KALUPUR COMMERCIAL CO-OPERATIVE BANK LTD. Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) THE present petition is filed under section 14(1) of the Companies Act, 1956 ('the Act') seeking directions to the respondent No. 1 to rectify the register of company in liquidation, i.e., Navrang Synthfab (P.) Ltd. and to register the charge of the petitioner over the property of the company being the land bearing survey No. 267/P situated at Mouje, Iyava, Taluka, Sanand Distt. Ahmedabad, for which the company in liquidation has already created equitable mortgage with effect from 29th August, 2000 in favour of the petitioner. Shri Nandish, learned counsel appearing for the petitioner narrated the brief facts. He submitted that the petitioner -bank had granted certain financial facilities to Navrang Synthfab (P.) Ltd. (the company in liquidation) along with the other group companies administered and managed by the same group of persons. However, the company was irregular in repaying the advances granted by the petitioner. As on 30th March, 2007, the company was indebted to the tune of Rs. 83,86,836 to the petitioner -bank, plus further interest thereon. It is submitted that the directors/guarantors of the company (in liquidation) had executed usual and necessary documents in favour of the petitioner -bank on 22nd October, 1999 to secure the repayment by the company (in liquidation) from the petitioner -bank as on the said date. Such documents were demand promissory note, letter of lien, deed in acceptance of the credit facilities, guarantee bond, agreement for issuance of bills, etc. -all executed on 22nd October, 1999. It is further submitted that in order to further secure the repayment of its dues, the director of the company (in liquidation) vide letter dated 29th August, 2000, deposited the original title deed of the property of the company (in liquidation) being land bearing Plot No. 267/P admeasuring 20,639 sq. meters situated at Mouje village Iyava (Vasna) Taluka: Sanand, District Ahmedabad, Gujarat ('the subject property'), with an intention to create equitable mortgage over it in favour of the petitioner -bank. It is asserted that the petitioner -bank is presently holding the original copies of the title deeds of the subject property. Hence, under the provisions of Transfer of Property Act, more particularly section 58(f) of the Act, the deposit of original title deed of any property in order to secure the repayment by a debtor to the creditor itself constitutes an equitable mortgage and, hence, the petitioner -bank has become the sole secured creditor of the company (in liquidation) qua the subject property. It is submitted that as soon as the title deeds of the subject property were deposited by the company (in liquidation) to the petitioner -bank, the mortgage was completed and, hence, the petitioner -bank got its charge registered before the Revenue Authority by way of letter dated 4th September, 2000.

(2.) IT is submitted that the petitioner -bank was neither aware of filing and/or pendency of the company Petition No. 222/99 in the hon'ble Gujarat High Court whereby the company (in liquidation) was sought to be wound up, nor the directors or the guarantors of the company (in liquidation) had apprised the petitioner -bank about the said fact while creating the charge of the petitioner -bank qua the subject property. The petitioner had granted credit facilities to the company with all bona fides and after taking due care and caution and upon receiving the security of immovable property. The hon'ble Gujarat High Court passed an order dated 4th December, 2000 of winding up of the company (in liquidation) in the said petition. It is submitted that on 12th October, 2007, the respondent No. 2 had published public advertisement in Divya Bhaskar newspaper, wherein, it was mentioned that the official liquidator, attached to the hon'ble Gujarat High Court (respondent No. 2 herein) has put the properties of the company (in liquidation) for public auction and offers of the public at large were invited under the said advertisement. The subject property appeared in Lot No. 4 of the said advertisement amongst other two properties. It was at that time that for the first time the petitioner came to know about the filing of the above petition and the order passed by the hon'ble Gujarat High Court ordering winding up of the company. On perusing the said advertisement, the petitioner -bank immediately addressed a communication dated 16th October, 2007 to the Official Liquidator, wherein the petitioner registered its objections for holding of auction of the subject property. Pursuant to the said communication, the petitioner -bank received a communication dated 19th October, 2007 from the office of the official liquidator stating therein that the advertisement was published pursuant to the order passed by the hon'ble Gujarat High Court and if the petitioner wants to get the same cancelled or withheld, it may approach the hon'ble court for suitable orders. Pursuant to the said letter dated 19th October, 2007, the petitioner -bank again wrote a letter dated 23rd October, 2007 to the office of the official liquidator, whereby, it was conveyed that out of the properties described in the public advertisement, the property in Lot -IV being plot No. 267/P, i.e., land admeasuring 20,639 sq. metres, situated at Mouje -village Iyava (Vasna), Taluka: Sanand, Dist. Ahmedabad is given as security by Mr. Jagrut Jayantilal Bhagdev, director of the company (in liquidation) by executing power of attorney dated 4th September, 2001 in favour of the petitioner -bank. The respondent No. 2 again wrote a letter dated 25th October, 2007 to the petitioner reiterating that the petitioner cannot be considered as a secured creditor and may file its claim against the company (in liquidation) as prescribed under the Companies (Court) Rules, 1959. Thereafter by way of communication dated 6th November, 2007, the petitioner submitted its claims against the company (in liquidation) as per the Form No. 66 prescribed in Companies (Court) Rules, 1959 ('Court Rules') to the respondent No. 2 on 6th November, 2007. It is submitted that thereafter without giving any hearing to the present petitioner, the respondent addressed a communication purporting to be an order dated 20th November, 2007 passed under rule 163 of the Court Rules. On perusing the said order, it was found that by way of the said order the respondent had rejected the claim of the petitioner. The petitioner -bank filed the Company Application No. 71/2008 being an appeal as provided under rule 164 of the Court Rules challenging the communication (order) dated 20th November, 2007 of official liquidator. The hon'ble court directed the official liquidator to consider the present petitioner as a creditor of the company and further restraining him from dealing/disbursing with the sale proceeds recovered from the subject property. It is submitted that under the provisions of the Act, subject to the exceptions stated in rule 149, no charge of any secured creditor would be valid against the liquidator, if the same is not registered as per section 125 of the Act. Since the company is in winding up proceedings before the hon'ble Gujarat High Court, permission of the court was required to be obtained. Hence, the petitioner filed an application being Company Application No. 90 of 2008 in the hon'ble Gujarat High Court under section 446 of the Act, seeking permission of the court to initiate proceedings before this Board. The said application came to be allowed by the hon'ble Court vide order dated 25th February, 2008, permitting the petitioner to file the present proceedings. The learned counsel relied upon the judgment of the Madras High Court reported in Akkirath Mandanat Manakkal Thuppan Nambudiri v. Official Liquidator, Malayalee Bank Ltd., (1954) 24 Comp Cas 489. It is of the view "undoubtedly the language of the section supports the contention of the appellant". If the court is satisfied that the omission to register in time was due to inadvertence or some other sufficient cause, it is not necessary that the court should be further satisfied that it "is not of a nature to prejudice the position of creditors or shareholders of the company". With great respect to the learned Judge, we think that he overlooked the effect of "are" which separates each of the clauses in section 120(1) from the other. On a proper construction of the section, it is clear that the court is entitled to extend the time provided the court is satisfied that any of the following conditions is satisfied, viz., (i) the omission was accidental or due to inadvertence or to some other sufficient cause, (ii) the omission is not of a nature to prejudice the position of creditors or shareholders of the company, and (iii) on other grounds it is just and equitable to grant reliefs. These conditions are not cumulative because of the disjunctive "or". The court held that "but we agree with him that this is a case in which it must be held that the omission to register in time was due to inadvertence or some other sufficient cause". In view of the reasons and facts as stated above, he prayed this Bench to grant the reliefs as prayed for.