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TMI Blog2003 (12) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... Government of Karnataka and was taken over by the present management (UB group) in 1990 under a Rehabilitation Package formulated by the Government of Karnataka, financial institutions and banks. It is stated that the package could not be implemented in its entirety in view of the fact that certain financial assistance, contemplated under the rehabilitation scheme, was not extended. In the circumstances, on 25-6-1991, the company entered into a Joint Hypothecation Agreement with a Consortium of 10 Banks including Syndicate Bank, the 2nd respondent herein. Under the Hypothecation Agreement, a common charge against the appellant-company s stock-in-trade, goods, merchandise etc., was created in favour of the Consortium including Syndicate Bank for a sum of Rs. 13425.78 lakhs. On 27-9-1991, a charge was registered under the Act with the Registrar of Companies, Bangalore (ROC). In terms of the Agreement, the State Bank of India which is a lead bank, retains 5 per cent of the sale proceeds of fertilizers sold by the appellant-company for payment to consortium lenders consisting of 10 banks, including Syndicate Bank, commencing from the year 1994 and, at that rate, the outstanding amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would amount to modification of the scheme. Under the circumstance, on 25-2-2002, the appellants filed Forms 17 and 13 before ROC and required him to record satisfaction of charge. On 4-3-2002, the ROC pointed out the delay in filing application for recording satisfaction of charge and directed the appellant to seek condonation of delay from the Company Law Board (CLB). While so directing the appellants, the ROC also pointed out that out of 10 banks, Syndicate Bank has not countersigned Forms 17 and 13 and requested the appellants to take necessary steps for rectifying the above defect. 6. The appellants filed Application in TA 300 of 1997 before the DRT for a direction to Allahabad Bank to accept Rs. 439.42 crores in full settle- ment of Allahabad Bank s claim against Syndicate Bank and the appellants. On 25-9-2002, DRT directed the appellant to deposit Rs. 439.42 crores into an escrow account with Allahabad Bank. Accordingly, on 11-10-2002, the appellant deposited Rs. 439.42 crores into an escrow account with Allahabad Bank. On 16-12-2002, BIFR passed orders taking appellants out of SICA, leaving open the dispute among appellants, Syndicate Bank and Allahabad Bank to be resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , nevertheless, rejected the prayer of the appellants for condonation of delay by its order dated 27-8-2003 which is impugned in this appeal. 10. We have heard Sri P. Chidambaram, learned Senior counsel for the appellants and Sri K. Radhesh Prabhu, learned counsel for Syndicate Bank and Sri Shashikantha, learned Addl. Central Government Standing counsel for ROC. 11. Sri Chidambaram would contend that by passing the impugned order, the CLB has committed an apparent illegality and error of jurisdiction. Sri Chidambaram would submit that as there was delay in filing satisfaction of charge before ROC, as directed by ROC himself, appellants filed application for condonation of delay in filing satisfaction of charge before the CLB. The only issue before CLB was whether the appellants have shown sufficient cause for condoning delay or not in filing satisfaction of charge before ROC; the CLB instead of considering the application for condonation of delay on merit, exceeded its jurisdiction by going into merits of the matter and in directing the appellants to approach competent forum, if so advised, for modification of the conditions stipulated in the order dated 1-12-2000 of BIFR a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the satisfaction under section 139 of the Act is totally misconceived and not maintainable. 13. Having heard the learned counsel for the parties, the only question that arises for decision is whether the impugned order of the CLB is legal and justified or, in passing that order, the CLB has exceeded jurisdiction vested in it. 14. It is appropriate to first notice the relevant statutory provisions which have bearing on the decision-making. Section 125 provides for certain charges to be void against liquidator or creditors unless registered. Sections 138 and 141 of the Act which are more relevant for our purpose, read as follows: "138. Company to report satisfaction and procedure thereafter. (1) The company shall give intimation to the Registrar of the payment or satisfaction, in full, of any charge relating to the company and requiring registration under this Part, within thirty days from the date of such payment or satisfaction. (2) The Registrar shall, on receipt of such intimation, cause a notice to be sent to the holder of the charge calling upon him to show cause within a time (not exceeding fourteen days) specified in such notice, why payment or satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on envisaged has to be filed by the Company within 30 days from the date of payment or satisfaction. In the instant case, admittedly, there was delay of 706 days in filing the intimation. From a careful reading of the provisions of sub-section (1) of section 138 and sub-section (1) of section 141 conjointly, it is quite clear that if intimation of the payment or satisfaction of the charge was not filed within the prescribed time of 30 days, the ROC cannot receive the intimation filed beyond the prescribed time, unless the sanction of the CLB is obtained under section 141 of the Act as the power to do so has been specifically vested in the CLB and not in the ROC. The Appellants, as directed by the ROC himself, made an application before CLB under section 141 seeking condonation of delay in filing satisfaction of charge before ROC and seeking extension of time to file satisfaction of charge. The provisions of clause ( a ) of sub-section (1) of section 141, make it clear that the power vested in the CLB under section 141 is a discretionary power and that discretion has to be exercised by CLB judiciously and having due regard to facts and circumstances of each case and explanation offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as section 141 of the Act, thus: "...There is no reference there to the Court being satisfied as to the validity of the charge, and it would have been very simple to insert such a reference if it had been intended. What section 101 does is to give the Court power in certain circumstances to substitute its own time-limit for the time-limit in section 95, but apart from that it leaves section 95 to operate as if the application to register had been made in time." (p. 776) Further, in Chaudhary Builders (P.) Ltd. v. Sanghi Bros. (Indore) Ltd. [2001] 107 Comp. Cas. 466 (MP), the appellant-company therein, on February 15, 1990, executed a deed of assignment of certain immovable property in favour of the respondent, but did not file the particulars of the charge with the Registrar of Companies. The respondent on May 15, 1990, filed the particulars under section 125 of the Act with the ROC, who asked it to move the CLB for condonation of delay. The respondent on April 16, 1992, filed an application before the CLB for condonation of delay and for grant of extension of time up to May 15, 1990. The Appellant-company raised objections including that the deed of assignment did not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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