial questions of law being formulated, adjudicated and answered.
Hence, I proceed to pass the following:
ORDER
(i) Appeals are hereby dismissed.
(ii) Judgment and decree passed by Additional District Judge and Presiding Officer, FTC-IV, Raichur in R.A. Nos. 1/2004 to 6/2004 dated 29.10.2005 are hereby affirmed.
(iii) Cost made easy.