1968 (6) TMI 48 - HC - Companies Law

Issues Involved:
1. Whether there was a mortgage of the tea estate by Ranjit Bose in favor of the plaintiff.
2. Whether there was a relinquishment of right, title, and interest of the tea estate by Ranjit Bose.
3. Whether the property in suit was purchased by Rangaroon Tea Company Ltd. in the name of Ranjit Bose.
4. Whether Rangaroon Tea Company Ltd. created a mortgage on the properties in favor of the plaintiff or acquired the properties subject to mortgage in favor of the plaintiff created by Ranjit Bose.
5. Whether the object or consideration of the documents dated 30th August 1944 and 30th December 1944 was forbidden by law.
6. Whether the mortgage was void or illegal by reason of the provisions of the Defence of India Rules.
7. Whether the mortgage was void by reason of non-registration under section 109 of the Indian Companies Act.

Issue-wise Detailed Analysis:

1. Mortgage of Tea Estate by Ranjit Bose:
The plaintiff claimed that Ranjit Bose mortgaged the Rangaroon Tea Estate to secure a loan of Rs. 2,75,000. The learned judge concluded that the mortgage was created by Rangaroon Tea Company Ltd. in the name of Ranjit Bose, and the plaintiff bank was aware of these transactions. The mortgage was not solely of Ranjit Bose but involved the company.

2. Relinquishment of Right, Title, and Interest:
The plaintiff alleged that Ranjit Bose relinquished his rights in the Rangaroon Tea Estate to Rangaroon Tea Company Ltd. The court found that the company, through Ranjit Bose, had indeed purchased the estate and created the mortgage. Thus, the relinquishment was not solely by Ranjit Bose but involved the company.

3. Property Purchase by Rangaroon Tea Company Ltd.:
The court concluded that the property was purchased by Rangaroon Tea Company Ltd. in the name of Ranjit Bose. The evidence, including exhibit E, indicated that the company was the real owner and the mortgage was created by the company through Ranjit Bose.

4. Mortgage Creation by Rangaroon Tea Company Ltd.:
The court affirmed that the mortgage was created by Rangaroon Tea Company Ltd. and not solely by Ranjit Bose. The plaintiff bank was aware of the company's involvement in the transactions.

5. Object or Consideration Forbidden by Law:
The court examined whether the transactions were forbidden by law, specifically under rule 94A of the Defence of India Rules. It was concluded that the rule was mandatory, and the mortgage was void or illegal due to non-compliance with the rule.

6. Mortgage Void or Illegal under Defence of India Rules:
The court held that the mortgage was void under rule 94A of the Defence of India Rules. The rule prohibited creating a charge on company assets without the Central Government's consent, which was not obtained in this case. The mortgage was thus illegal, and the plaintiff could not enforce it.

7. Mortgage Void due to Non-registration:
The court found that the mortgage was void due to non-registration under section 109 of the Indian Companies Act. This section required registration of charges created by companies, which was not complied with in this case.

Additional Observations:
The court also addressed the issue of possession, concluding that Ranjit Bose did not take possession in February 1944 as claimed. The evidence indicated that possession was taken after the incorporation of the tea company.

Conclusion:
The appeal was dismissed, and the judgment of the trial court was affirmed. The mortgage was deemed void due to illegality under the Defence of India Rules and non-registration under the Companies Act. Each party was ordered to bear its own costs. The liquidator was allowed to retain costs from the assets of Rangaroon Tea Company Ltd. and Calcutta National Bank Ltd.

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