Judgment

DESAI, J. :- First respondent United Industrial Bank Limited (Bank for short) having its registered office at 7, Red Cross Place, Calcutta filed Suit No. 1508 of 1981 on the original side of the Bombay High Court against the appellant - The Cotton Corporation of India Limited (Corporation for short) and one Tapan Kumar Ghosh, who at the relevant time was the Chief Branch Manager of the Worli Branch of the Bank and defendant No. 3-Bradbury Mills Limited, an existing Company within the meaning of the Companies Act, 1956 carrying on business at Maulana Azad Road, Jacob Circle, Bombay praying for a declaration that the acceptance and / or co-acceptance of the bill of exchange and / or hundies listed in Exhibit K by second defendant Tapan Kumar Ghosh for and on behalf of the Bank was null and void and not binding on the Bank and calling upon the Corporation to deliver up to the Court the disputed bills of exchange and / or hundies for the purpose of cancellation and for a direction cancelling the same. In this suit the Bank took out a notice of motion No. 1156 of 1981 seeking to restrain by an interim injunction the Corporation from enforcing any claim. whatever in any form or from relying on or ,giving effect to the bills of exchange or hundies involved in the dispute for the purpose of any suit or other proceedings including winding up proceedings under the Companies Act, 1956. and/or the Banking Regulation Act, 1949 against the Bank. Notice of motion also included a prayer for an interim injunction restraining the defendants in any manner whatsoever either endorsing or negotiating or transferring the said bills of exchange or hundies and for appointment of a receiver to take custody of the bills of exchange and hundies listed in Exh. K. An ex parte ad interim injunction was granted as prayed for. When the notice of motion came tip for hearing, the learned Judge made the following order :

"...........Mr. Chagla confines prayer (a) only to the filing. of winding tip petition by Defendants Nos. 1 and 3. He presses prayer (b) in full. Notice of motion as against the Defendant No. 1 dismissed. The Notice of Motion made absolute in terms of prayer (a) in so far winding or is concerned as against the defendant No. 3. so far as prayer (b) is concerned, the bills are in the possession of the Ist Defendant and there is no question of other defendants negotiating the same.

Notice of Motion dismissed as regards prayer (b) also against Defendants 2 and 3 ..........."

2. The Bank having been dissatisfied with the rejection of the Notice of Motion against the Corporation preferred Appeal from an order No. 527 of 1981. A Division Bench of the Bombay High Court allowed the appeal and issued interim injunction restraining the Corporation from presenting a winding up petition, the order being in the same terms as made against the 3rd defendant by the learned single Judge. The correctness and validity of this order is impugned in this appeal.

3. As the suit is pending awaiting adjudication on merits, every attempt would be made by us to avoid any expression of opinion on the merits of the suit. The few facts which we propose to set out are for the purpose of understanding and appreciating the contention only, the correctness or otherwise of the allegation of facts being immaterial for the present purpose.

4. The Corporation is engaged in the business of purchasing and selling cotton to textile mills in India. The policy of the Corporation appears to be to sell cotton against cash payment but in some cases to accommodate the textile mills the sale is effected on credit against acceptance of usance bills co-accepted by the bankers of the textile mills guaranteeing payment on due dates. 3rd defendant Bradbury Mills Limited is alleged to have purchased cotton of the aggregate value of Rupees 45,75,000/- and in payment of the price issued 16 usance bills. The 3rd defendant by its letter dated May 21, 1981 had informed the Corporation that the Bank ha