In case of hypothecation of goods, the bank shall be treated as a secured creditor and shall have preferential right of recovery in relation to other creditors.

R.R. Jain, J.

1. The appellant Rehaboth Traders, a partnership firm, having failed to discharge its liability, was adjudged as insolvent in Insolvency Proceedings No. 34 of 1991. The respondent Canara Bank had advanced loan to the appellant against Hypothecation of goods. After adjudication, as the matter was referred to the Official Assignee, the respondent Bank also lodged its claim as secured creditor in Claim No. 127 of 1991 for a sum of Rs.13,23,588.51 ps. with future interest. However, after holding an enquiry, the of ficial assignee held the respondent Bank as unsecured creditor vide an order dated 30.11.1993. Aggrieved by the said order of the of ficial assignee, the respondent Bank preferred an appeal in Application No. 140 of 1994 under Section 86 of the Presidency Towns Insolvency Act in the High Court. The learned Single Judge, by his detailed order dated 9. 1996, allowed the appeal, setting aside the order of the of ficial assignee and directing the of ficial assignee to treat the respondent Bank as secured creditor. Aggrieved by this order, the insolvent - debtor - appellant has filed this appeal.

2. The principle bone of contention placed on us on behalf of the appellant insolvent is that as at the time of commencement of insolvency, the appellant was in exclusive possession and disposition of the properties that are alleged to have been hypothecated with the respondent, the same shall form part of property of the instalment divisible amongst the creditors, and shall be made available for the pro rata distribution. In support of this contention, the learned counsel for the appellant has placed reliance upon Section 52(2)(c) of the Presidency-Towns Insolvency Act, 1909. Since the entire controversy centres around the interpretation of Section 52(2)(c) of the Act, it will be appropriate to reproduce Section 52(2)(c) as under: -

"52. Description of insolvents property amongst creditors. -(1) The property of the insolvent divisible amongst his creditors, and in this Act referred to as the property of the insolvent, shall not comprise the following particulars, namely: -

.(a) property held by the insolvent on trust for any other person;

.(b) the tools (if any) of his trade and the necessary wearing apparel, bedding, cooking vessel, and furniture of himself, his wife and children, to a value, inclusive of tools and apparel and other accessories as aforesaid not exceeding three hundred rupees in the whole.

.(2) Subject as aforesaid, the property of the insolvent shall comprise the following particulars, namely: -

.(a) all such property as may belong to or be vested in the insovent at the commencement of the insolvency or may be acquired by or devolve on him before his discharge;

.(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the insolvent for his own benefit at the commencement of his insolvency or before his discharge; and

.(c) all goods being at the commencement of the insolvency in the possession order of disposition of the insovent, in his trade or business by the consent and permission of the true owner under such circumstances that he is reputed owner there of :Provided that things in action other than debts due or growing due to the insolvent in the course of his trade or business shall not be deemed goods within the meaning of clause (c): Provided also that the true owner of any goods which have become divisible among the creditors of the insolvent under the provisions of clause (c) may prove for the value of such goods."

3. The learned counsel for the respondent Bank has repelled this contention and is also challenging the maintainability. Consequently, before dealing with the rival contentions on merits, we would deal with the preliminary objection about the maintainability of this appeal.

.4. It is strenuously argued on behalf of the respondent Bank that upon a debtor being adj