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U.P. Government Vs. L. Manmohan Das and ors. - Court Judgment

LegalCrystal Citation
SubjectElectricity
CourtAllahabad
Decided On
Reported inAIR1941All345
AppellantU.P. Government
RespondentL. Manmohan Das and ors.
Excerpt:
- - , ltd air1940all458 .5. now, it is a well-recognized canon of interpretation that the general word which follows particular and specific words of the same nature as itself takes its meaning from them, and is presumed to be restricted to the same. in both the creditor is entitled to follow the property for the satisfaction of his debt with this difference :that a simple mortgage being a right in rem is good against subsequent transferees while a charge is only good as against a subsequent transferee with notice or a volunteer with or without notice. the rule of interpretation referred to above is subject to another well recognized rule that the restricted meaning which primarily attaches to the general word in such circumstances is rejected when there are adequate grounds to show.....iqbal ahmad, c.j.1. the question referred for decision to this full bench is 'whether a 'charge' is or is not a 'transfer' within the meaning of clause (2) of section 9, electricity act (9 of 1910).' by that act 'licensee' is defined as meaning 'any person licensed under part 2 to supply energy,' and it is provided by clouse (2) of section 9 that:the licensee shall not at any time assign his license or transfer his undertaking, or any part thereof, by sale, mortgage, lease, exchange or otherwise without the previous consent in writing of the provincial government.2. the penalty for violation of the mandatory provisions of clouse (2) of section 9 is prescribed by clouse (3) of the same section in the following words:any agreement relating to any transaction of the nature described in.........
Judgment:

Iqbal Ahmad, C.J.

1. The question referred for decision to this Full Bench is 'whether a 'charge' is or is not a 'transfer' within the meaning of Clause (2) of Section 9, Electricity Act (9 of 1910).' By that Act 'licensee' is defined as meaning 'any person licensed under part 2 to supply energy,' and it is provided by Clouse (2) of Section 9 that:

The licensee shall not at any time assign his license or transfer his undertaking, or any part thereof, by sale, mortgage, lease, exchange or otherwise without the previous consent in writing of the Provincial Government.

2. The penalty for violation of the mandatory provisions of Clouse (2) of Section 9 is prescribed by Clouse (3) of the same section in the following words:

Any agreement relating to any transaction of the nature described in.... Sub-section (2), unless made with, or subject to, such consent as aforesaid, shall be void.

3. The question whether the creation of a charge as distinguished from a mortgage, over the undertaking amounts to a transfer within the meaning of Clause (2) of Section 9, was considered by my brother Allsop in In re Official Liquidators v. Debenture-holders of the Lower Ganges-Jumna Electricity Distributing Co., Ltd. (in liquidation) and was answered in the affirmative. He held that because a charge is not necessarily a transfer in some circumstances it does not follow that the Legislature did not mean to prevent a licensee from creating a charge upon his property without the sanction of the Local Government. There seems to be no 'reason why the licensee should be forbidden to mortgage his undertaking or any part of it and yet at the same time should be allowed to create a charge upon it. I am inclined to think, therefore, generally that it was the intention of the Legislature to prevent a licensee from charging his property with any debt unless the Local Government agreed that he should do so. In the second place, it is necessary to point out that the provisions of Section 9 not only prevent a transfer but also prevent an agreement to transfer.... Under the provisions of Section 100, T.P. Act, a charge on immovable property creates the same effect generally as a simple mortgage.... I should think, therefore, that a charge, if it is not an immediate transfer, is at least an agreement to transfer when certain contingencies arise ... The result is that the creation of a charge is an agreement to transfer property and as such in my judgment it is void if the property is an undertaking or part of an undertaking to which the provisions of the Indian Electricity Act apply.

4. A Letters Patent appeal was filed against the decision of my brother Allsop and the Letters Patent Appeal Bench consisting of Thorn C.J. and Ganga Nath J. differed from him and held that the 'charge' was not a 'transfer' within the meaning of Clause (2) of Section 9. They observed that

in our judgment in no sense of the term can a charge be regarded as a transfer either in praesenti or in futuro : vide Manmohan Das V. Lower Ganges Jumna Electricity Distributing Co., Ltd : AIR1940All458 .

