Creditor and Debtor

Statutory First Charge ('SFC') was created by the operation of a provision in a legislation that granted preference to the holder of the SFC over all other creditors, including secured creditors, holding any form of security

Such SFC's derived their authority through the statute which was the precise reason why the court could not interfere in granting secured creditors rights over parties holding SFC's

Furthermore it was inconsequential if the (statutory) first charge was created prior or subsequent to the mortgage or lien of the secured creditor; it was also immaterial if the nature in the goods were changed

Statutory First Charge persevered as it attached itself onto the goods, travelled with them, and remained enforceable in a preferential manner against other secured creditors irrespective of the manner in which the goods were processed, sold, or pledged

Therefore, the SFC remained unfazed by whatever processing the goods underwent; it took precedence over all contractual liens and mortgages that may be claimed and its creation remained independent from the requirement of registration.

When considering whether a statutory due carried with it a statutory first charge, the court could take into account the object and purpose of the legislation, the language of the provision conferring the statutory due, whether a statutory right was created through the operation of the act, and whether a priority was granted for the statutory due over other creditors

Each of said considerations served as indicative factors that the legislature intended to create a statutory first charge

However said factors were a non-exhaustive list of factors and each statutory due must be assessed subjectively.

Debtor must seek the creditor.

Father and son both were advanced loan by Cooperative Society separately against separate and independent securities/sureties

Cooperative Society secured decree against respondent (father) to the extent of his own loan as also to the extent of loan advanced to his son

Validity

Order of Assistant Registrar, Cooperative Society who had decreed Cooperative Society's loan as also loan of respondent's son had not indicated in his order that loan advanced to son of respondent was "benami loan" and that real beneficiary and recipient of loan was respondent

In absence of finding of competent forum that real beneficiary of loan advanced to son of respondent was respondent, latter could not be deemed to be liable for loan advanced to his son.

Creditor and Debtor Debtor must follow his creditor to pay the debt.

Plaintiff's claim of having advanced loan to defendant also got support from the written statement of one of the defendants who admitted all averments in the plaint

Relationship of creditor and debtor' was thus, established, between plaintiff and defendant on basis of evidence on record.

Promissory note, letter of continuity, letter of lien etc. all bearing signatures of defendant remaining unrebutted with regard to contents contained therein

Relationship of creditor and debtor between parties was proved in circumstances

In absence of any contract to the contrary, debtor would be bound to seek creditor to make payment to him where he resides or carries on business for gain.

Where no overt act was alleged against creditor, debtor, held, would be bound by terms of agreement.