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TMI Blog1959 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... egative, the third question is whether an order of extension actually made by the court under section 120 (as amended by the Act XXII of 1936) in a case which comes under section 109A, is a nullity or an illegal order made by irregular assumption of jurisdiction. The facts upon which the above questions arise are as follows: On January 30, 1944, one Ranjit Bose entered into an agreement with one Robert Standley Treanor for the purchase of a tea estate named the Rangaroon Tea Estate belonging to the latter and in pursuance of the said agreement paid a sum of Rs. 20,001 as earnest money on February 1, 1944, and was put into possession. Thereafter the said Ranjit Bose approached the Calcutta National Bank Ltd. (now in liquidation), which has been and will hereinafter be described as the bank, for a loan of Rs. 2,75,600. The bank agreed to lend the said amount provided the said Ranjit Bose agreed to repay the sum with interest at the rate of 6 per cent. per annum and further agreed to secure the repayment by creating a mortgage by deposit of title deeds relating to the Rangaroon Tea Estate. On June 18, 1944, the said Ranjit Bose promoted and registered a limited company named the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 109 of the Indian Companies Act of 1913. On January 30, 1950, the bank instituted a suit in the court of the Subordinate Judge, Darjeeling, for enforcement of its charge against the company for the recovery of a sum of Rs. 1,70,365-12-0. The company entered appearance in the suit and filed a written statement on April 28, 1950. Sometime in 1951, the suit was transferred to this court under clause 13 of the Letters Patent and registered as Extraordinary Suit No. 2 of 1951. The respondent No. 1, Abhoy Singh Sahela, instituted a suit on the original side of this court (Suit No. 755 of 1949) for the recovery of the price of packing materials supplied by him to the company together with commission and damages, claiming a total sum of Rs. 1,27,270-11-9. On February 20, 1951, there was a preliminary decree in the aforesaid suit directing a reference and on December 6, 1951, the reference was concluded and on August 17, 1953, a final decree was made in favour of Abhoy Singh Sahela for the entire amount claimed by him. On December 18,1951, the company was ordered to be wound up and on December 2, 1952, the bank went into liquidation. Then begins a chapter of events with which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mortgage was not effected in compliance with the provisions of the company's articles and that the mortgage is void by reason of provisions contained in Defence of India Rules. The company further contended that the court has no power to grant any relief or registration of charge required under section 109A and that the order of Sinha J. is therefore void. By an order dated June 23, 1955, G.K. Mitter J. has allowed the application filed by Sahela and has revoked the order made by S.B. Sinha J. on April 4, 1949, and against that order the bank has brought this appeal. The first and the most important point that has been argued in support of the appeal is that Sahela, being an unsecured creditor of the bank has no locus standi to file an application for revoking an order made under section 120 of the Indian Companies Act of 1913. Section 120 of the Act, as amended by Act XXII of 1936, consists of two sub-sections. The first sub-section authorises the court to extend the time for registration of a mortgage or charge required by section 109 to be registered within twenty-one days in any of the following classes of cases: ( a )the omission to register was accidental or due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons who can file an application for the winding up of a company and section 229 deals with rules to be applied in the winding up of an insolvent company and it is in the fitness of things that those sections should contain provisions dealing with all classes of creditors. The meaning of the word creditor as used in sections 109 and 120 of the Act must be determined by referrence to the provisions of those sections themselves. Turning now to the provisions of section 120 it appears that the Indian Legislature thought fit to introduce the second sub-section by the amending Act of 1936. If this sub-section be an exhaustive codification of the effect of an order of extension made under the first subsection there can be no doubt that the intention of the Legislature was only to protect "rights acquired in respect of the property concerned prior to the time when the mortgage or charge was actually registered." In other words, in order to enjoy the protection conferred by subsection (2) the creditor must have acquired some right in the property, that is, must be a secured creditor. Mr. Roy appearing for the respondent contends that section 120(2) is not an exhaustive codification of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding up of the company a few days before the charge was actually registered. The question whether unsecured creditors are entitled to the benefit of the formula evolved by Buckley J. and whether they required protection under the "just and convenient" clause came up for consideration by the Court of Appeal in the case of Ehrmann Bros. Ltd. [1906] 2 Ch 697 . There it was held that the words "without prejudice to the rights acquired prior to the date of registration" meant without prejudice to the rights acquired in the property of the company by charge, execution or otherwise. Vaughan Williams L.J. pointed out, "...according to my reading of the order, the protection is given only to those who have acquired rights of property or rights against