5. Now, it is a well-recognized canon of interpretation that the general word which follows particular and specific words of the same nature as itself takes its meaning from them, and is presumed to be restricted to the same. genus as those words. In other words, it is to be read as comprehending only things of the same kind as those designated by them, unless, of course, there be something to show that a wider sense was intended : vide Maxwell on the Interpretation of Statutes, Edn. 7th, page 284. The counsel for the debenture-holders placed reliance on this rule and contended that as the words 'or otherwise' in Clause (2) of Section 9 follow the words 'transfer, sale, mortgage, lease, exchange,' the words 'or othewise' must be construed ejusdem generis with the words which preceded them. The argument is that the words 'or otherwise' in the context in which they occur cannot be given such an extended meaning as to bring within their scope a transaction that is not a 'transfer' in the eye the of law. It is therefore urged that a charge not being transfer does not fall within the purview of Section 9 (2). In support of his argument the learned Counsel invited our attention to Kishan Lal V. Ganga Ram ('90) 13 All 28, Altaf Begam V. Brij Narain : AIR1929All281 and Shiva Prasad Singh V. Beni Madhab ('22) 9 A.I.R. 1922 Pat 529. It was held in these cases that a charge only gives right to payment out of a particular fund or particular property and that no interest in the property itself is transferred by a charge. The learned Counsel therefore contends that the words 'or otherwise' following as they do the word 'transfer' cannot include a charge.

6. In the view that I take it is unnecessary for me to decide whether by the creation of a charge over specific property an interest in that property either in praesenti or in futuro is or is not transferred. But I may observe in passing that the right created by a charge is something more than a personal obligation, for it is a jus ad rem, i.e., a right to payment out of the property specified. There is very little difference between a charge and a simple mortgage. In both the creditor is entitled to follow the property for the satisfaction of his debt with this difference : that a simple mortgage being a right in rem is good against subsequent transferees while a charge is only good as against a subsequent transferee with notice or a volunteer with or without notice. It is however worthy of note that charge is a specific subject dealt with by the Transfer of Property Act and it is therefore permissible to say that the Legislature treated 'charge' as amounting to transfer of property. By Section 5, T.P. Act, the phrase 'transfer of property' is defined as meaning 'an act by which a living person conveys property in present or in future, to one or more other living persons....' Even if it be conceded that by creating a charge a person does not convey property 'in present' it is by no means clear that by a charge property is not conveyed 'in future.' By charge immovable property is 'made security for the payment of money to another' and the security is enforceable by sale of the property. It, therefore, appears to me difficult to hold that by a charge no interest in the property charged is created in favour of the charge-holder. I however consider it unnecessary to express a definite opinion on the point. The rule of interpretation referred to above is subject to another well recognized rule that the restricted meaning which primarily attaches to the general word in such circumstances is rejected when there are adequate grounds to show that it has not been used in the limited order of ideas to which its predecessors belong. If it can be seen from a wider inspection of the scope of the legislation that the general words, notwithstanding that they follow particular words, are nevertheless to be construed generally, effect must be given to the intention of the legislature as gathered from the larger survey.

7. In other words, the general object of the Act to be construed sometimes requires that the final generic word shall not be restricted in meaning by its predecessors:

Upon this principle it has been held that, having regard to the object of Section 32, Patents, Designs and Trade Marks Act, 1883 (c. 57) - repealed, 8. 36, Patents and Designs Act, 1907 (c. 29) - as seen on a consideration of the whole section and the law existing at the time of its enactment, in construing the reference to threats of legal proceedings 'by circulars, advertisements, or otherwise' which it contained, the words 'or otherwise' were not to be restricted to threats by measures ejusdem generis with circulars or advertisements, but were to be regarded as extending the previous words so as absolutely to prohibit any threats whatever of legal proceedings by a patentee for the infringement of his patent, unless they were followed up speedily by an action: vide Maxwell on the Interpretation of Statutes, Edn. 7, pp. 288 and 289.

