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TMI Blog1973 (3) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... the Civil Judge at Dharwar and the pleadings shall be referred to as the plaint and written statements. The plaintiff is the Bank of Maharashtra and the suit is filed for recovery of Rs. 1,97,343-01 with future interest and costs by sale of mortgaged properties belonging to the first defendant and if necessary by applying for a personal decree against such of the defendants as are liable. The case of the plaintiff is briefly as follows : The planitiff is engaged in banking business. Defendant No. 1 was a company engaged in the business of manufacturing paper and mill board Defendants Nos. 2, 3 and 4 are members of the board of directors of defendant No. 1 and defendant No. 2 is its chairman. That in the year 1964 defendant No. 1 was being managed by a firm of managing agents, called M/s. Paranjape Shah & Co., and defendants Nos. 4 and 5 were partners of the said firm. That in the year 1964 defendants Nos. 2 to 5 acting on behalf of defendant No. 1 and on their own behalf, opened a cash credit account in the name of defendant No. 1 and borrowed a sum of Rs. 1,50,000 in order to pay the price of the machinery bought by defendant No. 1. In connection with the said loan, defendants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endant No. 7. Defendant No. 6 pleaded that there was collusion amongst defendants Nos. 1 to 5 and 7 that no personal decree could be passed against it, as it was in possession of the assets of defendant No. 1 under the agreement dated July 17, 1964, and it had filed a suit for specific performance of the said agreement in O. S. No. 12/67. Defendant No. 7 pleaded that the suit mortgage was not valid and binding. After defendant No. 1 was ordered to be wound up and the official liquidator assumed his duties, an additional written statement was filed and the principal plea raised in that written statement was that the equitable mortgage was not enforceable against the official liquidator as it had not been duly registered with the Registrar of Companies as required by the Act. On the basis of the above pleadings, the following issues have been framed: 1.Whether the promissory note dated July 27, 1964, is executed by defendants Nos. 2 to 5 and if so, is it by persons validly authorised as per provisions of the Companies Act ? 2.Whether the agreement of hypothecation dated May 20, 1964, is executed by defendants Nos. 1 to 5 and if so, is it by persons validly authorised as per pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble mortgage. Exhibit P-5 is the extract of the record of rights relating to the land of defendant No. 1. Exhibit P-6 is the copy of the equitable mortgage bearing the seal of the Registrar of Companies. Exhibits P-7 to P-11 are statements of account of the cash credit account under which moneys were advanced to defendant No. 1 for repayment of which exhibits P-1 to P-4 came to be executed. From exhibit P-11 it is seen that on August 1, 1969, a sum of Rs. 1,94,159.38 was due under the said account to the plaintiff. Exhibit P-12 is an acknowledgment dated June 14, 1967, signed by one So-devar-the (sic) on behalf of defendant No. 6 which was then managing the affairs of defendant No. 1 stating that on December 31, 1966, a sum of Rs. 1,47,872.76 was due under the cash credit account in question. P.W.-1 has further deposed that under the articles of association of defendant No. 1, defendant No. 1 was empowered to borrow money for its business through its directors. Article 115 in exhibit P-15, which is the printed memorandum of association and articles of association of defendant No. 1, is relied on in support of the above statement. P.W.-l has further deposed that in exhibits P-14 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o existence. In fact no argument was addressed on the above point at the time of the hearing. Hence, it is unnecessary to deal with the evidence of D.W.-1, Parkhe Sudhakar, one of the partners of defendant No. 6, in the course of which he has disowned the liability of defendant No. 6 to discharge the suit liability. The plaintiff is not, however, estopped from recovering the amount from the assets of defendant No. 1. Issue 9: The above issue relates to the liability of defendants Nos. 5 and 7. Defendant No. 5 has no objection for a decree being made as can be seen from the written statement. Defendant No. 7 claims to be the subsequent mortgagee. His rights are, therefore, subject to the rights of the plaintiff who is a prior mortgagee. Issue 10: This issue relates to the relief to which the plaintiff is entitled. I shall deal with this at the end of this judgment. Additional Issues Nos. 1 and 2 : These two issues were framed by this court after the case was withdrawn to the file of this court under section 446 of the Act. They arise out of the additional written statement filed by the official liquidator in which he has pleaded that the mortgage created by exhibit P-4 is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention. Section 125 prescribes only the time within which the particulars of a mortgage have to be filed and does not prescribe the time within which the Registrar should register it. Secondly, clause (b) of section 141(1) empowers the court to extend the time on an application filed by the company or any person interested in the mortgage or charge being registered, but not by the Registrar. What all a company is expected to do under section 125 is to file the particulars in time. The act of registration has to be performed by the Registrar. If there is delay in registration then the only consequence may be that the registration may not prejudice any rights acquired in respect of the property before the mortgage or charge is actually registered. But it cannot be said that the registration itself is ineffective for all purposes. The argument urged on behalf of the official liquidator may be repelled on another ground in this case. Exhibit P-21 is the certificate of registration issued under section 132 of the Act. Section 132 reads : "132. Certificate of registration.-The Registrar shall give a certificate under his hand of the registration of any charge registered in pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derstood it, when once the certificate has been given the grantees are safe. Though one can see that this may cause great hardship to a person who gives credit to the company in reliance on a defective register, one can also see that equal hardship would be caused to secured creditors if their security was to be upset for reasons connected with the action of persons over whom they had no control. For these reasons I take the view which was taken in In re Yolland, Husson and Birkett Ltd. [1908] 1 Ch. 152 (C.A.) and Cunard Steamship Co. v. Hopwood [1908] 2 Ch. 564 (Ch. D.) that the giving of the certificate by the registrar is conclusive that the document creating the charge was properly registered, even if in fact it was not properly registered". While construing section 95(5) of the Companies Act, 1948, which is similar to section 132 of the Act, the view expressed by Scrutton L.J. in the case referred to above has been followed in In re Mechanisations ( Eaglescliffe) Ltd. [1965] 35 Comp. Cas. 478 ; [1966] Ch. 20 (Ch. D.) and In re Eric Holmes (Property) Ltd. (In Liquidation) [1965] 35 Comp. Cas. 811 [19651Ch. 1052 (Ch. D.). In Benares Bank Ltd. v. Bank of Bihar Ltd. [1947] 17 Com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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