9911796707
TMI Blog1954 (7) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... The Registrar acknowledged receipt of the particulars and called upon the managing director to file the instrument or a copy of the same. The bank replied to the Registrar on 13th July, 1950, that they had not received a copy of the mortgage deed and that as soon as it was received they would furnish the Registrar with it. It appears that a copy of the mortgage deed was obtained by the managing director on 24th July, 1950, but the same was not filed with the Registrar. By an order of court dated 10th October, I960, the bank was directed to be wound up and the first respondent was appointed official liquidator. Soon after the expiry of six months, the time fixed for the repayment of the amount due under the sub-mortgage, the appellant wrote on 25th January, 1951, to the official liquidator to make arrangements to pay the amount due to him. The official liquidator replied that the deed of mortgage in favour of the appellant was void under section 109 of the Indian Companies Act as against the official liquidator and the other creditors, as the requisite particulars of mortgage had not been filed with the Registrar of Joint Stock Companies in time. The appellant thereupon himself app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time required by section 109, or that the omission or misstatement of any particular with respect to any such mortgage or charge, or the omission to give intimation to the registrar of the payment or satisfaction of a debt for which a charge or mortgage was created was accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested and on such terms and conditions as seem to the court just and expedient, order that the time for registration be extended, or, as the case may be, that the omission or misstatement be rectified, and may make such order as to the costs of the application as it thinks fit." Undoubtedly, the language of the section supports the contention of the appellant. If the court is satisfied that the omission to register in time was due to inadvertence or some other sufficient cause, it is not necessary that the court should be further satisfied that it "is not of a nature to prejudice the position of creditors or shareholders of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to grant relief may, on the application of the company or any person interested and on such terms and conditions as seem to the Judge just and expedient, order that the time for registration be extended, or, as the case may be, that the omission or misstatement be rectified," Buckley J. ordered the application, but he directed that the following words be added to the order, viz., "but that this order be without prejudice to the rights of parties acquired prior to the time when the debentures shall be actually registered." The learned Judge was of opinion that these words ought to be added in every case, unless there was some good ground to the contrary. A few months after this decision, Swinfen Eady J. dealt with a similar application for extension in In re Spiral Globe Ltd. Here, the debenture holders were the applicants, and the application was made after the commencement of the winding up of the company. An order of extension was made but with the addition of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge was registered on November 15; but in the meantime, on November 11, the company passed an extraordinary resolution for voluntary winding up. Buckley J. held that the rights of the general body of creditors under the winding up order were protected by the saving words of the order extending the time for registration, and the debenture holders were not entitled to set up the debentures in their favour against any of the creditors of the company existing at the time of the passing of the resolution for winding up. The learned Judge thought that the case was covered by his previous decision in In re S. Abrahams and Sons. In In re Ehrmann Bros. Ltd. the Court of Appeal had to deal with the effect of the usual proviso added to an order extending time, such as that in In re Joplin Brewery Co. Ltd. It was held that such a proviso did not enable an ordinary unsucured creditor of the company at the date when the charge was registered to rank pari passu with the charge-holders, unless he had taken steps to enforce his debt or unless a winding up had intervened. Vaughan Williams L. J. said: " according to my reading of this order, the protection is given only to those who hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der extending time for registration was made. Shortly after the order for extension of time was made the mortgagor company was ordered to be wound up compulsorily on its own petition. The liquidator took out a summons to declare the charge void against him inasmuch as the company had suffered a judicial proceeding when unable to pay its debts and thus was guilty of a fraudulent preference. It was held by the Court of Appeal that the liquidator was not entitled to any relief. Romer L.J. once again pointed out that the protecting proviso usually added to an order for extension did not apply to unsecured creditors. But then it was asked by counsel, if that be so, and if the court was not going to protect unsecured creditors, why was it that the court always insisted on being furnished with evidence that there had been no judgment obtained against the company and that no resolution had been passed or even notice sent out convening a meeting of the company to pass a resolution to wind up? The learned Lord Justice answered it thus: "The court, as far as I know, does not do it. I do not know of any case in which the court has insisted upon having evidence of that kind. It is perfectly t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the solvency of the company. But he thought that the solvency or insolvency of the company was not a matter to which he need pay attention. For this he had the authority of Romer L.J. in In re M.I.G. Trust Ltd. In the Indian Companies Act, originally, section 120 did not contain what is now to be found in sub-section (2). It was by the Companies (Amendment) Act, 1936, that that subjection was added. It runs thus: "Where the court extends the time for the registration of the mortgage or charge, the order shall not prejudice any rights acquired in respect of the property concerned prior to the time when the mortgage of charge is actually registered." Whatever may be the usefulness of the English decisions before Amendment Act of 1936 inserting sub-section (2), there is now very little scope for the application of the practice in English courts and of the protecting proviso added to an order for extension. In sub-section (2) of section 120, the Legislature had laid down the effect of the order, namely, that it shall not prejudice any rights acquired in respect of the property concerned prior to the time when the mortgage or charge is actually registered. This sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