8. As I take into account the general purpose and scope of the enactment under consideration it seems to me that the general words 'or otherwise' in Section 9 (2) are to be given a wide interpretation even though they follow the words 'transfer, sale, etc.' The object underlying the enactment is to provide for the supply of electrical energy to the public and the purpose of the enact, ment will be frustrated if transactions that are calculated to pass the undertaking from the hands of a body approved by the Government to some other body are countenanced. Section 9 (2), I feel, was enacted with a view to ensure that the licensee will not do any act which results in the assignment of the license or the undertaking to some person who in the opinion of the Provincial Government, will not be able to perform the obligations imposed by the license. Even though a 'charge' may not be a 'transfer' within the meaning of the Transfer of Property Act, there appears to me no adequate ground to give a restricted meaning to the word 'transfer', in the Electricity Act, the more so as the last mentioned Act is not in pari materia with the Transfer of Property Act. The word 'transfer' in my opinion, is used in Section 9 (2) in a wide sense as embracing the transactions which either in present or in future may lead to the passing of the undertaking from one person to another. A charge entitles a charge-holder to realize his debt by sale of the property charged, and, as such, the creation of a charge over the undertaking may ultimately lead to the sale of the undertaking. I therefore consider that the Legislature in using the word 'transfer' did not intend to exclude a 'charge' from its purview.

9. Further, if it was the intention of the Legislature not to prohibit the creation of a charge over the undertaking and to confine the operation of Section 9 (2) only to such transactions as are, by common consent, transfers within the meaning of Transfer of Property Act nothing would have been easier than to follow the words 'sale, mortgage, lease, exchange' by the word 'gift' and to drop the words 'or otherwise' from the Sub-section. Apart from charge the only transactions recognized as transfers by the Transfer of Property Act are sale, mortgage, lease, exchange and gift. It is therefore clear that by the addition of the word 'gift' in the clause under consideration the Legislature could easily have exhausted all the forms of transfer recognized by the Transfer of Property Act and thus could have avoided the use of the words ' or otherwise'. It follows that the words 'or otherwise' must have been used with a view to widen the scope of the Sub-section and to bring within its purview transactions which though not transfers in praesenti partake of the nature of such transactions. That this is so is, to my mind, put beyond doubt by Sub-section (3) of Section 9. That subsection renders void not only transfers or transactions specifically mentioned in Sub-section (2), but enacts that even an agreement relating to any transaction 'of the nature' described in Sub-section (2) shall be void. Even if it be conceded that a charge is not a transfer it cannot, in my view, be disputed that a charge is a transaction that partakes of the nature of a mortgage. The conclusion is therefore irresistible that the creation of a charge over the undertaking is prohibited by Sub-section (3) of Section 9. That being so it is not unreasonable to assume that Sub-section (2) also embraces a charge and prohibits the creation of the same. My answer to the reference, therefore, is that a 'charge' is a 'transfer' within the meaning of Clause (2) of is. 9, Electricity Act.

Allsop, J.

10. The question before this Full Bench is whether a charge is or is not a transfer within the meaning of Sub-section (2), Section 9, Electricity Act. This sub-section lays down that a licensee shall not transfer his undertaking or any part thereof by sale, mortgage, lease, exchange or otherwise without the previous consent in writing of the Provincial Government. The question has arisen out of a case in which a limited liability company, namely the lower Ganges-Jumna Electricity Distributing Co. Ltd., which was the licensee of an undertaking for the distribution of electricity issued debentures and created a charge upon its assets. The company had not obtained the previous consent in writing of the Provincial Government to the issue of the debentures and the creation of the charge. The question which arose was whether the agreement between the company and the debenture-holders was void under the provisions of Sub-section (3) of Section 9, Electricity Act. This subsection says that any agreement relating to any transaction forbidden by Sub-section (2) shall be void unless it is made with or subject to the consent of the Provincial Government. If the charge on the undertaking is a transfer of the same nature as a sale, mortgage, lease or exchange, it is clear that the agreement relating to the charge is void. The argument on behalf of the debenture-holders was that a charge was not a transfer. The question came before me sitting as a single Judge and I decided as my Lord the Chief Justice has already pointed out in his opinion that the charge was a transfer and that the agreement was void. There was an appeal under the Letters Patent to a Bench of the Court which decided that a charge was not a transfer and the agreement was not void : Manomohan Das v. Lower Ganga Jumna Electricity Distributing Co. Ltd. : AIR1940All458 . This Bench has now to consider whether that ruling is to be accepted as laying down a correct proposition of law.

