9911796707
|
Home
Issues Involved:
1. Whether the petitioner is a secured creditor. 2. Validity of the charge creation due to non-registration under the Indian Registration Act. 3. Allegation of fraudulent preference under sections 531 and 531A of the Companies Act. Issue-wise Detailed Analysis: 1. Whether the petitioner is a secured creditor: The petitioner, along with his father and brother, owned Swiss Hotel, Delhi, and sold it to M/s. Oberoi Hotels (India) Pvt. Ltd. to clear the company's debt to the Central Bank of India. The petitioner claimed that the company agreed to create a mortgage or charge on its Indore property in favor of the petitioner and his family. A power of attorney was issued to the Central Bank of India to realize the sale proceeds and clear the company's debt. On 19th December 1967, an agreement was executed to create a charge on the company's Indore property. The official liquidator admitted the claim but regarded it as ordinary due to non-registration under the Indian Registration Act. The court found that a charge can be created orally or by conduct, and in this case, the resolutions and actions taken indicated the creation of a valid charge, making the petitioner a secured creditor. 2. Validity of the charge creation due to non-registration under the Indian Registration Act: The court examined whether a charge must be compulsorily registered. It referenced previous judgments, including the Supreme Court's decision in M. L. Abdul Jabbar Sahib v. Venkata Sastri and Sons, which held that a charge could be created orally and did not need to be registered unless created by a written document. The court concluded that the written document dated 19th December 1967, was inadmissible due to non-registration. However, it determined that the charge was created through the company's resolutions and conduct, independent of the written document. The court held that the charge was validly created even without the document's registration. 3. Allegation of fraudulent preference under sections 531 and 531A of the Companies Act: The official liquidator argued that the charge was void due to fraudulent preference. The court noted that section 531A applies to the transfer of property, but the Supreme Court had established that creating a charge does not transfer property but creates a right of payment out of the specified property. The court also considered section 531, which avoids voluntary transfers not made in good faith or for valuable consideration. The court found that the charge was created in good faith and for valuable consideration, as it was part of an agreement to liquidate the company's debt to the Central Bank. Therefore, the charge was not void under sections 531 or 531A. Conclusion: The court allowed the application, holding that the petitioner is a secured creditor with a charge on property No. 20/2, Manorama Ganj, Indore. The charge was validly created through the company's resolutions and conduct, independent of the written document's registration. The allegation of fraudulent preference was dismissed, as the charge was created in good faith and for valuable consideration.
|
