1986 INSC 0071
                                             United Commercial Bank

                                                           Vs

                            Municipal Corporation of Greater Bombay and Others

                                          Civil Appeal No. 1105 of 1986

                                              (B. C. Ray, A. P. Sen JJ)

                                                      12.03.1986

                                                        ORDER

A. P. SEN, J. -

1. This Court by its order dated August 29, 1985 made a direction to the effect that before making
any order of payment of Rs. 21,68,000 to the Municipal Corporation, the learned Judges should
address themselves afresh to the question of priority of charges, and the main controversy between
the parties in respect of the true scope and effect of Section 212 of the Bombay Municipal
Corporation Act, 1888. We are distressed to find that despite the clear direction, the learned Judges
should have refrained from going into the question of priority of charges since it involved
adjudication of the rival contentions of the parties. Instead of going into the question of priority of
charges, they have left the question to be determined in the suit brought by the plaintiff-Bank. We
do not think that this is a satisfactory way of dealing with the question remitted. That virtually
amounts to decreeing the claim of the Municipal Corporation without a suit being brought. They
then proceeded to make the same order as before.

2. We accordingly set aside the order of the Division Bench and remit the matter to the High Court
for determination of the controversy between the parties as to whether the Municipal Corporation
had a prior right for payment of the aforesaid amount of Rs. 21,68,000 by reason of Section 212 of
the Bombay Municipal Corporation Act, 1888.

3. We are informed that the amount of Rs. 21,68,000 is invested with the plaintiff-Bank in a fixed
deposit for six months. We think that it would be just and expedient to allow the money to remain
with the plaintiff-Bank till the question remitted is determined. The learned Attorney-General
appearing for the plaintiff-Bank undertakes that the plaintiff-Bank will keep the money in a fixed
deposit for a term of six months in the first instance and renew the same for fresh term of six
months each and also agree to pay interest at the rate or 12% per annum with six monthly rest. The
learned Attorney-General further undertakes that the plaintiff-Bank will place the money at the
disposal of the Receiver and whichever party succeeds would be entitled to the interest accused
thereon. In the event the High Court upholds the contention of the Municipal Corporation, it would
recall the money from the plaintiff-Bank irrespective of the term of deposit.

4. The result is, therefore, the appeal succeeds and is allowed. The order passed by the Division
Bench of the High Court is set aside and the matter is remitted to the Division Bench for a decision
afresh.

5. No costs
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