11. I have already expressed my opinion in the case to which I have referred, but, in deference to the arguments which have been addressed to us, I should like to discuss the matter again. A transfer between living persons in my judgment takes place when a right or interest which has existed in one person ceases and at the same time comes into existence in some other person. The term 'transfer' is not defined in the Electricity Act or in the Transfer of Property Act or in the General Clauses Act except in so far as Section 5, T.P. Act, states that a transfer of property means an act by which a living person conveys property in present or in future to one or more other living persons or to himself and one or more other living persons. The terms of this section do not carry us very far and I, therefore, think that it is better to convey my conception of a transfer of property in the simplest language. If that conception is right, then the creation of a charge is a transfer if thereby any right or interest existing in the person who creates the charge is destroyed and the same right or interest is simultaneously created in the holder of the charge. It seems to me that the condition is satisfied. The creation of a charge in specific property gives the charge-holder a right to recover a certain sum of money from the value of the property charged and to that exact extent reduces the interest of the creator of the charge in the property. I would distinguish between a fixed charge for the recovery of a specific sum of money from specific property and a floating charge for the recovery of money from the general assets of the person who creates the charge. In the former case, in my judgment a transfer of an interest immediately takes place when the charge is created. In the latter case the charge is contingent, that is, on the occurrence of some event, a fixed sum of money due at the time becomes recoverable from the specific assets which are in existence at that time. When the contingency arises, the charge is crystallized and then becomes a fixed charge. A floating charge is an agreement by which the creator of the charge stipulates that in the event of a certain contingency an interest in the property which happens to be in his possession at that time shall be conveyed to the holder of that charge. It seems to me therefore that the creation of a charge is an agreement to transfer an interest in property immediately or at some future time.

12. I have examined the reported case in Manomohan Das v. Lower Ganga Jumna Electricity Distributing Co. Ltd. : AIR1940All458 with some care in order to discover in what point the learned Judges who decided that case differed from the opinion which I had already expressed. I think that point is to be found in that part of the judgment of the learned Judges in which they say that a charge is less than a mortgage and a mortgage is something less than a transfer of property. It seems to me that the learned Judges conceive a transfer as being the transfer of a complete entity, that is, a house or an estate or a share in an estate or something of that kind and with the greatest deference to them, I think that they overlooked the point that there may also be a transfer of an interest. They were not right, in my judgment, in saying that a mortgage was something less than a transfer of property. It is one of the forms of transfer recognized in the Transfer of Property Act and is defined as a transfer of an interest in property. It seems to me that the Legislature in enacting Section 9, Electricity Act, was clearly using the term in the same sense because one of the specific transfers which it mentioned is a mortgage. They might just as well have spoken of the transfer of an undertaking such as a sale, lease, or exchange or a transfer of an interest in an undertaking such as a mortgage. The term 'otherwise' in Sub-section (2) of Section 9, Electricity Act, must be construed as referring to transactions similar to those specifically mentioned and must include a transaction similar to a mortgage provided that that transaction amounts to a transfer of an interest in property. I have already explained that it seems quite clear to me that a charge is a transfer in the sense that an interest which has existed in the creator of the charge passes to the holder of the charge. I may now add that it appears to me that a charge creates an interest almost the same as an interest created by a simple mortgage. A simple mortgagee has the right to bring the property mortgaged to sale and to re-cover from the proceeds of the sale the amount of money which is secured by the mortgage. A charge, holder is in exactly the same position against the property charged once the charge has become fixed and there is no way in which he can recover his money at least in so far as the property charged is capable of sale except by sale of the property. It is true that the right of a charge-holder is more restricted than that of a mortgagee because the former cannot follow the property into the hands of a transferee for consideration who has no notice of the charge. It seems to me however that this fact does not affect the issue.

