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Judgment
P. Sathasivam, J.—Aggrieved by the order of the learned single Judge dated 21.12.2005 in Application No. 3847 of 2001 in C.S. No. 231
of 1998, permitting the Advocate Commissioner for sale of item No. 2 (Plant and machineries) in the schedule, respondents 4 to 6 therein filed the
above Original Side Appeal.
M/s. Shriram Transport Finance Limited and M/s Shriram Investments Limited have filed C.S. No. 231 of 1998 against N.A.P. Alagiri Raja
and Co., and five others praying for an order directing the defendants to pay a sum of Rs. 1,31,52,250/- with interest at 21% per annum with
monthly rests on Rs. 19,00,000/- along with costs and in default, to sell the schedule mentioned property and settle the proceeds towards the
payment of the amount of the said principal, interest and costs.
Pending the suit, the plaintiffs also filed Application No. 3847 of 2001 for an order of sale of the properties mentioned in the Schedule to the
Judge''s Summons and for deposit of the amount to the credit of C.S. No. 231 of 1998. In the affidavit filed in support of the above application, it
is stated that the first respondent, viz., N.A.P. Alagiri Raja & Co., and five partners borrowed a sum from the applicants by hypothecating the
plant and machineries of Palani Sri Murugan Textiles Limited and deposited the title deeds of the property, in which the mill at Palani is situated.
The respondents could not run the mill efficiently and there were huge arrears in respect of the principal and interest due by them. The respondents
also mortgaged, by deposit of title deeds, their personal properties situated at Rajapalayam, Mettupatti since the mill at Palani was not running and
was heavily indebted to various creditors and due to the respondents creating further charge to defeat the rights of the applicants, the applicants
took out O.A. No. 908/1998 for appointment of an Advocate Receiver to take charge of the properties. By an order dated 07.07.1999, the
original side of this Court had appointed Shri. R.Sridharan, Advocate, Dindigul, as Advocate Commissioner to inspect the machineries installed in
the mill and also to take steps for upkeep and maintenance of the machineries. The Advocate Commissioner, after inspection, submitted a report
stating that machineries are rusting as they have not been put to any use for a long time and if they are not used and maintained further, the value of
the security available to the applicants will diminish considerably. On the other hand, if the mill''s properties are sold in ""as is where is"" condition
immediately, the applicants would be able to secure a good offer and thereby reduce the liability of the respondents to that extent. It was suggested
that it would be in the best interest of the applicants and the respondents to take immediate steps to sell the mill and the properties described in the
schedule to the Judge''s Summons. On verification, the applicants came to know that the highest offer was made for a sum of Rs. 80 lakhs by one
Karuppasami, Proprietor, Uma Tex, Palani. It would be in the best interest of both the parties that the said offer be accepted and the amounts
realised after the sale may be deposited to the credit of the Suit. With these particulars, the applicants prayed for an order for sale of the properties
mentioned in the schedule to the Judge''s Summons to M. Karuppusami, Proprietor, Uma Tex, Palani for a sum of Rs. 80 lakhs and deposit the
said amount to the credit of the suit in C.S. No. 231 of 1998.
In the counter affidavit filed by the respondents, it is stated that even before the suit had concluded or any decree was passed in their favour, the
plaintiffs had sought to sell the property and there is no material in the application. Hence, they prayed for dismissal of the same.
Before the said application was taken up, the Advocate Commissioner submitted a report on the condition of the machineries. According to
him, since the machineries have not been put into operation for more than 10 years, they have become rusty and old and it will be highly
uneconomical to put them into use and run it now. He has also opined that the machineries were valued and sold as scraps.
The learned single Judge, after finding that the first defendant and five partners having borrowed sums from the applicant/plaintiffs by
hypothecating the plant and machineries of Sri Palani Murugan Textiles Limited and depositing the title deeds of the property, in which the mill is
situated, the plaintiffs have the primary right to safeguard its interest over the hypothecated plant and machineries and based on the report of the
Advocate Commissioner relating to the condition of the machineries, allowed the said application and directed the Advocate Commissioner to sell
the said machineries, i.e., Item No. 2 , by public auction. Questioning the same, respondents 4 to 6 in the Application No. 3847 of 2001 have filed
the above appeal.
Even at the time of admission, Mr. R. Krishnaswamy, learned Senior counsel appeared for the respondents.
