9911796707
TMI Blog1961 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... t was registered with the Registrar, Joint Stock Companies, Lucknow, as well as in the office of the Sub-Registrar, Lucknow, under the Indian Registration Act. By a resolution dated March 23, 1952, the board of directors authorised Sri B. P. Agarwala, who was managing the affairs of the company to issue a third series of debentures for Rs. 4,50,000, and a committee was appointed to allot these debentures: In pursuance of the above resolution on April 7, 1952, the committee allotted debenture bonds Nos. 1 to 4 for Rs. 2,000 to Rai Sahib Pandit Sri Krishna Deva Bhargava of Khatauli and four bonds Nos. 5 to 8 for Rs. 3,000 to Smt. Rajeshwari Devi of Karol Bagh, Delhi. In respect of this series of debentures, no trust deed was executed nor was any registration effected in the office of the Sub-Registrar as required under the Indian Registration Act. The company, however, registered with the Registrar, Joint Stock Companies, the particulars of tin's series of debentures on April 18, 1952, under section 109 of the Indian Companies Act. In view of this situation, the liquidator moved an application in the High Court before the company judge praying for the relief to the effect that a decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossible, made applicable to charges. Section 59 of the Transfer of Property Act makes all simple mortgages in which the principal money secured is one hundred rupees or upwards compulsorily registrable. Section 4 of the Transfer of Property Act (4 of 1882), as amended by Act 3 of 1885, lays down that sections 34 paragraphs 2 and 3,59,107 and 123 of the Transfer of Property Act shall be read as supplemental to the Indian Registration Act (16 of 190$). The combined effect of sections 4, 59 and 100 of the Transfer of Property Act is, therefore, to make all charges in respect of immoveable properties compulsorily registrable under the Registration Act provided that the amount secured exceeds Rs. 100. The cases, Khoo Sain Bern v. Tan Guat Tean AIR 1929 PC 141 and Viswanathan v. M.S. Menon AIR 1929 PC 202 support the same conclusion. A floating charge is, however a special charge which is recognised by the Indian Companies Act. In the present case, we are concerned with the Indian Companies Act (VII of 1913) which was the Act in force at the relevant date. A floating charge is created by making the assets or the undertaking of the company a security for the payment of debts into which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed case of the parties that the third series of debentures were registered as required by sections 109 and no of the Companies Act (VII of 1913). On behalf of the appellants it is argued that a floating charge is a statutory charge under the Companies Act. A registration of the same, therefore, under the aforesaid sections is quite sufficient. On the other hand, on behalf of the respondents the learned counsel has argued that the fact that under the Companies Act such debentures are made compulsorily registrable in a certain manner with the Registrar of Joint Stock Companies does not absolve the parties from the necessity of having the said documents registered under the Registration Act where such documents are compulsorily registrable under the latter Act also. In the present case it is argued that debentures of the third series would be compulsorily registrable under section 17 of the Indian Registration Act (16 of 1908) if they are to be treated as valid and effective documents creating a charge on immoveable property. Both the parties have advanced detailed arguments before us in support of their respective contentions. We are, however, of opinion that the answer to this quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servations made by us in this judgment would be confined to such a case only. So far as the future immoveable property is concerned, we do not wish to express any opinion in this case. We must confess that the question appears to bristle with difficulties at every stage, and it is not easy to reconcile the conflicting considerations that arise in such a case. In our opinion, section 17 of the Indian Registration Act (XVI of 1908) would be attracted in a case where the dispute relates to a charge sought to be created by a debenture on immoveable property which was, existent at the date of the creation of the charge and was in the ownership of the company at that date. The relevant provision of law in this regard is section 17(1)(b) of the Indian Registration Act. Under section 17(1)(b) of the Indian Registration Act the documents made compulsorily registrable are described as follows: "17. (1)(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immoveable property." In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that thereafter the property which is the subject-matter of the charge having been specified and fixed becomes subject to the charge created by the debenture and the fetters which the law imposes on charged property begin to attach to such a property. The unrestricted right of the company to deal with the said property can thus be said to have been limited. It may also be noticed that clause (b) of section 17(1) of the Registration Act is worded in a very wide form. Every portion of this section bears the imprint of its extensive character and seems to be designed to emphasise the same. Clauses (a) and (b) of section 17(1) together cover all kinds of non-testamentary instruments