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TMI Blog1981 (2) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. According to the petitioner the company had agreed that the money so paid would result in a mortgage or a charge being created by the company of its property at Indore, in favour of the petitioner and his father and brother. According to the petitioner, with a view to give effect to the aforesaid scheme, the petitioner and his father and brother issued a power of attorney dated 18th April, 1966, in favour of the Central Bank of India. By this power of attorney the Central Bank of India were, inter alia , entitled to realise from M/s. Oberoi Hotels (India) Pvt. Ltd., the intending purchasers of Swiss Hotel, the balance amount of sale price payable by them. The Central Bank was further authorised that out of the sale proceeds so received by them the debt due to the bank from the company would first be liquidated. The balance amount was to be placed to the credit of the joint account of the petitioner and his father and brother. On that very day, i.e. on 18th April, 1966, a letter was also written to Oberoi Hotels (India) Pvt. Ltd. to the effect that the balance amount of sale price payable by them should be paid to the Central Bank of India. On 19th -April, 1966, the board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to Rs. 1,48,04546 but informed the petitioner that the same would be regarded as an ordinary claim against the company as the charge was not registered under the Indian Registration Act and was within one year preceding the date of the winding up. Thereupon the petitioner filed an appeal under rule 164 of the Companies (Court) Rules, 1959. By order dated 5th January, 1978, it was held by this court that it was not a suitable case where power should be exercised under rule 164 and the question involved could be decided by an application under section 446(2) of the Act. By the same order it was also held that the official liquidator could only determine the quantum due to a debtor but could not determine the nature of the debt. By the said order leave was also granted to the petitioner to move an application under section 446(2) of the Act. It is in pursuance of the grant of the said leave that the present application under section 446 has been filed. In the present application the abovementioned facts have been reiterated by the petitioner. It has been specifically stated that in pursuance of the agreement dated 19th December, 1967, the company "by a resolution dated 19th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the charge. It was observed by the Supreme Court that a charge could be created orally. It was, however, stated that if a charge was created by a written document then the provisions of the Registration Act would have to be complied with and the document registered. In the present case what was registered under sections 125 to 130 of the Companies Act as a charge was the charge which was sought to be created on 19th December, 1967. On that date the above-mentioned document was executed which purported to create the charge. The question which arises for consideration is whether this creation of charge was valid or not because of non-registration of the said document. It is also the contention of Shri Nayar that the charge was validly created and that, in any event, even if that document is ignored the company had orally agreed to and had in fact created a charge of its property. What is the effect of a document creating a charge not being registered? Section 49 of the Registration Act, inter alia , provides that no document which is required by section 17 or by the provisions of the Transfer of Property Act to be registered shall "affect any immovable property comprised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can affect an immovable property, I fail to see how the court can accept that a property has been affected by a document, which is not registered, merely because the two parties, in the pleadings, admit that such an unregistered document was executed. The ratio of the decisions in the aforesaid cases, appears to me to be contrary to the provisions of section 49( a ) of the Registration Act. I might also usefully refer to a decisions of this court reported as Lakshmi Chand v. Iqbal Singh [1975] Rajdhani Law Reporter 67. In that case it was held that notwithstanding sections 17 and 49 of the Registration Act a partition deed which created or extinguished the right to immovable property of more than Rs. 100 was inadmissible in evidence under sections 91 and 92 of the Evidence Act. This, to my mind, is the correct position in law. It will be seen that a charge, as held by the Supreme Court, can be created orally as well as by written document. The written document in the present case dated 19th December, 1967, is clearly inadmissible in evidence. Does it mean that, on the facts and circumstances of the present case, no charge at all was created? Document dated 19th December, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction was hit because of fraudulent preference. Firstly, reliance was sought to be placed on section 531A of the Companies Act. Section 531A applies, inter alia , in the case of transfer of property. It has now been held by the Supreme Court in New Kaiser-I-Hind's case [1970] 40 Comp. Cas. 689 (SC), that creation of a charge does not amount to any transfer of interest in the property. In this case it was further held that in the case of a charge there was no transfer of property or any interest therein but a charge only created a right of payment out of the specified property. Reference was then made by Mrs. Jain to the provisions of section 531. It was contended.that within six months before the presentation of the winding up petition the charge was effected in December, 1967. In order to see whether the creation of a charge is hit by section 531 or not, reference has to be made to section 53 of the Provincial Insolvency Act, 1920. The said provision reads as under: "53. Avoidance of voluntary transfer. Any transfer of property not being a transfer made before and in consideration of marriage or made in favour of a purchaser or incumbrancer in good faith and for valuable co ..... 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