N.V.ANJARIA, J. - (1.) THE question that arises for consideration is whether a claim of debt based upon a charge of mortgage, secured under decree of the Court passed post -winding up, would automatically confer upon the decree holder a status of "secured creditor" for the purpose of enforcement of such claim before the Official Liquidator against the company in liquidation, even though the charge was not registered in compliance of Section 125 of the Companies Act, 1956?
(2.) THE applicant -IFCI Limited in this Company Application, by taking out Judge's Summons prayed for a direction against respondent No.1 -Official Liquidator to re -examine the claims of the applicant, workers and other creditors in light of the observations made in order dated 09th July, 2012 passed by this Court in Company Application No.26 of 2010. It further prayed to determine the final percentage of ratio in terms of the aforesaid order for entitlement of secured creditors and workers completing the exercise time bound. A direction was prayed requiring the Official Liquidator to file report containing full details of undisputed funds in respect of the proceeds of sale of assets of M/s.Gujarat Inject Limited -the company in liquidation. Basic Facts
(3.) THE relevant facts emerging from the record may be set out. The company in liquidation -M/s.Gujarat Inject Limited came to be wound up by order dated 20th January, 2000 passed by this Court in Company Petition No.18 of 1989. The Official Liquidator took possession of the properties and assets of the company comprising of land and building, plant and machinery and movables situated at Survey No.23, 25/1, 25/2 -B and 30/2 at Village Alindra, Taluka Kalol, District Panchmahal. They were sold at Rs.01,90,00,000/ - to M/s.Setco Automative Limited. 3.1 The applicant had sanctioned loan jointly with IDBI and ICICI to the company in liquidation for Rs.179 lakhs on 13th May, 1985; further on 27th September, 1985 as well as on 28th October, 1985 of Rs.82.74 lakhs in foreign currency. A mortgage transaction was effected in that regard and a Deed dated 19th August, 1987 was executed. In the recovery proceedings being O.A. No.293 of 2000 filed before the Debt Recovery Tribunal, Ahmedabad jointly by the applicant -IFCI, IDBI and ICICI, the Tribunal passed judgment and decree on 12th March, 2004. On the basis of the said decree by the Debt Recovery Tribunal it has been the case of the applicant that they acquire status as secured creditor under Section 529 -A read with Section 529 of the Companies Act, 1956. Therefore, it is being contended, that though the charge was not registered as required under Section 125 of the Companies Act, non -registration would not affect their categorization as secured creditor under Section 529 -A read with Section 529 for the purpose of payment of its dues, in view of the decree passed. It is the case that a sum of Rs.11,82,41,735/ - was payable to the applicant on the date of winding up, which has mounted to Rs.01,09,76,30,112/ - when this Company Application was filed on 31st August, 2012. 3.2 It appears that the applicant herein claiming the capacity of a secured creditor, filed Company Application No.26 of 2010 seeking directions for determination of inter se ratio and final distribution of the funds. In the said Company Application Official Liquidator filed his Reports. In the Report dated 24th August, 2010 the Official Liquidator suggested distribution of Rs.01,75,00,000/ -, then available for disbursement. The ratio pattern was indicated. As the present applicant, opponent No.2 -IDBI, etc., raised certain objections to the Report of the Chartered Accountant. In view of the anomalies and issues emerged, another Report dated 24th December, 2010 determined the ratio in respect of various claims. 3.3 It further appears that thereafter as directed by this Court, the Official Liquidator filed yet another Report dated 15th December, 2011 clarifying the factual position with regard to the registration of charge. The Official Liquidator in his Report stated that no charge on the immovable property was got registered with the Registrar of Companies, Gujarat by IFCI, ICICI and IDBI under Section 125 of the Companies Act, 1956. The Chartered Accountant confirmed the said position by their letter dated 15th December, 2011 stating that on the company's immovable properties such as land and building, the IDBI, ICICI and IFCI have no charge and they are not a secured creditor on that property. 3.4 It thus surfaced as an undisputed position that none of the said three financial institutions had complied with the requirements of Section 125 of the Act. The Chartered Accountant opined that therefore applicant -IFCI and respondent No.2 -IDBI and ICICI being the assignee of respondent No.3 herein cannot claim status of secured creditors. Previous Proceedings; Present Proceedings The Company Application No.26 of 2010 previously filed by the applicant was disposed of by this Court by detailed order dated 09th July, 2012. The Court referred to the facts, relevant statutory provisions and considered the decision of the Apex Court in Indian Bank Vs Official Liquidator, Chemmeens Exports (P) Limited, 1998 5 SCC 401 . Following were some of the observations made by this Court in the said order dated 09th July, 2012. "18.6 Section 125 of the Act will be applicable in cases where property of company in liquidation is offered as security and "charge" is created. However charge created by conduct or act of a person / company and / or by contract cannot be equited with or cannot be put on par with decree or order of Court. It may be, in given case, that the Court's order or decree is passed on the basis of mortgage created by the company however if the charge created by the act of a person / company or contract by a person / company is merged in the order or decree of the Court the security as well as relationship of the parties will be governed by the directions passed by the Court and reflected in the order or decree and, as observed by the Apex Court in the case of Indian Bank , it will not be hit by Section 125 of the Act. If on reading and construction of the decree or order of the Court it emerges that the charge which was within the domain of contract has not travelled into the realm of order or decree by the Court and has not merged into the Court's order then, undoubtedly, Section 125 of the Act will be attracted and will be applicable and in such situation unregistered charge will be void against all creditors and OL, however if it emerges that it has merged into Court's order or decree then Section 125 of the Act will not be applicable. 