relating to immoveable property. Section 17(1)(b) embraces not only: rights which become operative in the immediate present but also in future. This is borne out by the clause "whether in present or in future" in the said provision of law. It is also significant to note that this clause covers not only titles and interests in immovable property but also rights in them. Further, the section uses the word "to" as well as the world "in" when describing such rights, titles or interests. Its ambit is further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y would be covered up by clause (b) of sub-section (1) of section 17 of the Indian Registration Act. It is also noteworthy that there is no specific provision in the Indian Companies Act itself exempting debentures creating charges on immoveable properties from the mandatory provisions of the Indian Registration Act. On the other hand, one does find that while enacting section 17 of the Indian Registration Act, the legislature did have in view debentures which are the creations of the company law, and did not intend to exempt from its operation debentures affecting immoveable property. It also appears that the purpose of registration under the Companies Act is quite different from the purpose of registration under the Registration Act. In the case of registration under section 109 of the Indian Companies Act, 1913, as section no(c) of the same Act shows, a general description of the property is quite enough. On the other hand, description under the Registration Act has got to be specific and definite (vide section 21, Registration Act). The purpose of registration under the Companies Act, therefore, appears to be to give a general idea of the financial condition and the status of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, be prejudicial not only to the interests of the creditors but also to that of the companies themselves. We would, therefore, require something more to be able to hold that such salutary and imperative provisions of the Registration Act as are embodied in section 17 are completely swept away by the Companies Act. Unless, therefore, we find ourselves constrained by considerations of a strong, clear and compelling nature, we would be reluctant to endorse the arguments so vehemently advanced before us by the learned counsel for the appellants. The view taken by us above would also find support from the line of reasoning adopted in Imperial Bank of India v. Bengal National Bank Ltd. [1931] 1 Comp. Cas. 159; AIR 1931 Cal. 223, K. Roy and Bros. v. Ramanath Das [1945] 15 Comp. Cas. 69 ; AIR 1945 Cal. 37 and State of Madras v. Madras Electric Tramways (1904) Ltd. [1956] 26 Comp. Cas. 398 AIR 1957 Mad. 169. It may be noted that the first case was reversed by the Privy Council in Imperial Bank of India v. Bengal National Bank Ltd. [1931] 1 Comp. Cas. 307AIR 1931 PC 245 but not so far as this particular point was concerned. Learned counsel for the appellant also relies on proviso (iv ) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s we have already observed above, we do not propose to express any opinion on this aspect of the matter, because this question does not specifically arise in the case before us. In this connection, the learned counsel for the appellant also argued that the factory which was installed on the land was future property as it was affixed to the land subsequent to the creation of the charge. That, however, would not make any difference. The fact that the machinery was affixed to the land subsequent to the date of the creation of the charge has the effect of making the machinery in question a part and parcel of the immoveable property. In other words, the machinery which is embedded in the land should be considered to be appurtenant to it or rather an accretion to it. The situation in such a case would be analogous to that of a house which is subsequently constructed or a tree which is subsequently planted on a land which is already mortgaged. Reference in this connection might be made to the following cases : Reynolds v. Ashby & Son [1904] AC 466, R.M.P.M. Chettiar Firm v. Siemens (India) Ltd. AIR 1933 Rang. 195 and Mohammed Ibrahim v. Northern Circars Fibre Trading Co. AIR 1944 PC 79. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. On the other hand, if it consists of tools or other items which are not intended to be used thus and are not attached to the earth in such a manner and with this intent, such articles should be deemed to be moveable properties. On behalf of the respondent, the learned counsel has stated that the question as to whether any particular property is moveable or immoveable should be left open to be determined by the learned company judge when the case goes back to him. Learned counsel for the appellant agrees to this procedure. We have already pointed out the broad lines of distinction between moveable and immoveable property and when the question does arise before the learned company judge, we have no doubt that, as agreed by the parties before us, he would go into the matter again and re-determine the question with reference to the specific items in connection with which it is raised. In this view of the matter, the declaration made by the learned company judge will have to be modified. This appeal is, therefore, partly allowed and the holders of the third series of debentures are hereby declared to be secured creditors in respect of the moveable properties but not in respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
