TaxTMI 
TaxTMI 
1998 (5) TMI 342
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....39;) and rule 9 of the companies (Court) rules, 1959 praying for a declaration that the charge created by the company in liquidation in favour of the Indian Bank against the land and buildings of the company, being plaint schedule properties in O.S. 169 of 1980 before the Principal sub-Court, Cochin, was void and a further declaration that the preliminary decree passed in the said suit to the extent that it created three charges on the assets of the company was contrary to the provisions of section 125 and as such void and unenforceable against the official liquidator representing the General body of creditors excluding the decree holder. 2. It will be necessary to notice the facts giving rise to this appeal for a proper appreciation of the questions raised before us. The Indian Bank advanced certain amounts to Chemmeens Exports (P.) Ltd. which was secured by an equitable mortgage by deposit of title deeds of the debtor-company with the bank. Thereafter, winding up proceedings were initiated against the debtor-company and on 1-3-1979 and winding up order was passed in Company petition No. 18 of 1978. The bank sought leave of the Company Court to file a suit for recovery of the d....
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....itself was void; that under section 125, what was required to be registered was charge created by the company and as the preliminary decree in the suit could not be said to be a charge created by the company, section 125 had no application to the decree of the Court. In any event, submitted the learned counsel, the liquidator himself being a party to the decree, it was binding on him and he could not be permitted to plead to the contrary. Shri E.M.S. Anam, the learned counsel appearing for the contest-ing respondent, argued that because the charge created by the company on its properties was void in view of mandatory provision of section 125, the Division Bench had rightly held that the preliminary decree was also void against the creditors and the liquidator and that it was of no consequence that the liquidator did not appeal against it and that the principle of res judicata had no application. 5. On these submissions, the question which falls for consideration is: what is the effect of section 125 on a preliminary decree in a mortgage suit passed on the basis of an unregistered charge : and what is relief to which the judgment creditor will be entitled to in such a case ? 6....
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....hat if a company creates a charge of the nature enumerated in sub-section (4), after 1-4-1914, on its properties, and fails to have the charge together with instrument, if any, by which the charge is created, registered with the Registrar of the Companies within thirty days, it shall be void against the liquidator and any creditor of the company. This, however, is subject to the provisions of Part-V. The proviso enables the Registrar to relax the period of limitation of thirty days on payment of specified additional fees, on being satisfied that there has been sufficient cause for not filing the particulars and instrument or a copy thereof within the specified period. Sub-sections (2) and (3) deal with repayment of money secured by the charge. Sub-section (2) provides that the provision of sub-section (1) shall not prejudice the contract or obligation for repayment of money secured by the charge and sub-section (3) says that when a charge becomes void under that section, the money secured shall become payable immediately. Though as a consequence of non-registration of charge under Part-V, a creditor may not be able to enforce the charge against the properties of the company as a se....
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....ll be necessary to read here section 446. It deals with the effect of winding up order on the suits and other proceedings pending or in the offing. Section 446 is in the following terms : 446. "Suits stayed on winding up order.-(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose. (2) The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of- (a)any suit or proceeding by or against the company; (b)any claim made by or against the company (including claims by or against any of its branches in India); (c)any application made under section 391 by or in respect of the company; (d)any question of priorities or any other question whatsoever, wheth-er of law or fact, which may relate to or arise in course of the winding up of the company; whether such suit or procee....
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....r clause (d) of sub-section (2). We wish to make it clear that under section 446, no power is conferred on the company court to declare a decree of the competent court void - a prayer which is made by the Official Liquidator in the application out of which this appeal arises - so to that extent the application filed by the liquidator in the company court is not maintainable. 13. The question, however, remains what is the effect of the preliminary decree passed by the court against the Official Liquidator on 28-5-1982. It will be useful to read here the material portion of the preliminary decree: "It is ordered and decreed that a preliminary decree is passed and that the plaintiff is entitled to realise from the defendants a sum of Rs. 29,50,605.58 with interest at 14% from the date of suit till the realization and that plaintiff is entitled to the cost of the suit also and that the defendants 1 to 3 will deposit in court on or before 28-8-1982 the abovesaid amount and cost of the Suit and on payment of the amount the equitable mortgage will stand discharged and the documents of title deposited with the plaintiff by the defendants and which are produced by the plaintiff in Cou....
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....o the contract creating charge, even under the terms of the decree was available till the said date and thereafter, 'the matter had passed from the domain of the contract to that of judgment'. 15. In Rani Sundar Koer v. Rai Sham Krishan [1934] Indian Appeals 9 (P.C.) Lord Davey observed as follows: "Their Lordships think that the scheme and intention of the Transfer of Property Act (now the corresponding provisions of the Civil Procedure Code) was that a general account should be taken once for all, and an aggregate amount be stated in the decree for principal, interest and costs due on a fixed day; and that after the expiration of that day, if the property should not be redeemed, the matter should pass from the domain of contract to that of judgment and the rights of the mortgagee should thenceforth depend, not on the contents of his bond but on the directions in the decree." That principle was followed by the Privy Council in Kusum Kumari v. Debi Prosad Dhandhania [1936] PC 63 where the question of granting interest under regulation 6 of 1872 fell for consideration. Regulation 6 provided, 'the total interest decreed on any loan or debt shall never exceed one-....