The main legal point established in the judgment is that the rule of equity, protecting an innocent purchaser from a person in possession without notice of the pending litigation, should prevail over the rule of necessity, the doctrine of lis pendens, in the case of movables.

1. The 3rd defendant, namely the Josna Bank Ltd., is the appellant and the main question in controversy is whether the appellant is entitled to priority on the amount in court deposit or whether the plaintiff-1st respondent, namely the Asian Bank Ltd., has priority. The lower court decided the question in favour of the latter and the former has come up in appeal. The 2nd respondent before me is the 1st defendant and the 3rd respondent the 2nd defendant. The 4th respondent is the liquidator of the 1st respondent - Bank in voluntary liquidation.

2. The facts that led to the appeal, which are not in dispute, may be briefly stated. The 1st defendant had an open loan account with the 3rd defendant from 1946. While so, the 3rd defendant filed O.S. No, 156 of 1124 against the 1st defendant; and the 1st defendant filed the statement Ext. II on 1st Meenam 1124 to the effect that he would deposit in court half the amount realised by sale of timber involved in the suit. Thereafter the 1st defendant executed a document of hypothecation and pledge of goods, namely Ext. A, on 27th February 1950 in favour of the plaintiff. Subsequent thereto the 2nd defendant, another simple creditor of the 1st defendant, filed O.S. No. 154 of 1950 against the 1st defendant; and in that suit an order for attachment before judgment was passed. On 31st January 1951 the Amin went to effect the attachment, when he found the agent of the plaintiff on the spot. The said agent objected to the attachment claiming that the plaintiff had a mortgage over the goods and was in possession of the goods. The Amin reported the matter to the court and the court ultimately directed the appointment of receiver. The receiver was directed to take possession of the goods and sell them in public auction. This was done and the money realised was deposited in court. Now the contest is as to who, whether the plaintiff or the 3rd defendant, is entitled to the said amount in deposit.

3. The 1st defendant remained ex parte in the lower court and is ex parte before me. No relief is claimed in appeal against the 2nd defendant, though he is also impleaded in the appeal. The dispute is between the appellant-3rd defendant and the plaintiff-1st respondent who is now represented by the liquidator, the 4th respondent.

4. Two points have been elaborately argued before me by Mr. V. Rama Shenoi on behalf of the appellant. The first is regarding the effect of the recitals in the document executed by the 1st defendant in favour of the 3rd defendant in comparison with the recitals in the document executed by him in favour of the plaintiff. The question is whether there is any difference in the recitals and if so, what is its effect on the respective claims made by the 3rd defendant and the plaintiff to the money in court. The second point raised by the learned counsel is the effect of Ext. A, which came into being pendente lite that is, pending O.S. No. 156 of 1124. According to him Ext. A is hit by lis pendens.

5. I would straightaway dispose of the first question. The earliest document in favour of the 3rd defendant is Ext. VI dated 16th February 1946. This contains a recital at the end that a schedule of goods and materials hypothecated is also attached, though that schedule is not now before court. The next document in favour of the 3rd defendant is Ext. VII of 8th September 1947. This is also in the same printed form, the only difference being that the open loan limit which was fixed at Rs. 7500/- in Ext. VI was reduced to Rs. 5000/- in Ext. VIIA schedule is attached to Ext. VII, which mentions some logs of timber, planks, scantlings and general light wood as the properties covered by the document. This appears to be a copy of Ext. V executed on the same day; Ext. V however does not contain the schedule. For the purposes of this case I would accept the schedule in Ext. VII.

6. The document in favour of the plaintiff is Ext. A dated 27th February 1950. This document is captioned "hypothecat