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TMI Blog2014 (4) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... ber industries was based on individual contracts entered into with each of the concerns. The appellant and the members of the said Association entered into an agreement for supply of natural gas. The agreement provided the price payable for supply of gas and the rate of interest in the event of failure to pay the stipulated prices. 3. On 30th March, 1979, the contractual period of the aforesaid contract expired. After the expiry of the contract, a new contract stipulated prices for supply that were prevalent at the time of the respective contracts. The then levied price for supply of gas was Rs.504/- per unit. 4. The Association formed a Society registered under the Cooperative Societies Act. The Association filed Special Civil Application No. 833 of 1979, before the Gujarat High Court praying to issue appropriate writ directing the directing the Respondent therein (Appellant herein) to supply the break up and data on the basis of which price structure was arrived at by ONGC, for supply of the gas etc. 5. The Gujarat High Court by an interim order dated 30th March, 1979 in the said Application, directed the Appellant herein to continue supply of gas at the old rate, i.e., Rs.504 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in on an application filed by the ONGC complaining of non-payment by the members of the Association, this Court observed that the liability of the members of the Association to make the payment of amounts due from them to the ONGC was beyond controversy and cannot be disputed. In the aforesaid order, it was further observed that the principal amount due from Ambica Mills Co. Ltd. as on 31st March, 1993 in respect of period 1st April, 1979 to 21st January, 1987, as shown in the statement furnished by ONGC, is Rs. 1.58 crores and interest thereon amounted to Rs.4.96 crores. Ambica Mills Co. Ltd. admitted the principal amount. The interest calculated would be accepted subject to verification. At the relevant time, reference relating to Ambica Mills Co. Ltd. under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) was already pending before the Board for Industrial and Financial Reconstruction (BIFR). Upon consideration of the matter, this Court on 29th April, 1993 granted the prayer of ONGC that it would be entitled to take steps for disconnecting the supply of gas in case of non payment of the amounts due. This Court directed that the principal amount must be paid wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made for release of the aforesaid amount to ONGC. 14. It appears that respondent No.10-Textile Labour Association, Bhadra sought review of the order dated 17th October, 1997 by filing Review Petition Nos.1193- 1203 of 2001 in I.A.No.168-178/1997 in C.A.No.8530-40 of 1983. The aforesaid review petitions were decided by this Court on 12th April, 2004 and it was directed that claims of ONGC will have to be worked out in accordance with Sections 529 and 529A of the Companies Act as well. The submissions made on behalf of ONGC that the mandamus issued by this Court earlier that ONGC must be paid up first from any sale of the assets of the company in liquidation, would prevail even if the statutory provisions contained in Sections 529 and 529A of the Companies Act, were rejected. The aforesaid judgment of this Court is reported at 2004 (9) SCC 741. 15. The record also shows that ONGC moved Company Application No.445 of 2000 in Company Petition No.121 of 1995 by way of judges summons, in which directions were sought that outstanding amounts of the ONGC be paid by the company in liquidation. Further, an injunction be issued restraining the company in liquidation its agents, officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right on the basis of the order passed on 17th October, 1997. According to Mr. Kuhad, the second error committed by the High Court is that it has wrongly concluded that no security was created in favour of the appellant on the basis of the interim order passed by this Court on 15th April, 1987 and the undertaking furnished by the company in liquidation Ambica Mills Co. Ltd. pursuant to the order of this Court. The third error committed by the High Court, according to Mr. Kuhad, is in holding that no security has been created in favour of the appellant as no charges have been registered under Section 125 of the Companies Act, 1956. Mr. Kuhad has submitted that the undertaking dated 27th May, 1987 is a superimposition on the priorities as given in Sections 529 and 529A of the Companies Act. In support of his submission, learned senior counsel has relied on a number of judgments which we shall notice presently. 19. Learned counsel for the respondents has submitted that the genesis of the civil appeal is the interim order dated 15th April, 1987. It is submitted that the aforesaid order is in the nature of an injunctive order whereby the company in liquidation was directed, not to char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel for the parties. In our opinion, the appellant cannot claim that the order dated 15th April, 1987 created an enforceable charge on the assets of the company in liquidation. We are of the opinion that the learned counsel for the respondents are quite right in their submissions that an injunction was issued only to ensure that the company in liquidation does not further encumber or create charges in favour of third parties over the assets of the company in liquidation. In our opinion, neither the interim order dated 15th April, 1987 nor the undertaking given pursuant thereto can be said to be a charge on the assets of the company in liquidation. This Court in the case of Indian Bank Vs. Official Liquidator, Chemmeens Exports (P) Ltd. & Ors. (1998) 5 SCC 401 whilst considering the provisions contained in Section 125 of the Companies Act has observed as follows :- "6. Since the preliminary decree is assailed as being void under Section 125 of the Act, it would be useful to read here the said provision, insofar as it is relevant for our purposes. It reads: "125. Certain charges to be void against liquidator or creditors unless registered.-(1) Subject to the provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quidator and any creditor of the company. This, however, is subject to the provisions of Part V of the Act. The proviso enables the Registrar to relax the period of limitation of thirty days on payment of specified additional fees, on being satisfied that there has been sufficient cause for not filing the particulars and instrument or a copy thereof within the specified period. Subsections (2) and (3) deal with repayment of money secured by the charge. Sub-section (2) provides that the provision of sub-section (1) shall not prejudice the contract or obligation for repayment of money secured by the charge and sub-section (3) says that when a charge becomes void under that section, the money secured shall become payable immediately. Though as a consequence of non-registration of charge under Part V of the Act, a creditor may not be able to enforce the charge against the properties of the company as a secured creditor in the event of liquidation of the company as the charge becomes void against the liquidator and the creditor, yet he will be entitled to recover the debt due by the company on a par with other unsecured creditors. It is also evident that Section 125 applies to every cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No particular form of words is necessary to create a charge and all that is necessary is that there must be a clear intention to make a property security for payment of money in praesenti. In Jewan Lal Daga v. Nilmani Chaudhuri, a case relied on by him, the question was one relating to an agreement to mortgage. Following on the agreement, a draft mortgage was prepared which was approved by the respondent's solicitors, the mortgage deed was engrossed and even the stamp for it was paid by the respondent. The question was whether specific performance of the agreement compelling the respondent to execute the mortgage could be granted before accounts between the parties were made up and the amount due thereunder was ascertained. The Privy Council disagreeing with the High Court held that that could be done and observed that " there was a valid agreement charging the property with whatever sum was actually due......and that a proper mortgage ought to be executed to carry out these terms." In Khajeh Suleman Quadir v. Salimullah certain deeds were executed purporting to make wakfs of certain properties in favour of the members of a Mahomedan family and then for charitable purposes. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company will be further charged and encumbered hereafter with effect from 15.04.1987, i.e. from the date of order of this Hon'ble Court except with the leave of this Hon'ble Court. 4. I state that Respondent NO.10 Company further undertakes not to alienate any of its immovable assets hereinafter with effect from 15.04.1987 except with the leave of this Hon'ble Court. The Respondent No.10 Company further undertakes to make available all its immovable assets in the event of discharging the liabilities which may arise on account of the difference between the price at which all the Gas being supplied to the company during the pendency of the proceedings in this connection and the price which may be determined by this Hon'ble court while disposing of the present Appeals finally. 23. A perusal of the aforesaid undertaking shows that Ambica Mills has not identified any particular immovable assets which would be made available in discharging the liabilities in favour of the appellant. Therefore, we have no hesitation in rejecting the submission of Mr.Kuhad that the interim order read with the undertaking expressed an intention to create an enforceable charge of any particular asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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