property, and this, as it seems to me, clearly does not include unsecured creditors who have no right against the property in question and no charge against it." Romer L. J. was also of the same opinion and he held that, " an ordinary creditor would have no locus standi ", but he pointed out that different considerations would apply if there was liquidation or a charge. Then his Lordship proceeds to observe as follows: "...in the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny order of extension of time. Romer L.J. dissented from the observations made by Buckley J. in the case of Cardiff Workmen's Cottage Co. Ltd s. case ( supra ) to the effect that in a case of sufficient magnitude it was desirable to give notice to unsecured creditors of substantial amounts. The decision of the Court of Appeal in M.I.G. Trust Ltd s. case ( supra ) was affirmed by the House of Lords in In re M.I.G. Trust, Limited [1934] AC 252; 4 Comp Cas 325 . Finally in the case of Kris Cruisers Ltd. [1949] Ch 138; 19 Comp Cas 134 , Vaisey J. followed the principles laid down by the Court of Appeal in the case of M.I.G. Trust Ltd. [1933] 1 Ch 542; 3 Comp Cas 345 though his Lordship pointed out the anomaly of not giving any protection to unsecured creditors who might have been induced to give credit to the company under the impression that the assets of the company were not subject to any charge or mortgage. In this case Vaisey J. was considering an application for extension of time under section 101 of the English Companies Act of 1948, which corresponds to section 120(1) of the Indian Act of 1913. The aforesaid review of the English authorities establishes beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed creditors. The second sub-section was introduced by section 64( a ) of the Amending Act XXII of 1936, which was passed by the two Houses of Legislature in October, 1936. The Indian Companies Act is largely based on its English counterpart and the object of the Amending Act of 1936 was to bring the Indian Act into line with the changes introduced in the United Kingdom. It is, therefore, reasonable to infer that when the Indian Legislature introduced the second subsection to section 120 it adopted the view taken by the Court of Appeal in In re M.I.G. Trust Ltd. case ( supra ) and affirmed by the House of Lords in In re M.I.G. Trust Ltd. case ( supra ) . As I have already pointed out under the decision of the English Court of Appeal the unsecured creditors of a company required no protection and no notice in a proceeding for extension of time. This principle was recognised by the Indian Legislature in enacting sub-section (2) of section 120. If the second sub-section is a legislative recognition of the Buckley formula it is a recognition of that formula as interpreted by the Court of Appeal in the case of In re M.I.G. Trust Ltd s. case ( supra ). To say that sub-section (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d long after the period of 21 days from the creation of the mortgage or charge. Since the starting point of the period of 21 days under section 109 is different from that under section 109A it is impossible to apply section 120 to a case which comes under section 109A. Mr. Chaudhury appearing for the appellant, however, contended that the omission to mention section 109A in section 120 was a case of casus omissus which can be supplied by the court. The argument is that section 109A was introduced into the Indian Companies Act by the Amending Act of ig36, and although that section requires the particulars of the mortgage or charge to be filed "in manner required by this Act," the manner laid down by sections 112 to 121 relates only to mortgages or charges contemplated by section 109. It is accordingly argued that section 109A becomes altogether unworkable unless the entire group of sections beginning with section 112 and ending with section 121 is read as incorporating section 109A. To illustrate, it is contended that there is no mention of section 109A in section 112 which requires the Registrar to keep a register of mortgages and charges, or in section 121 which requires the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw (4th Edition) page 71, and the various cases referred to therein to establish that a casus omissus cannot be created or supplied. There is hardly any conflict amongst the authorities on this point. In Crawford on Statutory Construction the position is thus summarised at pages 269-270: "If a particular case is omitted from the terms of a statute, even though such a case is within the obvious purpose of the statute and the omission appears to have been due to accident or inadvertence, the court cannot include the omitted case by supplying the omission. As is obvious, to permit the court to supply the omissions in statutes, would generally constitute an encroachment upon the field of the Legislature .... Some decisions allow words omitted by oversight to be supplied, if the statute is otherwise meaningless, or if an amendment, without interpolation is ineffective." As I have attempted to show earlier, the omission in the present case is neither accidental, nor due to inadvertence nor is section 109A or section 120 without the interpolation meaningless or ineffective. If we add section 109A in section 120, it would be, to quote the words of Lord Denman C.J. in Green v. