Company charge enforcement and limitation: unregistered security remained effective against a purchaser, and the mortgage suit was timely.

A mortgage suit for sale of charged properties was maintainable in the ordinary civil court because enforcement under Order 34 CPC fell outside the Companies Act's special company-court control. Non-registration of the company charge did not render the mortgage void against a purchaser who took the property subject to the security; the charge remained effective against the company while a going concern and was void only as against the liquidator and creditors. Ext. A-9 created both a specific charge over identified immovable properties and machinery and a floating charge over other assets, so sale of the specifically charged properties was competent. The suit was also within limitation, having been filed within twelve years from enforceability of the security.

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Issues: (i) whether the Subordinate Judge's Court had jurisdiction to entertain the mortgage suit; (ii) whether non-registration of the charge under the Companies Act rendered the mortgage void and unenforceable against the purchaser from the company; (iii) whether Ext. A-9 created only a floating charge or also a specific charge enforceable by sale of the mortgaged properties; and (iv) whether the suit was barred by limitation.

Issue (i): whether the Subordinate Judge's Court had jurisdiction to entertain the mortgage suit

Analysis: Jurisdiction under the Companies Act is confined to matters that the Act places within the company court's control. A suit for enforcement of a mortgage by sale of charged properties under Order 34 of the Code of Civil Procedure is not such a matter. The ordinary civil court with general pecuniary jurisdiction could therefore entertain the suit.

Conclusion: The objection to jurisdiction failed and the suit was maintainable in the Subordinate Judge's Court.

Issue (ii): whether non-registration of the charge under the Companies Act rendered the mortgage void and unenforceable against the purchaser from the company

Analysis: Section 125 makes an unregistered charge void only against the liquidator and creditors of the company, while preserving the debt and the obligation to repay. The security remains effective against the company while it is a going concern. A purchaser who buys the property subject to the mortgage cannot treat the charge as a nullity merely because the charge was not registered.

Conclusion: The mortgage was not void as against the appellant, and the purchaser could not claim the property free from the mortgage.

Issue (iii): whether Ext. A-9 created only a floating charge or also a specific charge enforceable by sale of the mortgaged properties

Analysis: The deed specifically charged the existing immovable properties and machinery described in the schedules, while also creating additional floating security over future assets and other items. The presence of a floating charge did not destroy the specific mortgage charge. The right to proceed against the specifically charged properties therefore remained intact.

Conclusion: Ext. A-9 created both a specific charge and a floating charge, and the suit for sale of the specifically charged properties was competent.

Issue (iv): whether the suit was barred by limitation

Analysis: Under the deed, default in payment of yearly interest and certain other contingencies made the principal and interest immediately payable after the grace period, while redemption was in any event fixed for 5 June 1954. On either basis, the suit filed on 20 March 1961 was within twelve years. The mortgagor could not convert a contractual option reserved for the mortgagee into an immediate bar against enforcement by relying on his own default.

Conclusion: The suit was within limitation.

Final Conclusion: The decree in favour of the mortgagee was upheld because the civil court had jurisdiction, the charge remained enforceable against the purchaser, the deed contained a specific mortgage security in addition to floating charge rights, and the suit was filed in time.

Ratio Decidendi: Non-registration of a company charge avoids the security only against the liquidator and creditors in winding-up, not against the company while it continues as a going concern or against a transferee who takes subject to the mortgage; a deed may validly create both a specific charge and a floating charge, and limitation for enforcement runs from the contractual enforceability of the security, not from the mortgagor's default alone.

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