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TMI Blog2010 (2) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... of plant, machinery and other property, for a sum of Rs. 250 lakhs on 16-1-1996, in favour of the first respondent M/s. Murudeshwar Foods and Exports Ltd. (in liquidation). And another loan of Rs. 50 lakhs as on 8-3-1996, to enable it to acquire the assets of M/s. Binaga Ice Cold Storage (P.) Ltd., Binaga, Karwar. The charges created in respect of the above borrowings were registered with the Registrar of Companies ('the RoC') at Bangalore. 3. The first respondent is said to have defaulted in the repayment of the loans. The applicant-bank had therefore, raised a dispute under section 70 of the Karnataka Co-operative Societies Act, 1959 (hereinafter referred to as "the KCS Act" for brevity). An order of attachment before judgment was said to have been passed by the Joint Registrar of Co-operative Societies, Belgaum, against the first respondent at the instance of the applicant as per order dated 7-12-1996. Accordingly, the properties furnished by the first respondent as security for the loan transactions were duly attached. 4. The first respondent had thereafter filed a petition under section 433(a) and (f) of the Companies Act, 1956, seeking voluntary winding up of the company b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g been offered on behalf of the company in liquidation as to there being no authority to borrow in the first instance, in the absence of any resolutions of the company and he has hence opined that the particulars furnished in Form No. 17 may not be false particulars. It is further opined by the Registrar of Companies that action, if any, to be initiated against the respondent-directors would be by the Official Liquidator and not by the office of the Registrar of Companies. 8. Shri Madhusudhan Naik, senior advocate appearing for counsel for the applicant contends that under the provisions of the Companies Act-it is mandatory to register every charge created for the purpose of borrowings by a company. The same is registered with the Registrar of Companies and is entered in the Register of Charges. The payment or satisfaction of any such charge should also be reported within 30 days of such payment or satisfaction. The Registrar is, in turn, required to issue a notice to the holder of the charge to show cause as to why payment should not be recorded. It is stated that when the applicant found from the statement of affairs filed on behalf of the respondent-directors before the Officia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 with the Registrar of Companies while also informing the authority of the criminal acts. It is claimed that the Registrar of Companies accepted their contention that the charge created was unauthorised and accordingly, registered the satisfaction of charge. It is further claimed that as there is no provision in the Act, to rectify a charge wrongly created the above mode was adopted to nullify the invalid charge. It is sought to be admitted that the charge was not satisfied by repayment of the loan-as no such loan was legally or validly created. 13. Shri Naik, would submit that as is evident from the above stand of the respondents, there is no denial of the loan transactions having been created and the same not having been discharged. As there was no such explanation forthcoming insofar as the declaration made in the statement of affairs is concerned, the respondents, by their patent admission in the proceeding, render themselves liable for criminal prosecution for having wilfully made false statements before this court. 14. Shri Naik would then submit that insofar as the office of the Registrar of Companies is concerned, as per the report now submitted by the Registrar of Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of respondent Nos. 3 to 5 and 7 to 9 that it was latently discovered by the board of directors after a special audit carried out through an independent firm of chartered accountants of the criminal acts of malfeasance and misfeasance by its two officers V.V. Kamath and S.R. Naik, including the borrowing of Rs. 3 crores from the applicant on the basis of false and forged board resolutions. It is further alleged that they were acting in active connivance with the bankers of the company as well as the very chairman as well as the managing director of the applicant-bank, namely, G.T. Hegde and Sreenivas Prabhu, respectively. A criminal complaint has been instituted in this regard. 23. The company had also taken steps to intimate and call upon the applicant to cancel the invalid transactions. In spite of which further transactions having been entered into by the applicant-bank with the errant directors by way of hypothecation of motor vehicles of the company clearly establishes the unholy nexus alleged. 24. It is pointed out that a further pointer to the applicant-bank having actively conspired in bringing, about the illegal loan transactions is evident from the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 28-7-2005, in C.A. No. 366 of 2004. That he has assigned reasons in support of the findings in the report submitted. It is contended that action against the office of the Registrar of Companies is not tenable as the alleged offences committed under sections 628 and 629 of the Act can only be by the officers of the company. Secondly, in terms of section 635A, no proceeding shall lie against the officers of the Government in respect of anything done in good faith in pursuance of the Act. The action of the office of the Registrar of Companies are sought to be justified as being in accordance with law. 30. In the light of the above, it would be seen that the present application is a reiteration of the application filed earlier by the very applicant in C.A. No. 366 of 2004 disposed of on 28-7-2005. From a perusal of the earlier order this court had prima facie opined that the two charges created on 16-1-1996 and 18-3-1996, respectively, in respect of the assets of the company were duly registered with the Registrar of Companies. However, on the question whether there was compliance with section 138 of the Act by the Registrar of Companies in having entered the discharge and satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id and hence, rectification of the same under section 141 of the Act did not arise. But it was only by way of abundant caution, the said forms were filed which were duly acted upon by the Registrar of Companies. And it is on that basis that the statement of affairs had been filed. However, from a perusal of the statement of affairs and List E "unsecured creditors" found at page 40 of the application, there is a declaration to the following effect. "Includes Rs. 300,00,000 (rupees three hundred lakhs only) covered as secured in company's books but treated as unsecured since the security offered stands satisfied". This is a false and incorrect statement and is established on the admitted position as indicated in the statement of objections of the respondent-directors. The specious plea as to the charges itself being invalid is not tenable. This aspect of the matter though peripherally addressed by the court earlier, the issue was not taken to its logical conclusion. 36. The second aspect of the matter is the irregular proceedings before the Registrar of Companies. It is claimed that there are no records available to ascertain whether notice was issued of the filing of Form Nos. 13 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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