KOTAK MAHINDRA BANK LTD. Vs. NAGARJUNA TRAVELS AND HOTELS LTD.

JUDGEMENT

(1.) THE present petition is filed under section 614 of the Companies Act, 1956 ('the Act') read with regulation 44 of the Company Law Board Regulations, 1991 ('CLB Regulations') praying this Bench to direct the R1 -company and its directors to register under section 125 of the Act, the mortgage created by the respondent No. 1 in favour of the petitioner. It is submitted that the petitioner -company sanctioned a short -term loan of Rs. 50 crore to the Deccan Chronicle Holdings Ltd. ('DCHL') on 4th May, 2010. The entire amount was disbursed and transferred to the bank account of DCHL. Further DCHL also applied for a working capital demand loan facility of Rs. 50 crore from the petitioner which was also sanctioned by the petitioner. The said amount was disbursed and transferred to the bank account of DCHL. The Board of directors of R1 -company passed a resolution dated 16th July, 2012 agreeing to guarantee the payment of the debt of Rs. 100 crore to the petitioner on behalf of DCHL and also agreeing to mortgage its immovable property comprising of land and building constructed thereon hearing Municipal No. 3 -6 -356, 557, 358 near Gandhi Medical College, Basheerbagh, Hyderabad all together measuring 1580 sq. yds. to secure the loans under the short -term loan facility and WCDL facility by DCHL. The articles of the R1 -company authorised the respondent No. 1 to provide a corporate guarantee and to create security over its property. The respondent No. 1 executed an affidavit -cum -indemnity dated 18th July, 2012 and deposited title deeds relating to the mortgaged property and created mortgage in favour of the petitioner -company. The memorandum was executed on 19th July, 2012. The R1 -company also executed Form 8 for registration of charge created by it over the said mortgaged property in favour of the petitioner -company on 27th July, 2012 duly signed by its director Mr. E. Venkatram Reddy on behalf of. R1 -company and Mr. Ramakrishna P Shenoy on behalf of petitioner -company the petitioner -company appointed a company secretary to upload the Form 8 together with the documents required under the provisions of the Act on the official website of the MCA. However, the same could not be uploaded at the pre -scrutiny stage itself. On making enquiries by the petitioner -company it was found that the director whose digital signature was appended to Form 8 could not be uploaded for registration of charge on the ground that the said director is also a director of another company, viz., Open Doors Ltd., which is a defaulting company. It is submitted that the petitioner -company is a secured creditor in whose favour the charge or the mortgage has been created. Hence, the petitioner -company is an interested person under section 134 of the Act and, therefore, entitled to get the charge registered with the Registrar of Companies ('RoC') read with section 125 of the Act. The petitioner -company exhausted all the remedies available and issued a notice dated 28th November, 2012 under section 614 of the Act calling upon the respondent to come forward and comply with the filing of Form 8 before the respondent No. 2 within 14 days from the date of receipt of the said notice. The notice was received by the R1 on 5th December, 2012 but till date R1 has not complied with the filing of Form 8. Therefore it is requested to grant relief as prayed in the application. Heard the learned counsel for the petitioner -company. None appeared for the respondents. The petitioner -company sent notices to the respondents by speed post and filed proof of service before the Bench. Despite service of notices none appeared for the respondents nor present themselves. The Bench also directed the petitioner -company to send notices to the respondents. The petitioner -company has complied with the direction of this Bench by sending the notices to the respondents. The respondents failed to appear either in person or through their counsel. Neither any counter affidavit has been filed to the petition. The Bench decided to dispose of the application in their absence. From analysing the pleadings and documents it is to be decided whether the petitioner -company has made out any case seeking the reliefs as prayed in the petition. Admittedly the petition is filed under section 614 of the Act seeking direction from this Bench to direct the first respondent, its directors and the managers to register the mortgage created by the first respondent in favour of the petitioner -company. The Deccan Chronicle Molding Ltd. (not a party to this petition) applied to the petitioner -company for sanction of short term loan of Rs. 50 crore and the petitioner -company sanctioned on 22nd June, 2010. The said amount was to be repayable on or before 28th March, 2012. Further the DCHL applied for a working capital demand loan of Rs. 50 crore from the petitioner -company and the petitioner -company sanctioned the loan. The due date for repayment of the working capital was on 11th January, 2013. It is stated that the Board of directors of R1 -company, i.e., Nagarjuna Travels & Hotels Ltd. passed a resolution dated 16th July, 2012 agreeing to guarantee the repayment of Rs. 100 crore due to the petitioner -company from DCHL and agreed to mortgage its immovable property comprising of land and building. The R1 -company executed