18.11 The legal position in connection with Section 125 of the Act clarified and declared by the Apex Court is applicable to order or decree passed by the Court inasmuch as the Apex Court has, as mentioned above, held that "where the charge is by operation or created by order or decree of the Court, section 125 has no applicability". 18.12 In light of the said observation by the Apex Court it has to be held that even though special and additional obligation is created by section 125 of the Act which requires registration of "charge" (and the instrument, if any), the said requirement will not be applicable to the cases where the charge is created by order or decree of Court if the unregistered charge is extinguished by and it has merged into order or decree of the Court. However if the decree or order of the Court has kept the charge alive then the obligation created by section 125 would be applicable with all force. Differently put, if the unregistered charge has merged in the decree or order of the Court then the relationship would be governed by the terms of the decree or order of the Court which would not be affected by obligation under section 125 of the Act. 19. In light of the foregoing discussion of reasons it follows, so far as facts of present case and particularly the order by the learned Tribunal is concerned, that the observations and directions in the said order has extinguished the unregistered charge and the said unregistered charge, upon expiry of period of one month after the date of the order merged in the order of the Court. Accordingly as a result of and in view of the above noted observations and directions, the bank became entitled to realise its dues by sale of the immovable properties in question. The charge created by act or conduct of the parties / by a contract was kept alive for one month. During the said period the charge continued to be matter of contract but after one month the charge travelled into the realm of order of Court and merged into the order. Thus, as held by the Apex Court, the nonregistration of charge against the immovable properties of the company is not hit by the requirement under Section 125 of the Act and is not rendered void. 20. In this view of the matter, OL shall have to reexamine the claim and / or the objections of the applicant and other creditors as well as by workers, in light of the legal position declared by the decision in case of Indian Bank ." 4.1 The Court inter alia directed to Official Liquidator that he would ascertain as to whether the four properties of which a reference had been made in the order passed by the Tribunal were personal properties of the directors or guarantors or they were the properties of the company. The Official Liquidator was further required to ascertain whether any properties other then mentioned in the order of the Tribunal were auctioned and sold; Those properties were not mentioned in the Tribunal's order. 4.2 In the present Company Application, the applicant claiming to be a secured creditor on the basis of the decree passed by the Debt Recovery Tribunal, seeks the relief as aforesaid. Respondent No.5 -Gujarat Labour Federation filed affidavit -inreply and contended inter alia that Report of Chartered Accountant dated 19th February, 2013 was required to be rejected, that the same was not in consonance with law, that in the earlier Company Application No.26 of 2010, this Court required the Official Liquidator to ascertain whether the four properties of which reference was made by the Tribunal in its order were personal properties, etc., which has not been gone into. It was contended that even if the claim of the applicant and other creditors were required to be considered by virtue of the decree passed by the Debt Recovery Tribunal, their claim would not stand at par with the workmen under Section 529 -A of the Companies Act, 1956. It was contended that the said aspect was not examined in light of true legal position emanating from the decision in Indian Bank . 4.3 The Official Liquidator has filed his Report dated 07th April, 2014 and 07th November, 2014 in response to the prayers in this Company Application. The applicant filed further affidavit placing the details of the documents relating to the loan transaction made at the relevant time with the company in liquidation on the basis of which the decree came to be passed by the Debt Recovery Tribunal, and also placing copy of judgment and decree of the Debt Recovery Tribunal. 4.4 Referring to the Reports of the Chartered Accountant obtained from time to time and the last Report dated 18th March, 2014, the Official Liquidator has given the following details about the amount realized from the sale of assets and immovable properties to be distributed amongst the secured creditors and workmen under Section 529 of the Act. JUDGEMENT_248_LAWS(GJH)3_2015.jpg 4.5 The official Liquidator stated that it has funds of Rs.02,30,95,697/ - as on 28th February, 2014 in the account of the company in liquidation. He has stated that after deducting the expenses incurred by IFCI, keeping provision for income tax liability, other expenses of professional fees and other contingent expenses, amount of Rs.02,00,00,000/ - could be distributed amongst the secured creditors. Post -winding up Decree ;