TMI Blog1998 (5) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the Division Bench ought not to have held that the preliminary decree passed by the Competent Court on 25-5-1980 was void and un-enforceable and accordingly we set aside the order under appeal dated 29-1-1986 by allowing the appeal with costs. - CIVIL APPEAL NO.4393 OF 1986 - - - Dated:- 8-5-1998 - B.N. KIRPAL AND S.S. MOHAMMED QUADRI, JJ. Harish N. Salve, Shanti Bhushan, Sudhir Chandra Aggarwal, R.F. Nariman, Shailendra Swarup, Ms. Bindu Saxena, Ms. Leena George, K. Ram Kumar, Ms. Asha G. Nair, C. Balasubramanian, Y. Subba Rao, Ms. Santi Narayan, Dinesh Mathur, S. Ganesh, K.J. Desai and E.M.S. Anam for the Appearing Parties. JUDGMENT Quadri, J. - This appeal, by special leave, is directed against the order of the Division Bench of Kerala High Court in M.C.A. No. 11 of 1983 passed on 29-1-1986. That was an application filed before the learned Single Judge of the High Court of Kerala ('the company Court') by the Official Liquida-tor against the Indian Bank and respondents Nos. 2 to 5 herein under section 446(2) and section 460(4) read with section 125 of the companies Act, 1956 ('the Act') and rule 9 of the companies (Court) rules, 1959 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e passed in the suit did not operate as res judicata; that on account of non-registration of the charge it was void under section 125 and that plea could be raised by the Official Liquidator as such and also on behalf of the body of the creditors in the application and also declared that the preliminary decree passed on the basis of the charge created by the company in favour of the bank against the land, buildings and machinery of the company, as set out in the preliminary decree, was void against the Official Liquidator and the creditors of the company and that the same was not enforceable against the assets of the company. 4. Shri Ram Kumar, the learned counsel for the appellant, contended that since no appeal was preferred against the preliminary decree passed in the suit filed by the bank with permission of the Company Court against the company represented by the liquidator on the basis of equitable mortgage of the company's property, it had become final, and the Division Bench could not have gone behind the decree to hold that as the charge, the basis of the decree, was not registered with the Registrar and was void, the decree itself was void; that under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the company satisfies the Registrar that it had sufficient cause for not filing the particulars and instrument or copy within that period. (2) Nothing in sub-section (1) shall prejudice any contract or obligation for the repayment of the money secured by the charge. (3) When a charge becomes void under this section, the money secured thereby shall immediately become payable. (4) This section applies to the following charges : ( a )a charge for the purpose of securing any issue of debentures ; ( b )a charge on uncalled share capital of the company; ( c )a charge on any immovable property, wherever situate, or any interest therein ; ( d )a charge on any book debts of the company; ( e )a charge, not being a pledge, on any movable property of the company; ( f )a floating charge on the undertaking or any property of the company including stock-in-trade; ( g )a charge on calls made but not paid; ( h )a charge on a ship or any share in a ship; ( i )a charge on goodwill, on a patent or a licence under a patent, on a trade mark, or on a copyright or a licence under a copyright. 7. On a plain reading of sub-section (1) it become clear that if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be entitled to execute the decree and in the event of execution of the decree, the security furnished by the Bengal Engg. Co. with the Registrar under an earlier order of the Court to the extent of ₹ 53,000 would continue as security for the decree. That decree was not registered. Thereafter, Bengal Engg. Co. went into liquida-tion and its entire assets were sold by the official liquidator. The Praga Tools Co. applied claiming to be a secured creditor to the extent of ₹ 50,000. A learned Single Judge of the Calcutta High Court held that as the charge was created by an order of the Court, it would not require registration under section 125 and that the Praga Tools Co. should be treated as secured creditor to the extent of ₹ 50,000 and was entitled to recover the amount from the Official Liquidator. We approve the principle laid down by the learned Single Judge of the Calcutta High Court. We also make it clear that an order or decree of a Court creating charge on the properties of a company has to be distinguished from a preliminary decree passed in a mortgage suit based on an unregistered charge which is hit by section 125. We shall advert to this aspect presently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as that Court may impose; (2)to entertain or dispose of ( a )any suit or proceeding by or against the company; ( b )any claim made by or against the company including claims by or against any of its branches in India; ( c )any application made under section 391 by or in respect of the company; and ( d )any question of priorities or any other question whatsoever whether of law or fact which may relate to or arise in the course of winding up of the company; and (3)To transfer to itself any suit or proceedings by or against the company which is pending in any Court (other than that in which the winding up of the company is proceeding) and disposed of the same. 12. It may be noted that these provisions have no application to any proceeding pending in appeal before a High Court or the Supreme Court. From this what follows is when a suit is instituted in the Court of competent jurisdiction with the leave of the Court under sub-section (1) and a decree is passed by that court whether on the basis of mortgage or otherwise, it would be binding on the official liquidator and no plea inconsistent with the decree passed against the Official Liquidator can be raised whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge will stand discharged and the documents of title deposited with the appellant-Bank by the respondents will be delivered to them; (4)in default of payment of the amounts, the appellant was authorised to apply to the Court for passing the final decree for the sale of the company's property and realisation of the decreed amount; and (5)in the event of the sale proceeds being less than the amount decreed, a personal decree was also passed against Defendants 2 to 5 therein for recovery of the unrealised amount. 14. The aforementioned preliminary decree was passed by the Court even though the official liquidator raised the plea in the written statement that the charge created on the company's property was void under section 125. But it may be that plea was not argued at the hearing. However, what was clear from the material on record is that no appeal was filed against the said preliminary decree by the official liquidator and the preliminary decree has attained finality. From the above discussion, it follows that the right of the respondents including the company represented by the official liquidator to deposit the decree amount was available till 28-8-1982. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Employees' Gratuity Fund. The creditors by a preliminary decree of 3-12-1977 were entitled to receive the amount secured on the property of the company; the court fixed 8-12-1988 as the date for redemption and ordered that in default of payment of the sum due by that date, the property was to be sold by public auction. On an application made on 16-2-1978, the company was ordered to be wound up by an order dated 3-8-1979. As default in payment of the decreed amount was committed, the mortgagees applied for leave of the Court under section 446 to execute the decree against the official liquidator by application dated 10-7-1981. Three contributories sought injunction against taking any further action on the ground that the charge created by the company was not registered under section 125, therefore, the mortgagees should be treated only as unsecured creditor. Their application was dismissed by a learned Single Judge. On appeal, speaking for the Division Bench of the Bombay High Court Justice Bharucha (as he then was) laid down, inter alia, the principle that the question of applicability of section 125 had to be decided on the terms of the decree - Whether the unregis-te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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