2012 (8) TMI 659 - HC - Companies Law

Winding up proceedings - final distribution between the secured creditors and the workers - Chartered Accountant s report that the creditors cannot claim status of secured creditor - the applicant and other creditors who allegedly hold charge against the assets of the company - particularly immovable properties - but have not got the charge registered are aggrieved by the said report of the chartered accountant. - held that - In present case even if it is assumed that charge was created against immovable properties (as claimed by the applicant) then also mere creation of charge (assuming it was created) against immovable properties will not suffice because for present case the important requirement is the one prescribed under Section 125 viz. the charge must be registered within 30 days with the Registrar of Companies. In the cases where the company is in liquidation and payments are to be disbursed amongst secured creditors in light of the provisions contained under Section 529-A read with Section 529 of the Act, the effect of the said provision under Section 125 of the Act would be that so much of charge which is not registered in accordance with provision under Section 125 of the Act will not acquire status of, and will not be treated as, secured charge for the purpose of Section 529-A and Section 529 of the Act and the creditor holding such unregistered charge will not be treated and considered, to that extent, a secured creditor in respect of the said charge - It is also evident the Section 125 applies to every charge created by the company on or after the Ist day of April, 1914 but where the charge is by operation of law or is created by an order or decree of the court, Section 125 has no application. In present case even if it is assumed that charge was created against immovable properties (as claimed by the applicant) then also mere creation of charge (assuming it was created) against immovable properties will not suffice because for present case the important requirement is the one prescribed under Section 125 viz. the charge must be registered within 30 days with the Registrar of Companies - present application is disposed of with the clarification that OL will consider and decide the claim of the applicant and other creditors and the workers in light of the foregoing discussion and accordingly determine the disbursement ratio

Issues Involved:
1. Determination of inter se ratio for final distribution between secured creditors and workers.
2. Notification of the exact amount available for distribution.
3. Ad-hoc disbursement pending final disposal.
4. Validity of claims based on unregistered charges against immovable properties.
5. Applicability of Section 125 of the Companies Act.

Detailed Analysis:

1. Determination of Inter Se Ratio for Final Distribution:
The applicant bank sought a direction for the official liquidator (OL) to determine the inter se ratio for final distribution between secured creditors and workers. The OL, in response, provided a report suggesting a pattern for disbursement of the available amount of Rs. 1,75,00,000/- based on the claims received from various creditors and workers. The Chartered Accountant's report was used to recommend the disbursement ratio.

2. Notification of the Exact Amount Available for Distribution:
The OL's report dated 20.3.2010 stated that after deducting expenses, Rs.1,74,65,840/- remained available for disbursement. This amount was confirmed in subsequent reports, and the OL was directed to notify the court of the exact amount available for distribution.

3. Ad-hoc Disbursement Pending Final Disposal:
The applicant bank requested an ad-hoc disbursement of an amount deemed fit by the court pending the final disposal of the application. However, this request was intertwined with the resolution of the main issues regarding the determination of the status of the creditors and the validity of their claims.

4. Validity of Claims Based on Unregistered Charges Against Immovable Properties:
The core issue revolved around whether the claims by creditors, particularly the applicant bank, could be considered secured despite not having registered charges against immovable properties as required under Section 125 of the Companies Act. The OL, supported by the Chartered Accountant's report, stated that the financial institutions did not comply with the requirement of registering their charges, rendering them unsecured creditors concerning immovable properties.

5. Applicability of Section 125 of the Companies Act:
Section 125 mandates that charges against a company's properties must be registered within 30 days, failing which they are void against the liquidator and creditors. The applicant bank argued that the omission to register the charge should not affect their status as secured creditors, citing a tribunal order dated 12.3.2004 that declared their entitlement to recover certain amounts. The court examined whether the tribunal's order created a charge that would bypass the registration requirement under Section 125.

Court's Findings and Directions:

1. Inter Se Ratio and Distribution Amount:
The OL was directed to re-examine the claims and objections in light of the legal position and determine the correct disbursement ratio. The OL must also verify whether the properties mentioned in the tribunal's order were personal properties of the directors or the company's properties.

2. Ad-hoc Disbursement:
The court did not grant immediate ad-hoc disbursement but emphasized the need for a thorough verification process to ensure the correct determination of secured and unsecured claims.

3. Validity of Unregistered Charges:
The court held that the non-registration of charges against immovable properties, as required by Section 125, rendered the claims unsecured. However, it acknowledged that if the unregistered charge merged into a court order or decree, it would not be void. The court cited the Supreme Court's ruling in *Indian Bank v. Official Liquidator*, which clarified that charges created by court orders are not subject to Section 125's registration requirement.

4. Applicability of Section 125:
The court concluded that the tribunal's order dated 12.3.2004, which allowed the applicant bank to recover its dues by selling the company's properties, effectively merged the unregistered charge into a court order. Therefore, the non-registration under Section 125 did not render the charge void.

Conclusion:
The application was partly allowed, with the OL directed to re-verify the claims and determine the disbursement ratio based on the court's findings. The OL may seek assistance from a Chartered Accountant to ensure compliance with the legal position established by the Supreme Court. No costs were awarded.

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