- (1.) THIS application has been filed by the voluntary liquidator of the Ludhiana Silicate and General Mills Private Ltd. (in voluntary liquidation), under Section 125 read with Section 530 of the Companies Act, 1956 (hereinafter referred to as "the Act" ).
(2.) THE company was advanced a loan of rupees one lakh by the Punjab Financial Corporation, Chandigarh (hereinafter referred to as " the corpora-tibn "), on the security of a mortgage deed executed by the company on 14th of November, 1963, and a further advance of Rs. 36,000 was made in October, 1965. The company failed to pay the instalments as agreed and the corporation took steps in the Court of the District Judge, Ludhiana, for the recovery of the loan in accordance with the procedure laid down in the Punjab Financial Corporation Act, 1951. On an application being filed by the voluntary liquidator in C. O. No. 18 of 1969, the proceedings pending before the District Judge were stayed and ultimately the property of the company, which was subject to the mortgage with the corporation was sold by private negotiations with the permission of the court. The present application was made by the company to the effect that the mortgage executed by the company in favour of the corporation was without any legal effect and was void because the aforesaid charge was not registered in the office of the Registrar within 21 days from the date of its creation as required under Section 125 of the Act and for that reason the corporation cannot claim any priority for its dues.
(3.) THE relevant part of Section 125 of the Act runs as follows : ". . . . . . every charge created. . . . . by a company and being a charge to which this section applies shall, so far as any security on the company's property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or a copy thereof verified in the prescribed manner, are filed with the Registrar for registration in the manner required by this Act within twenty-one days after the date of its creation. . . . . . ";