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19. On behalf of the custodian it was contended that the sale transaction between V.B.L. and K.N.L. is in fact a mortgage by conditional sale. The transactions between V.B.L. and K.N.L. are suspicious and the custodian is investigating the matter. The option to repurchase is to be considered along with the circumstances specially on the background of the minutes of the board meeting of V.B.L. dated 5.3.2000 and the subsequent grant of release by V.B.L. to K.F.S.L.

20. On behalf of the contesting respondent G.T.B. Mr. Janak Dwarkadas pressed three points. He contended that this Court has no jurisdiction as D.M.L. is not at all either necessary or proper party. No interest is created in favour of D.M.L. by the so called assignment. The case of equitable assignment is not pleaded. What is pleaded is that debt is impressed with trust and now a totally different case is made that it amounts to equitable assignment. (Advance notice given for raising that point is not disputed). The so called mandate does not create any equitable assignment. There is no question of contempt as the letter forming part of correspondence between the parties is on record. No stand contrary to the contents of that letter is taken. Letter is to be considered as sent to the custodian in reply to the query of the custodian wherein it was not necessary to disclose the entire stand of G.T.B against K.F.S.L. or K.N.L. If all the material documents, facts and circumstances are considered, it would be clear that giving up of option and the subsequent loss of lease hold property by K.N.L. and lease in favour of K.F.S.L. and sub-lease by K.F.S.L. are so inter linked that all the transactions have to be considered together, on the background of the minutes of the meeting of the board. Contempt, if any, is committed by the applicant by suppression of material facts and documents. The applicants have intentionally not disclosed how K.N.L, went out of picture and in its place its nominee or its own subsidiary company came in. The release deed cannot be read in isolation. The so called mandate is a well planned strategy to bring the matter to this Court. This Court would not get jurisdiction if D.M.L. is not a party and that is why it is brought in picture although no interest in its favour is created and there is no privity of contract with it. It is joined as applicant as it is a notified party. The real dispute is only between K.F.S.L. and G.T.B. The M.O.Us, got merged in the agreement of sub-lease. Application is also premature and legally untenable. The remedy of K.F.S.L. is to claim damages for breach or termination of agreement if it is wrongful. The amount of security deposit was to be adjusted on debts payable to G.T.B. by group companies and so receipt was acknowledged in the agreement.

40. In order to consider the argument of equitable assignment, it is necessary to point out that there is no pleading of equitable assignment. No doubt a notice in advance was given to respondent No. 1 that this point would be raised during the argument. However, in my view it is not sufficient especially because what is pleaded is that amount is impressed with trust. This case is given up and it is contended that the issuance of mandate by K.F.S.L. to G.T.B. amounts to an assignment in equity. The facts which make out the case of equitable assignment have to be clearly pleaded and in this case the pleading is that mandate was issued by K.F.S.L. and G.T.B. When one pleads a case of equitable assignment, he has to point out as to how it would become equitable assignment and how it gives right to the assignee to make a claim. Had equitable assignment been even in the mind of the Applicants to support their claim, then the application would not have been filed by the assignor and even if filed, the assignee would have been one of the co-applicant. The assignee according to the Applicants is not D.M.L., it is only a beneficiary. The assignee is K.N.L. and surprisingly enough K.N.L. does not approach the Court. When a particular debt is assigned, the assignor loses all interest in it and he also does not retain any legal right to sue on it. But even then he may be joined either as a plaintiff or a defendant. It is the assignee who gets the legal right and it is he who comes to the Court. This is of course in the normal course and therefore, in the normal course the assignee pleads as to how he is entitled to come to the Court as a claimant in place of the assignor who had a legal right and who assigned it to him.

It is further observed in para 7 as under :

7. This takes us to the question whether the power given to the Bank amounts in equity to an assignment of the decree or any portion thereof, to the Bank. From the power of attorney it is clear that the amount under the decree was specifically earmarked for discharge of the debts due to the Bank. It was constituted as a special fund for the said purpose. The power to realise that fund was made over to the Bank with the further authority to set off the amount realised towards the debts due to it. In other words, the power of attorney is an engagement to pay out of the particular fund the debt due to the Bank and hence the same constitutes an equitable assignment of the amount due under the decree or so much of that amount as is necessary for discharging the debts due to it. That rule is recognised in Watson v. Duke of Wellington (1830) 39 E.R. 231. There in the plaintiff, executors of Mr. Sims, had advanced a large sum of money to Marquis of Hastings on the joint bond of the Marquis and a surety. The sum due on the bond exceeded 9,000 pounds. Towards the end of 1825, the Marquis having returned from India to England, the plaintiffs made repeated applications to him for payment of the debt. The Marquis represented that he was about to receive a large share of the Deccan prize money; promised that their demand should be paid out of that funds; and begged that, in the meantime, no proceedings might be taken against him or the assets of his surety. On February 6. 1826, Mr. Allen, the solicitor of the plaintiff, again waited on the Marquis, who then stated that he had directed Col. Francis Doyle, whom he had empowered to receive his share of the prize-money, to pay the debt and costs due to the executors of Mr. Sims; and at the same time the Marquis wrote and delivered to Mr. Allen a letter addressed to Col. Doyle directing him that the executors of Mr. Sims were claimants on that fund for a bond debt with interest. From these facts the Court of Chancery came to the conclusion that there was an equitable assignment in favour of the executors of Mr. Sims of a portion of the prize-money sufficient to meet the debts due to the estate of Mr. Sims by the Duke of Wellington. To the same effect is the decision in Burn v. Carvelho (1839) 41 E.R. 265. Therein the Court of Chancery held that in equity, an order given by a debtor to his creditor upon a third person having the assets of the debtor to pay the creditor out of such fund is a binding equitable assignment of so much of the fund.

45. All these authorities considered together bring out the legal position that there must be a debt. In the present case there is no debt. There was breach of contract or termination of contract and suit for damages or recovery of money could be filed. There was no liability as against K.F.S.L. and in favour of K.N.L. K.N.L. is only assured loan by K.F.S.L. There is nothing on record to show any irrevocable authority. K.F.S.L. could withdraw the mandate at any moment and if it did so, there was nothing on the basis of which K.N.L. could enforce any liability against K.F.S.L. and therefore at the most it can be said to be a pay order and no equitable assignment as is tried to be made out. Even the authorities relied upon by the learned Counsel for the applicants do not support the claim that it amounts to an equitable assignment. These aspects of the matter reinforces earlier observation that it is absolutely necessary to make out case of equitable assignment by pleading.