TMI Blog1945 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, the holders of debentures issued by an Indian limited company known as Agra United Mills, Ltd., and herein called "the company," to any and what priority over such debentures in respect of moneys which had been borrowed from him by the receiver appointed in a suit brought by Such respondents to enforce their security. The Subordinate Judge held the appellant entitled to priority in respect of all the property subject to the charge, whether 6xed or floating, created in favour of the debentures: the High Court limited the priority to the property Subject to the floating charge. The appellant seeks to restore the order of the Subordinate Judge, the respondents to deprive him of his priority even in respect of the property subject to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted by him, as one of grave urgency, in which the appointment of a receiver was necessary for the protection of the property It was alleged that the company had not been able to pay its staff and mill-hands for at least three months and that the mill-hands had therefore gone on strike, creating a disturbance which threatened the safety of the company's property. On the following day 1st December, 1927, upon a report made by the receiver, the Court made a further order in these terms: "The mill-hands have to be paid and from the letter of the District Magistrate it appears that the mill-hands have been promised their dues, and if they do not get their salaries then there is every chance of a riot and disturbance at the mill. The mills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court has authorised me, the executant, to contract a sufficient amount of loan and pay off the salaries of the labourers, and to run the mill so far as possible. Accordingly, I have made Seth Suraj Bhan, Rai Bahadur, who has been financier of the mill from before and has invested money in it, willing to advance to me at this time Rs. 31,000 in cash bearing interest at annas 12 per cent per month, on promise of paying back the amount after six months, so that salaries of the employees and labourers may be paid and the said Seth Sahab may take away all the movable property, such as bales of prepared yarn, grain, flour, maida (fine flour), cotton bales, packing materials, waste and other goods under preparation, i.e. , under process, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is necessary to state this agreement in full since it appears to their Lordships that the rights of the parties depend upon a proper appreciation of its effect and that the High Court has in this respect fallen into error. It is not in dispute that the sum of Rs. 31,000 was duly paid to the receiver or that this sum was applied by him in the manner contemplated by the agreement or that the goods therein referred to were proved to be the property of the lender and were in due Course removed by him. From these facts two consequences follow. In the first place, it is clear that that part of the agreement which begins With the words: "If these goods will not be proved to be the property or under lien to Seth Sahab" did not come into operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to a charge in priority to the debenture holders. It has been urged that the order does not expressly authorise the creation of a prior charge. That is true, but such priority is implicitly authorised. For, if it were not so, the order would be stultified and the property could not be 6aved. It has been further urged that there was not in fact any hypothecation. This also appears to be true. But it cannot help the debenture holders: against them an agreement to hypothecate is as effectual as an actual hypothecation. This is the construction to which the Subordinate Judge came and in their Lordships' opinion he was right. The decrees under review in this appeal were made not in the debenture holders' suit, to which reference has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
