Unregistered charge and fixtures in mortgage law: pre-liquidation interest payments stood, and integrated structures remained within the security.

An unregistered charge under section 125 of the Companies Act, 1956 was treated as void only against the liquidator and creditors, so interest payments made under a lawful subsisting arrangement before liquidation could not be reopened or recalculated at the original rate. The court also applied the settled test of attachment and permanent beneficial enjoyment to hold that wooden partitions, a pump-set, a hut, a motor-car shed, lights and fans, together with other integrated improvements, formed part of the mortgaged property where the deed covered additions, improvements and accessions. The mortgage security was therefore upheld in the form claimed by the mortgagees.

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Issues: (i) Whether the mortgagees were bound to readjust the interest payments made at 91/2% by recalculating interest at 8% under the original mortgage deed; and (ii) whether the wooden partitions, motor pump-set, Missen hut, motor-car shed, lights and fans, other than permanent fittings, were to be excluded from the mortgaged property to be sold.

Issue (i): Whether the mortgagees were bound to readjust the interest payments made at 91/2% by recalculating interest at 8% under the original mortgage deed?

Analysis: The enhanced interest was paid pursuant to a subsequent agreement by which the mortgagor obtained extension of time for repayment of the principal amount. Although the promised supplemental mortgage deed was not executed and registered, the payments at the enhanced rate were made before liquidation in pursuance of a lawful arrangement supported by consideration. Section 125 of the Companies Act, 1956 renders an unregistered charge void only against the liquidator and creditors, and not void for all purposes or as against the company itself while it remained a going concern. The court found no basis to reopen payments already made and appropriated in accordance with the parties' arrangement merely because liquidation had intervened.

Conclusion: The official liquidator was not entitled to compel readjustment of the excess interest payments or to have the payments treated as made only at 8%.

Issue (ii): Whether the wooden partitions, motor pump-set, Missen hut, motor-car shed, lights and fans, other than permanent fittings, were to be excluded from the mortgaged property to be sold?

Analysis: Immovable property under section 3 of the General Clauses Act, 1897 and section 3 of the Transfer of Property Act, 1882 includes things attached to the earth or permanently fastened to anything attached to the earth. The court applied the settled test of attachment, object of fixation, and permanent beneficial enjoyment. On the evidence and photographs, the disputed items were treated as constructions and improvements integrated with the building, and the mortgage deed itself covered the unfinished superstructure, future constructions, additions, improvements, accessions, and the land. The court held that these items were not temporary or detachable articles outside the hypotheca.

Conclusion: The disputed items were not liable to be excluded from the property forming the security.

Final Conclusion: The mortgage security was upheld in the form claimed by the mortgagees, and the application by the official liquidator was rejected in its entirety.

Ratio Decidendi: An unregistered charge under section 125 of the Companies Act, 1956 is void only against the liquidator and creditors and does not permit reopening of payments lawfully made under a subsisting arrangement before liquidation; items annexed to and intended for the beneficial enjoyment of the building may form part of the mortgaged property where the mortgage deed expressly includes additions, improvements and accessions.

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