13. It was suggested at the bar at one stage of the argument that the charge, holder if he had an interest could enforce it against the whole world and therefore against a transferee for consideration without notice of the charge. In my judgment this argument is not sound. A person may have a right and interest in the property and yet may not be able owing to some specific rule of law to enforce it against some person or some class of persons. An ostensible owner of property has no right in the property and consequently a transfer by him cannot affect the rights of the real owner. The real owner retains his right in the property and yet in some circumstances as set forth in Section 41, T.P. Act, he cannot enforce that right against a transferee in good faith from the ostensible owner. A right to recover a debt does not disappear when the period of limitation for instituting a suit has expired but the right cannot be enforced on account of the specific rule of law that a suit cannot be instituted after that period. On the other hand, if the charge-holder had no interest in the property charged, it is difficult to see how he could enforce his charge against a transferee with notice or a transferee without consideration. Qui prior est tempore potior est jure. A charge-holder can enforce his charge by putting the property to sale in the hands of a transferee with notice or a transferee without consideration merely because his interest was created before the interest of the transferee. Learned Counsel for the debenture-holders was constrained to admit when the point was put to him, that his clients had an interest in the property. When he was asked where that interest came from, he fell back upon the argument that it had not been transferred but had been created, as it were, out of nothing. Without being dogmatic I am inclined to think that a private person cannot create a right which has not previously existed in himself, but it is unnecessary to pursue this suggestion because in the case of a charge it is quite obvious that the creation of the charge gives the charge-holder a right to recover his money out of the property charged and reduces the value of the property in a corresponding measure to the creator of the charge. As I have already said, this seems to me clearly to be a transfer of an interest in the property.

14. Learned Counsel for the debenture-holders contended however that this question whether a charge was a transfer was not res integra but that this Court should consider itself bound by authority. Learned Counsel quoted four cases, namely, 13 All. 28, 1929 A.I.R. 367 : A.I.R 1936 Lah 482 and 1 Pat 387. I have examined these cases with great interest in order to discover on what grounds the learned Judges based the conclusion that a charge did not transfer any interest in property. I find that no reasons are given in any of the judgments. In 13 ALL 282 the question before the Court was whether a certain deed amounted to a mortgage. It was argued at the bar that the deed did not specifically confer a right to put the property to sale and that the right was not implied because the term 'rehan' was not used. The learned Judges had no difficulty in deciding that the deed was a mortgage because the words 'arh' and 'mustaghraq' which were used did imply that the person in whose interest the property was hypothecated had a right to put the property to sale. The only justification for saying that the learned Judges held that a charge was not a transfer is that one of them quoted with approval a passage out of a text-book in which there was the following sentence, namely:

In every mortgage there must be a transfer of an interest in specific immovable property, while in the case of a mere charge no interest is transferred, nor is it necessary that the property to which it relates should be specific.

15. There was no discussion of the question which never really arose and if the learned writer of the text-book was referring to a floating charge, he was doubtless right in saying that no interest was immediately transferred. It is also possible that the learned writer was influenced by the English conception at the time that a mortgage was a transfer of a legal estate and that a charge was not. This case is no real authority for the proposition which has been put forward by learned Counsel on behalf of the debenture-holders.

16. In 1929 AL J 367 the dispute arose because a wife purported to transfer her past and future right to the recovery of maintenance or pin money, the payment of which had been secured, by the hypothecation of a certain village. The learned Judges held that the future right could not be transferred and that the whole transaction was void. In the body of the judgment of the Court delivered by one of the learned Judges there is a passage as follows:

Now there is a clear distinction between a mortgage and a charge, the former being a transfer of an interest in immovable property as a security for the loan, whereas the 'latter is not a transfer,, though it is nonetheless a security for the payment of an amount.

17. There is again no discussion in this case of the question and no reasons are given for the statement that a charge is not a transfer. If the learned Judge was referring to the question of future payments of maintenance or pin money he was doubtless right in saying that no immediate interest in the village had been transferred as security for these payments. He went on to say that

the right to recover such allowance is not itself immovable property, and indeed no question of enforcing the charge arises so long as the amount has not fallen into arrears.

18. I have no doubt that an interest was created in the village as soon as any specific amount of maintenance or pin money fell due and was not paid. Indeed on a previous occasion when a suit had been instituted by the lady for maintenance already recoverable, she had put the property to sale without question and had recovered the money from it. It seems to me that this case again is no real authority for the proposition that a charge does not create an interest in the property charged as soon as the charge becomes fixed.