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute." Lord Buckmaster quoted with approval the observations of Lord Sterndale which I have already read. All the authorities are therefore unanimous that the subsequent legislation may be looked at to fix the meaning of the earlier only when the earlier legislation is ambiguous. In the case before us there was no ambiguity in section 120 as it stood before the enactment of the 1956 Act. The language of section 120 was neither obscure nor capable of more than one interpretation. It laid down in clear and unambiguous language that it would apply only to a case where the mortgage or charge was not registered "within the time required by section 109." If it was the intention of the Legislature to make the provisions of section 120 applicable to a case falling under section 109A as well it would have said "within the time required by section 109 or section 109A." For the reasons given above I am unable to accept the appellant's argument that section 120 of the Act of 1913, applied to a case falling under section 109A of that Act. As the second point has been decided against the appellant and as I have held the court is not competent to grant extension of time for registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servations were followed by this court in various subsequent cases. It is to be noticed however that the ex parte order with regard to which the Privy Council made the aforesaid observations was in that case challenged by the auction purchaser who was the only person interested in challenging it. Mr. Roy also referred to the decision in the case of Craig v. Kanssen [1943] 1 KB 256, 262 where Lord Greene M. R. made the following observations : "A person who is affected by an order which can properly be described as a nullity is entitled ex debito justitiae to have it set aside. So far as procedure is concerned it seems to me that the court in its inherent jurisdiction can set aside its own order and that it is not necessary to appeal from it." This dictum of Lord Greene was followed by the Privy Council in an appeal from the West African Court of Appeal in the case of Kofi Forfie v. Selfah [1958] AC 59 at 67. In the case of Craig v. Kanssen case ( supra ) the ex parte order was challenged by persons who were parties to the proceeding and in Kofi Forfie case ( supra ) the persons who challenged the ex parte order derived their title from persons who we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itute a fresh suit in a case which did not come under Order XXIII, rule 1, sub-rule (2), of the Civil Procedure Code was a nullity and held that it was an order which was made by irregular assumption of jurisdiction. In that case it was pointed out that the jurisdiction of a court depends upon three circumstances namely, pecuniary, territorial and jurisdiction over the subject matter and if these conditions are fulfilled the court can be said to have jurisdiction. In that case Mukherjee C.J. delivering the judgment of the Full Bench observed as follows: "The classification into territorial jurisdiction, pecuniary jurisdiction and jurisdiction of the subject-matter is obviously of a fundamental character. Given such jurisdiction we must be careful to distinguish exercise of jurisdiction from existence of jurisdiction." In the present case S.B. Sinha J. being the Company Judge had jurisdiction under section 3 of the Indian Companies Act over the subject-matter of the dispute and there is no dispute that he had territorial as well as pecuniary jurisdiction in respect of the subject-matter of the dispute. Consequently, the conclusion is irresistible that the decision which he actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in our opinion that question should be left open for decision in the suit because it is not germane to a proceeding under section 120 of the Indian Companies Act. At the close of the argument Mr. Basu appearing for the first respondent invited our attention to a decision of Panckridge J. in Sathgram Coal Co. Ltd., In re [1936] 40 CWN 1171 , where the learned Judge held that a charge which is not registered under section 109 of the Indian Companies Act is void against all the creditors of the company irrespective of the date on which their debts accrued, It was further held that even if decree had been obtained on such unregistered mortgages prior to the winding up application that fact did not take the case out of the operation of section 109. In that case his Lordship was considering the rights of an unregistered secured creditor who had obtained a decree on the unregistered mortgage prior to the winding up order. After obtaining the decree the mortgagee decree-holder applied for leave to proceed with the execution thereof. His application was opposed by the official liquidator representing the creditors on the ground that as the mortgage was not registered with the Registrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a judgment within the meaning of clause 15 of the Letters Patent. This argument in my opinion is without substance. It is true that G.K. Mitter J. has not expressly stated that the bank's application for extension of time stands dismissed but the effect of the order is to dismiss that application. The decisions on all the questions which have been decided by G.K. Mitter J. will operate as res judicata between the appellant and respondents and those questions will not be and cannot be reopened or reagitated. I have, therefore, no doubt that G.K. Mitter J. has finally decided the questions involved in this appeal and his order is therefore a judgment within the meaning of clause 15 of the Letters Patent. Before concluding my observations with regard to the submissions made on behalf of the company which is the second respondent in this appeal, I cannot, help remarking that I am not at all satisfied with the conduct of the company. Although the company was vitally interested in challenging the order made by S.B. Sinha J. on the 4th of April, 1949, it took no steps in that behalf and on the contrary its directors, for reasons best known to themselves, remain content with supplyi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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