BHARAT NIDHI LTD. versus TAKHATMAL & ORS.

Citation: [1969] 1 S.C.R. 595 · Decided: 07-08-1968 · Supreme Court of India · Bench: S.M. SIKRI · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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595 
BHARAT NIDID LTD. 
v. 
TAKHATMAL & ORS. 
August 7, 196,8 
[S. M. SIKRI, R. S. BACHAWAT AND K. S. HEGDE, JJ.] 
Debtor and Creditor-Power of attorney coupled with endorsement 
on bill by debtor in favour of creditor-Equitable assignment of future 
debt-If valid. 
The appellant-Bank, agreed to finance the contracts undertaken by M. 
and to advance monies against his bills for supplies under the contracts . 
. For the purpose of caTrying out this arrangement M executed an irrevoc· 
able power of attorney in favo1<r of the appellant authorising the latter 
to re.ceive all monies due or to become due to M in respect of pending or 
future contracts. M made a bill, endorsed it in fayour of the appellant 
for collection, and handed it over to the appellant for collection. 
Before 
the appellant received the payment, the amount under the bill was attached 
by the first respondent in execution of a money decree obtained by him 
against M. The appellant filed a suit for a declaration that he was the 
assigoee of the bill and the first respondent had no right to attach it. 
The suit was decreed, but in appeal, the High -Court dismissed the suit. 
In appeal, on certificate, this Court : 
HELD : The appeal must be allowed. 
The power of attdrney coupled with the endorsement on the bill was 
a clear engagement by M to pay the appellant-Bank out of the monies 
receivable under the bill and amounted to an equitable assignment of the 
fund by way of security. 
The obvious intention of the parties was to 
provide protection for the lender and to secure repayment of the loans. 
\Vith that object in view the lender was authorised to receive payment 
of the loans. 
As the lender bad an interest in the funds the power of 
attorney was expressed to be irrevocable. [597 D, HJ 
There can be a valid equitable assignm.ent of future debts. 
A pay 
order is revocable mandate. 
It gives the payee no interest in the fund. 
An assi211meat creates an interest in the fund and is not revocable. Read 
in the light of the power of attorney the endcirsement on the bill created 
an interest in a specific fund and was irrevocable. 
There was thus a 
sufficient equitable assignment of a specific fund in favour of the appel-
lant-Bank. [598 H; 599 BJ 
Loonkaran Sethiya v. State Bank of Jaipur, 
[1969J 1 S.C.R. 
1'.)2 
followed. 
Palmer v. Carey [1926J A.C, 703 at 706; Tai/by v. Official Receiver, 
[1888] 13 A.C. 523, applied. 
Jagabluii Lallubhai v, Rustamji Nauserwanji, 
[1885] I.L.R. 9 Born. 
311, referred to. 
CIVIL APPELLATE JURISDICTION: 
Civil Appeal No. 133 of 
1965. 
Appeal from the judgment and decree dated February 17, 
1962 of the Madhya Pradesh High Court in First Appeal No. 89 
of 1959. 
L13 Sup. Cl/68-7 
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596 
SUPREME COURT REPORTS 
[1969] J S.C.R. 
S. N. Anand, for the appellant. 
S.S. Shukla, for legal representatives for respondent No. I. 
B. C. Misra and M. V. Goswami, for n;spondent No. 2. 
The Judgment of the Court was delivered by 
Bachawat, J. 
M. R. Malhotra was working as a contractor 
to the military and other authorities. He needed funds for the 
execution of his contract,. 
The appellant-Bank formerly known 
as the Bharat Bank Ltd., agreed to finance the contracts and to 
advance monies to Malhotra againS't his bills for supplies under 
the contracts. For the purpose of carrying out this arrangement 
Malhotra executed an irrevocable power of attorney in favour of 
the appellant on July 13, 1946. 
The power of attorney rcci1ed : 
"Whereas we arc working as contractors to the Government in its 
various department' and have entered into certain contracts and 
will in future enter into other contracts and whereas an agreement 
dated 13-7-1946 has been made between us and the B~arat Bank 
Ltd., in pursuance of which the attorneys have agreed to finance 
contracts and to advance us sums of money, against supply bills 
for payments to be received by us under the contracts issued by 
the Government in various departments on conditions mentioned 
therein; and whereas we, for the purpose of carrying out the terms 
of the said arrangement more effectively and to secure the interest 
of the attorneys arc desirous of appointing the Bharat Bank Ltd., 
as our lawful attorneys in all matters relating to the receipt of all 
payments under the contracts made or to be made hereafter." The 
document appointed the appellant to be the attorneys of Malhotra 
"to present and submit supply bills regarding our contract' t

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