1934 (6) TMI 27 - HC - Companies Law

Summary

Issues Involved:
1. Validity of the assignment of debt.
2. Nature of the assignment (absolute or by way of security).
3. Applicability of Section 109(d) of the Companies Act regarding registration of the assignment.
4. Interpretation of Section 130 and Section 134 of the Transfer of Property Act.

Detailed Analysis:

1. Validity of the Assignment of Debt:
The case involves a suit brought by the liquidator of the Co-operative Hindustan Bank to recover a sum of money from the Wardens of the Armenian Church for work done by Carr Morrison & Co., Ltd., which had gone into liquidation. The Wardens paid the amount into court, leading to a conflict between the liquidator of the bank and the liquidator of Carr Morrison & Co. The liquidator of Carr Morrison & Co. contended that the assignment of the debt to the bank was invalid as it was not registered under Section 109(d) of the Companies Act.

2. Nature of the Assignment (Absolute or by Way of Security):
The assignment was made through a letter and endorsements on bills dated 5th July 1930. The liquidator of Carr Morrison & Co. argued that this assignment was by way of security and not an absolute transfer. The court examined whether the assignment should be treated as a mortgage, which would necessitate registration under Section 109(d) of the Companies Act. The court found that the assignment was intended as security for an overdraft, not an out-and-out transfer.

3. Applicability of Section 109(d) of the Companies Act:
Section 109(d) of the Companies Act states that certain mortgages and charges are void if not registered. The court considered whether the assignment of the debt was a mortgage requiring registration. The judgment referenced Section 130 of the Transfer of Property Act, which deals with the transfer of actionable claims, and Section 134, which deals with the application of debts transferred as security. The court concluded that the assignment was indeed a mortgage of book-debts and, as such, required registration under Section 109(d). Since it was not registered, it was void against the liquidator and creditors of the company.

4. Interpretation of Section 130 and Section 134 of the Transfer of Property Act:
Section 130 of the Transfer of Property Act states that the transfer of an actionable claim is complete upon the execution of an instrument in writing. In this case, the court found that the assignment was complete and effectual upon the execution of the letter and endorsements on the bills dated 5th July 1930. Section 134 states that when a debt is transferred as security, the transferee can recover the debt and apply it towards the satisfaction of the secured amount, with any residue belonging to the transferor. The court interpreted this to mean that the assignment should be treated as a mortgage, requiring compliance with Section 109(d) of the Companies Act.

Conclusion:
The court concluded that the assignment was by way of security and not an absolute transfer. Therefore, it was subject to the registration requirements of Section 109(d) of the Companies Act. Since the assignment was not registered, it was void against the liquidator and creditors of Carr Morrison & Co. The appeal was dismissed with costs, and the appellant was held personally liable for the costs.

Separate Judgments:
Lort-Williams, J.: Agreed with the main judgment but noted that the letter of 2nd March 1931 was not admissible in evidence under Section 92 of the Evidence Act. He opined that the documents dated 5th July 1930, coupled with the covering letter dated 8th July 1930, amounted to an absolute transfer of the debts to the bank. However, given the concession by the bank's counsel that the transfer was by way of security, the appeal was dismissed with costs.