Heard the learned Counsel for the appellants as well as the learned Senior counsel for the respondents.
The only objection raised by Mr. V. Raghavachari, learned Counsel appearing for the appellants regarding the order of the learned Judge for
sale of plant and machineries is that the Court has permitted the Advocate Commissioner to fix the upset value of the machineries, whereas it is the
essential duty of the Court to fix the upset value and hence, the impugned order of the Court is liable to be set aside. Mr. R. Krishnaswamy,
learned Senior counsel appearing for the respondents submitted that even in the year 2000, the Advocate Commissioner was appointed and he has
submitted a report, which shows the condition of the machineries and stating that by keeping the same any longer, the applicant/plaintiffs would not
get anything from it, which warranted the Court to pass an order for sale of the machineries through the Advocate Commissioner. He further
submitted that the subject matter of the property being movables viz., machineries, there was nothing wrong in the procedure adopted by the
learned Judge and the ultimate order passed.
It is not in dispute that the first defendant and its partners borrowed sums from the applicant/plaintiffs and hypothecated the plant and
machineries of Palani Sri Murugan Textiles Limited. It is also not in dispute that they also deposited the title deeds of the property in which the mill
is situated. Though the applicant has filed two applications for sale of machineries as well as the immovable properties, the learned Judge has rightly
turned down the request in so far as the immovable properties is concerned and considered the application filed for sale of immovables viz.,
machineries. In this regard, it is relevant to note paragraph 6 of the report submitted by the Advocate Commissioner regarding the condition of the
hypothecated machineries, after he visited the main building and the plant and machineries on 4.3.2000. The Advocate Commissioner, in the same
paragraph, has also stated as follows :
... I was informed that the mill had not been running for the past 1 0 years prior to my inspection and some of the machineries have become rusted
and the motors attached to the machineries have been removed and kept separately....
In paragraph 13, the Commissioner has stated as follows :
I am of the opinion that under the present state of things and that the machineries have not been put into operation for more than 10 years and they
have become rusty and old it will be highly eneconomical to put them into state and run it. Under such circusmtances, the machines have to be
valued and sold as scraps.
Though Mr. V. Raghavachari, learned Counsel appearing for the appellant, by drawing our attention to para 15, has stated that all the
machineries found in the first inspection of the Commissioner were not put into operation for more than 10 years and they have become rusty and
old, according to the Commissioner, the machineries cannot be repaired and used. According to the Commissioner, the only course left open is to
sell them as scraps.
In view of the fact that the subject matter of the machineries are ordered to be sold in public auction hypothecated to the applicants for
discharge of the money borrowed, Order 38, Rule 6, C.P.C. enables the Court to order interim sale of movable property, which is subject to
speedy and natural decay, or for any other just and sufficient cause being shown, the Court may order sale of movable properties. As stated
earlier, the first defendant and its partners have obtained loan from the plaintiff for purchase of Palani Sri Murugan Textiles Limited and having
executed the deed of hypothecation for the plant and machineries of the mill, they cannot object for sale of machineries. As rightly pointed out, the
report of the Advocate Commissioner amply shows that there is just and sufficient cause to order sale of the machineries. In such circumstances,
we do not find any flaw or error in the course adopted by the learned single Judge in entrusting the work to the Advocate Commissioner, who is
acting as an Officer of the Court.
Mr. Krishnaswamy, learned Senior counsel for the respondents has also submitted that pursuant to the order of the learned Judge, the auction
was conducted on 25.02.2006, wherein the machineries fetched Rs. 31,10,000/- and the same was deposited in to the credit of the suit in C.S.
No. 231 of 1998. In the light of the factual details as stated in earlier paras, though the learned Counsel for the appellants relied on the decision of
the Apex Court reported in M.L. Mubarak Basha and others Vs. Muni Naidu, and the decision of this Court reported in reported in AIR 1930
Mad 22 (Kristamneni Kristnayya v. Karnedhan Kothari), we are of the view that the same are not helpful to the case on hand and there is no need
to refer to the details stated therein.
In these circumstances, we do not find any error or infirmity or valid ground for interference with the order of the learned single Judge.
Consequently the appeal fails and the same is dismissed. No costs. Consequently, C.M.P. No. 5818 of 2006 is also dismissed.