RAMASWAMY GOUNDER J.

This is an application filed by the Andhra Bank Ltd. for an order validating the charge created in their favour by the company, namely, the Godavari Sugars and Refineries Ltd. through its managing agents, in respect of 224 bags of sugar and 21 bales of gunnies on April 24, 1952. The petition for the winding up of the said company was filed on March 14, 1952. Application No. 1628 of 1952 was also filed for the appointment of a provisional liquidator. On that application, notice was given to the company and the learned counsel who appeared for the company stated that it could not possibly oppose the winding up. That being so, the court thought that it was a fit case for the appointment of a provisional liquidator; and accordingly a provisional liquidator was appointed on that application by an order dated April 18, 1952. It may be mentioned that the company was ordered to be wound up in O.P. No. 112 of 1952 on September 29, 1952. After the appointment of the provisional liquidator on April 18, 1952 and prior to the order of winding up, the applicant bank is said to have advanced a sum of Rs. 21, 000 to the company. This company was under the management of managing agents known as the Aidco Ltd., of which one V. Butchiah Chowdary was the managing director. At a meeting of the board of directors of the company in liquidation held on January 25, 1952, it was also resolved to borrow upto Rs. 10 lakhs from the Andhra Bank Ltd., on the pledge of sugar, jaggery and gunnies of the company. It was also resolved to authorise the managing agents to execute the necessary documents to the Andhra Bank Ltd. to give effect to the above resolution. On the same date, there was a meeting of the board of directors of the Aidco Ltd. when it was resolved to authorise the managing director, V. Butchiah Chowdary, to borrow on behalf of the Aidco Ltd., as managing agents for the Godavari Sugars and Refineries Ltd., from the Andhra Bank Ltd. (vide the resolutions, Exhibits P. 5 and P. 6). Accordingly, Butchiah Chowdary, as the managing director of the managing agents, made the loan application, Exhibit P. 7, on January 31, 1952, to the Andhra Bank (Bhimavaram branch), while its head office is at Masulipatam. A loan of 3 to 4 lakhs of rupees was asked for, "for rotation of business stocks", offering as security the stocks of sugar, jaggery, gunnies, etc., and also offering the personal security of the partners of the managing agency, namely, Butchiah Chowdhary, Saraswathi Bai and Sujata Devi. On that application, the agent of the Bhimavaram branch of the Andhra Bank examined as P.W. 1, submitted his proposals by a letter of January 31, 1952, to the head office at Masulipatam. The matter was pending with the office till April 15, 1952, when the head office addressed the letter, Exhibit P. 8, to the Bhimavaram branch, advising the latter of their having tentatively sanctioned to the Godavari Sugars and Refineries Ltd., who were having their manufactory at Tanuku near Bhimavaram, a key-loan cash credit upto a limit of Rs. 50, 000 on the pledge of stocks of sugar and gunnies and on the personal guarantee of the aforesaid three persons. By a letter of April 16, 1952, the head office of the Andhra Bank further intimated the agent of the Bhimavaram branch that they had sanctioned an advance of Rs. 1, 25, 000 and that for the present, an advance up to Rs. 50, 000 was permitted. As the loan was thus sanctioned by the Andhra Bank in favour of the company, the managing director of the managing agents, namely, Butchiah Chowdary, saw the agent of the Bhimavaram branch on April 24, 1952, and executed, in conjunction with the other two persons, the security agreement, Exhibit P. 2, for a sum of Rs. 1, 23, 000 on the security of 224 bags of sugar and 21 bales of gunnies; and on the same date, they also executed a promissory note, Exhibit P. 1, in favour of the Bhimavaram branch of the Andhra Bank for Rs. 1, 25, 000. Having obtained the doc