STATE BANK OF INDIA Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) THIS is a petition under Section 141 of the Companies Act, 1956 (hereinafter referred to as "the Act"), filed on January 18, 1995, for condonation of delay and extension of time for filing the particulars of modification of a charge made on October 12, 1993, by Ever-taut Steels Private Limited (hereinafter referred to as "the company"). The charge had been created on April 13, 1991, for Rs. 49 lakhs in favour of State Bank of India, Ambattur Industrial Estate Branch, Chennai-600 058 (hereinafter referred to as "the bank"). The modification relates to the offering of additional security of immovable property belonging to the company by way of second charge created on October 12, 1993. The particulars of the said modification should have been filed with the Registrar of Companies, Tamil Nadu at Chennai in terms of Section 125 of the Act on or before November 11,1993, whereas they were filed only on November 29, 1994. Hence this, petition.

(2.) According to the bank, the second respondent-company had availed of term loan facilities of Rs. 49 lakhs and created a charge in its favour against the movable and immovable properties belonging to the company on April 13, 1991. Subsequently, the company on October 12,1993, extended the equitable mortgage on the immovable properties of the company by way of second charge in favour of the bank by deposit of title deeds through constructive delivery thereof, the first charge holder being T.I.I.C. who holds the original title deeds and who have ceded the second charge in favour of the bank. The particulars of this modification, though ought to have been filed on or before November 11, 1993, were, however, filed by the bank with the Registrar of Companies, Tamil Nadu, only on November 29, 1994, after a delay of 1 year and 18 days. The bank was under the genuine belief that the company would have filed the particulars of the said modification within the prescribed time. The delay has been due to the failure on the part of the company to seek registration of the particulars of modification with Registrar of Companies, Tamil Nadu. The manager of the bank was not aware of the stringent provisions of law with regard to the consequences of non-registration of charges and also his powers to present the forms. The said delay of 1 year and 18 days was due to inadvertence and without any mala fide intentions. The delay in filing the particulars of charges will not in any way prejudicially affect the public or the company or the creditors or the shareholders of the company.

(3.) THE second respondent-company in its reply has admitted the additional security of immovable property offered in favour of the bank. According to the second respondent-company, the bank obtained signatures from the company in the relevant forms so as to register the particulars of charge with the Registrar of Companies, Tamil Nadu. THE bank itself had registered the charge in all cases. It was only at the insistence of the bank, the particulars of modification were not filed by the second respondent-company. THE company denies that the chief manager of the bank was not aware of the provisions of law with regard to consequences of non-registration of charges, when especially the bank had registered the charge in respect of the export packing credit facility extended to the company. It is further submitted that the delay will prejudicially affect the company, its creditors, shareholders and the public. THE bank is guilty of many omissions and commissions and has acted in total contradiction to the guidelines of the Reserve Bank of India issued from time to time. THE company was originally granted a limit of Rs. 34 lakhs and permitted to overdraw to the extent of Rs. 47 lakhs. A letter of credit was opened for Rs. 10 lakhs with the bank and when the amounts were regularised without even informing the company, the said overdrawn amount of Rs. 13 lakhs was adjusted towards the cash credit account, ruining the company's business. THE bank was aware that the company's factory was closed due to labour problems and the company could not meet its commitment. Though the bank assured to revive the sick unit, the limits were never renewed. THE second respondent-company was compelled to close down the unit. It is in these circumstances, the company, without prejudice to its interest, has no objection to condone the delay and extend time for filing the particulars of modification of charge.