19. In 1 Pat 387 the learned Judges had a particular document before them which they were called upon to construe. The argument was that this created a charge and not a mortgage. As the learned Judges held that it was a mortgage, the question of the incidents of a charge did not really arise. One of the learned Judges said that the broad distinction between a mortgage and a charge was this: that whereas a charge gave only a right of payment out of a particular fund or particular property without transferring that fund or property, a mortgage was in essence a transfer of an interest in specific immovable property. The learned Judge gave no reasons for his statement. He went on to say that the distinction between a mortgage and a charge was very clear in England but that was not so clear in India and ultimately the decision based upon the finding that the Bengali word 'bandhak' used in the document meant a mortgage. This case again is no authority for the proposition which learned Counsel for the debenture-holders has put before us. In A.I.R. 1936 Lah 482 the question was again whether a particular document created a mortgage or a charge and again it was held that it created a mortgage so that the question of the nature of a charge did not really arise. The learned Judge who delivered the judgment of the Court expressed certain dicta about the incidents of a charge and stated that a charge did not create an interest. His only reason if one can be inferred seems to have been that the Transfer of Property Act specifically defines a mortgage as a transfer of an interest in property and does not use those words where it defines a charge. As I have already said, the question did not really arise on the findings of the Court and no real reason is given for the assumption made that a charge did not create an interest in property.

20. In the majority of these cases the question was whether a particular document was a mortgage or a charge and the Courts in discussing this question tried to distinguish between the two. It was apparently taken for granted by them that a charge was not a transfer of an interest, but, as I have already said, no reasons were given for this proposition. A simple mortgage of immovable property is a transfer of an interest in that property which must be specific and the mortgagee has a right to get the property put to sale by the Court. A mortgage is created by act of parties. A charge, on the other hand, may not be on immovable property at all. It may not be, while it is floating, on any specific property and may be created not only by act of parties but by process of law. That seems to me to be the distinction between a simple mortgage and a charge. When a charge becomes fixed on specific immovable property, it is to all intents and purposes a mortgage if it is created by act of parties. Under the provisions of Order 34, Rule 15, Schedule 1, Civil P.C., it is to be enforced exactly in the same way as a mortgage. A charge on moveable property is not a mortgage. A floating charge, while it remains floating, is not a mortgage and a charge created by process of law is not a mortgage.

21. I am satisfied that this Court is not bound by any authority in coming to its decision upon the question before it and, as I have already stated, I hold that a charge is a transfer of the same kind as a mortgage and consequently that it comes within the prohibition expressed in Sub-section (2) of Section 9, Electricity Act, and that an agreement by which a charge is created by the licensee of an electrical undertaking is void under Sub-section (3) of Section 9, Electricity Act, if the previous consent in writing of the Provincial Government has not been obtained unless the agreement has been made specifically subject to such approval.

Yorke J.

22. I have had the advantage of reading the judgments of my Lord the Chief Justice and my learned brother Allsop J., and there is very little which I need say inasmuch as I am in full agreement with their view that a 'charge' is a transfer within the meaning of Clause (2) of Section 9, Electricity Act (9 of 1910). It seems tome on reading the decision of the Bench in 1940 A.I.R. 449 that their view in regard to the interpretation of Section 9, though not so stated, was really based on the view that this section could not be intended or allowed to hamper a company engaged in the important work of supplying the public with electricity in its ordinary business dealings with its property. They said that it was contended that the policy of the Act is clear, namely to prevent license-holders burdening their property with secured debts, and that they did not agree that this was the policy of Government, and it was apparently for this reason that they were inclined to the-view that the section must be construed most strictly as not applying to anything which was not obviously a transfer. It does, however, seem clear that the policy of the Act was to protect the public against the danger that a public utility company's assets might come by transfer or something, analogous to a transfer into the hands of persons not capable of running such a concern, unless such transfers or quasi-transfers were subject to the prior consent in writing of the Government. It seems to have been to secure this specific object that provisions were made in the Act which do have the effect and must be presumed to have intended to have the effect of limiting the powers of a company to deal with its property, whether the object of the company might be to get money for the concern itself or to get money for the other business projects of the licensee. Willynilly as it seems to me the provision in Section 9(2) of the Act was bound to and we must therefore suppose that it was intended to, hamper business transactions of companies engaged in supplying electricity in certain directions. It seems to me, therefore, that the underlying idea with which the problem of construing the section was approached was fallacious, and that in construing the section that idea must be discarded.

