JUDGMENT - S. N. VARIAVA, J. :---This is a petition taken out by the Custodian against the Karnataka Bank for a direction that the 1st respondents be directed to credit a sum of Rs. 2,75,66,822.99 into the attached account of respondent No. 2. Respondent No. 2 is Fairgrowth Financial Services Ltd. Respondent No. 2 was notified on 2nd July, 1992.

2. The Kasturba Road Branch, Bangalore of the 1st respondent had granted to the 2nd respondent an overdraft facility in a sum of Rs. 2.50 crores. As security, the 2nd respondent had executed in favour of the 1st respondent a Power of Attorney dated 1st December, 1990 and a Deed of Hypothecation dated 21st March, 1991.

3. In pursuance of this facility, the 1st respondents had allowed the 2nd respondents to withdraw the following amounts :

(a) Rs. 1.50 crores on 4th December, 1990;

(b) Rs. 0.50 crores on 31st March, 1991; and

(c) Rs. 0.50 crores on 15th October, 1991.

4. On the date the 2nd respondent got notified, under the said overdraft facility, a sum of Rs. 2,75,66,822.99 was due and payable by the 2nd respondent to the 1st respondent. It is an admitted position that after the date of the notification, the 1st respondent transferred all balances lying in all the accounts of the 2nd respondent in all the branches of their Bank to this branch. The 1st respondent thus transferred into this account a sum of Rs. 1,69,67,031.50. Under the circumstances indicated hereafter they also received lease rentals directly from various hire-purchasers of the 2nd respondent. They thus received an amount of Rs. 1,05,99,791.49 towards lease rentals. The 1st respondent then appropriated this amount of Rs. 2,75,66,822.99P. towards their dues.

5. The Custodian by his letter dated 8th March, 1993 called upon the General Manager of the 1st Respondent to furnish information regarding various accounts of the 2nd respondent and to convert all balances into fixed deposits. The 1st respondent by their letter dated 7th June, 1993 addressed to the Custodian set out which amounts were lying in fixed deposit and in which branches. They also, inter-alia, claimed that the appropriation made by them was in order. They however did not send information of what was appropriated. They also informed the Custodian that they had filed a writ petition in the Karnataka High Court which was pending.

6. The 1st respondents had, in the meantime, filed writ petition No. 12300 of 1993 in the High Court of Karnataka at Bangalore. This writ petition was against the Custodian, the 2nd respondent and various hire-purchasers. On 30th July, 1993 they obtained an ad-interim order by which the various hire-purchasers were directed to pay to the petitioners the lease amounts due under their Hire Purchase Agreements with the 2nd respondent. It is in pursuance of this order that they had managed to recover the sum of Rs. 1,05,99,791.49 from the various hire-purchasers.

7. On 25th November, 1993 the Karnataka High Court set aside the ad-interim order on the ground that the ad-interim order nullified the effect of the order passed by the Custodian under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter for sake of brevity called the Special Courts Act). The Karnataka High Court held that the proper course was to move the Custodian or this Court. I am informed that an appeal has been filed against this order. That appeal is pending. However no ad-interim or interim stay order has been obtained in that appeal.

8. On 6th December, 1993 the Custodian wrote to the 1st respondent calling upon them to furnish details of the amounts appropriated by them after the date of notification of the 2nd respondents. The 1st respondent by their letter dated 22nd November, 1993 sent particulars of all amounts received by them and/or appropriated by them. It is from these particulars that the Custodian learnt that an amount of Rs. 2,75,66,822.99 had been appropriated by the 1st respondent after the date of notifica

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