1964 (11) TMI 37 - HC - Companies Law

Summary

Issues Involved:
1. Construction and effect of sections 95 and 98 of the Companies Act, 1948, relating to the registration of charges.
2. Validity of the mortgagees' security based on the registration particulars.
3. Interpretation of the Registrar's certificate under section 98(2).
4. Potential rectification of the register under section 101.

Detailed Analysis:

1. Construction and Effect of Sections 95 and 98 of the Companies Act, 1948:
The primary issue revolves around the interpretation of sections 95 and 98 of the Companies Act, 1948, which govern the registration of charges created by companies. Section 95(1) stipulates that any charge created by a company must be registered with the Registrar of Companies within 21 days of its creation, failing which the charge becomes void against the liquidator and any creditor of the company. Section 98(1) mandates the Registrar to maintain a register of all charges requiring registration and to record specific particulars, including the amount secured by the charge and the property charged.

2. Validity of the Mortgagees' Security Based on the Registration Particulars:
The liquidator contended that the mortgagees' security was limited to the amounts explicitly stated in the registration particulars (lb16,000 and lb2,000, respectively). The liquidator conceded that the mortgagees were secured for sums of lb13,931 6s. 9d. and lb1,713 2s. 5d., plus arrears of interest, but argued that the mortgagees were not secured for any amount exceeding the registered sums. The dispute centered on whether the mortgagees could claim security for the entire debt of lb23,218 1s. 10d. or only for the registered amounts.

3. Interpretation of the Registrar's Certificate Under Section 98(2):
Section 98(2) states that the Registrar's certificate of registration is conclusive evidence that the requirements for registration have been met. The judgment referenced the case of National Provincial and Union Bank of England v. Charnley [1924] 1 KB 431, which established that the Registrar's certificate is conclusive evidence of compliance with registration requirements, even if the particulars registered are incomplete or inaccurate. The court emphasized that one must look at the document creating the charge to determine the extent of the security, not the register.

4. Potential Rectification of the Register Under Section 101:
The mortgagees filed a cross-application seeking rectification of the register under section 101, which allows the court to rectify omissions or misstatements in the registration particulars if the omission was accidental or due to inadvertence. However, the court noted that such rectification would be highly exceptional once a company has gone into liquidation and the rights of unsecured creditors have crystallized. Given the court's conclusion that the mortgagees' security was valid for the full amounts stated in the mortgage documents, the need for rectification did not arise.

Conclusion:
The court concluded that the mortgagees were entitled to rely on their principal mortgage and further charge as conferring valid security for the full amounts due under those documents. The Registrar's certificate was deemed conclusive evidence that the registration requirements had been complied with, and any inaccuracies in the registered particulars did not affect the validity of the charge. Consequently, the liquidator's application failed, and the mortgagees' cross-application for rectification was rendered unnecessary.