a corporate guarantee for a sum of Rs. 100 crore on 18th July, 2012 to secure the repayment of the amounts availed by DHCL. Further the R1 -company also executed an affidavit -cum -indemnity dated 18th July, 2012 and deposited title deeds relating to the property mortgaged and created mortgage over the said mortgaged property in favour of the petitioner -company. The R1 -company also executed Form 8 for registration of the charge created by it over the said mortgaged property in favour of the petitioner -company on 27th July, 2012. From the sequence of events it is clear that the R1 -company in its Board meeting dated 16th July, 2012 authorised its director Mr. E Venkatram Reddy to execute the guarantee aggregating Rs. 100 crore and authorised to mortgage the immovable property and execute required mortgage documents as may be required. Accordingly, the R1 -company executed corporate guarantee in favour of the petitioner -company on 18th July, 2012. In the schedule annexed to the corporate guarantee it is shown that the name of the guarantor is R1 -company and name of the borrower is DCHL and the credit facility to the extent of Rs. 100 crore. Further Mr. E Venkatram Reddy on behalf of the R1 -company executed affidavit -cum -indemnity dated 18th July, 2012. The petitioner -company vide its memorandum dated 19th July, 2012 acknowledged the deposit of title deeds by the R1 -company and also the guarantee given by R1 to the petitioner -company. Schedule A to the memorandum of deposit of title deeds, the details of particulars of the petitioner -company, the borrower and the mortgager have been given. In Schedule B the details of documents have been given. Further the petitioner -company filed Form 8 with the concerned Registrar of Companies ('RoC'). However, it was stated that the said Form could not be uploaded on the website of the MCA at the pre -scrutiny stage itself with the following remarks "some pre -scrutiny validation have failed, please make the required change and upload the Form again". It is stated that the petitioner -company's representative contacted the R1 -company in order to obtain necessary corrections and also made personal visit to the office of the R1 but they were not successful. Further it is stated that on enquiries it was found that Mr. E Venkatram Reddy is also a director of another company which is a defaulting company and that may be the reason for the online system of the MCA not accepting Form 8 through its online service. It is an admitted fact that the R1 -company authorised one Mr. E Venkatram Reddy to execute the necessary documents and forms in respect of mortgage and creation of charge on its immovable property in the name of the petitioner -company. Accordingly, Mr. E Venkatram Reddy executed the necessary documents in relation to mortgage and creation of charge and also appended his digital signature on Form 8. According, the respondent company has complied with all the formalities in respect of mortgage and creation of charge. The petitioner -company filed the petition under section 614 of the Act, invoking the jurisdiction of this Bench. Section 614 empowers the Bench direct the company and any officer thereof to make good the default, provided if a company having made default in complying with any provisions of the Act which requires it to file or register with or deliver or send to, the registrar any return, account or other document or to give notice to him of any matter, fails to make good the default within 14 days after the service of a notice on the company requiring it to do so. In the present case the respondent No. 1 -company authorised one of its director to execute the documents and sign the necessary forms in respect of mortgage and creation of charge. The director who was authored to sign Form 8 is also stated to have appended his digital signature on the Form 8 creating the charge. Thus, the R1 -company has fulfilled its obligations and has not made any default which requires the Bench's indulgence to direct the R1 -company and any of its officers to make good the default. The director who was authorised by the R1 -company to execute the documents is stated to be a director of another company which is a defaulting company. In the said circumstances, it is for the petitioner -company to ventilate its grievances against the R1 -company. Seeking directions from the Bench by invoking jurisdiction as vested under section 614 is my view is completely misplaced. As stated supra the company and its officers who has been authorised to file Form 8 for creation of charge has complied in creation of charge and in filing of Form 8 with RoC. On the other hand, from the pleadings it is seen that the company's inability to file Form 8 is due to MCA online services not accepting the digital signature of the director who has signed the Form 8 due to his default in some other company. In such a situation no directions can be issued against R2 as section 614 of the Act envisages issue of directions by Company Law Board only against the company and its officers who are in default and not against anyone else. In view of the reasons as stated above the petition has miserably failed both on facts and on law and the petitioner -company is not entitled for any reliefs as prayed for. Therefore, the petition is liable to be dismissed. Accordingly, the petition is dismissed. No order as to costs.