23. It was, however, with this first premise that the Bench, if I may say so with respect, went on to consider the question whether a charge amounted to a transfer. They began by laying down the propositionin plain terms that in their judgment a charge could not be regarded as a transfer either in praesenti or in futuro, but the sequence of argument upon which they ultimately based the conclusion was that 'charge' is 'less than mortgage' and a mortgage is something less than the transfer of property. A fortiori a charge was something very much less than a transfer. It is not disputed at the bar however that a mortgage is a transfer of property and that the statement that a mortgage is something less than the transfer of property is difficult to support. It is not necessary for me to discuss the various rulings quoted at the bar which have already been discussed by my learned brother, but it is worthy of note that in all those cases the first assumption which was made, and the correctness of which was not in dispute, was that a mortgage is a transfer of an interest in property.

24. It is again, I think, free from dispute that although there are certain distinctions between a simple mortgage and a charge, yet when the stage arrives of putting a charge into effect there is no distinction between a charge and a simple mortgage. It has been held that a charge is in the nature of a mortgage and the charge-holder is entitled to recover the amount due to him from whichever portion of the property he chooses. In another case it was held that as a charge-holder has all the rights of a simple mortgagee he can, when the nett proceeds of the sale have proved insufficient, and if the balance is recoverable from the defendant, claim a personal decree for such amount. While therefore it is true that even according to the definition in Section 100, T.P. Act, a 'charge' may be called something 'less than a mortgage', since one of the features of it by definition is that it 'does not amount to a mortgage,' yet in its ultimate character a 'charge' is clearly of the nature of a mortgage, and if therefore a simple mortgage is a transfer of property, it is difficult to see how something which partakes of that nature and which when put into effect gives the charge-holder the same rights as accrue to a simple mortgagee, can be held not to amount to a transfer. I am fortified in this conclusion by the fact that 'charge' is one of the subjects dealt with in the Transfer of Property Act. That very fact, as I understand it, means that for this country by act of the Legislature a charge is to be regarded as coming within the ambit of transfers of property. If that is so for the purposes of the Transfer of Property Act, it must clearly be so for the purposes of the Electricity Act.

25. On the other point on which I would lay some stress is the wording of the section. It being conceded that the words 'or otherwise' must in accordance with the canons of interpretation mean transfers of a similar nature to those which have been mentioned in the earlier part of the section, learned Counsel for the debenture-holders was asked to say what other forms of transfer could be referred to. By reference to the Transfer of Property Act itself it seems that the only ordinary form of transfer not mentioned in Sub-section (2) of Section 9 which is mentioned in the Transfer of Property Act, that is, excluding a charge, is a transfer by gift. It is obvious that if this was the only form of transfer remaining it was as easy for the Legislature to have said 'or gift' as it was to say 'or otherwise,' and had that not been done, it might have been reasonable to infer that transfers or quasi transfers by means of charge did not come within the scope of the clause. But the Legislature instead of speaking of gift used the words 'or otherwise' which must clearly have been intended to cover all other transactions having the nature of a transfer and in their nature allied to the kinds of transfer referred to individually in the section. This view of the intention or the scope of the words 'or otherwise', in this section is somewhat fortified by the frame of Sub-section (3) which provides that:

Any agreement relating to any transaction of the nature described in Sub-section (2) unless made with or subject to such consent as aforesaid (that is, the previous consent in writing of the Provincial Government) shall be void.

26. I do not suggest that the words 'of the nature' can be interpreted as having a wider connotation than the words 'or otherwise' in Sub-section (2), but I think they do assist towards the proper interpretation of the words 'or otherwise,' since they suggest that those words are intended to cover transactions which are analogous to or have a resemblance in character to the transactions of transfer mentioned in the previous sub-section. On all counts therefore in my judgment the answer to the question before the Bench is that a 'charge' is a transfer within the meaning of Sub-section (2) of Section 9, Electricity Act.

27. By the Court. - The answer to the reference is that a 'charge' is a 'transfer' within the meaning of Sub-section (2) of Section 9, Electricity Act.


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