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State of Punjab Vs. Grindlays Bank Ltd. and - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtDelhi High Court
Decided On
Case NumberCompany Appeal No. 1 of 1975
Judge
Reported in17(1980)DLT566; 1980RLR490
ActsCompanies Act, 1956 - Sections 125
AppellantState of Punjab
RespondentGrindlays Bank Ltd. And; Globe Motors Ltd.
Advocates: Anoop Singh, Advs
Cases ReferredUnited Bank of India Ltd. v. K. C. Mullick
Excerpt:
the case examined the effect of revision in loan amount and the necessity of registration of charge against the company under section 125 of the companies act, 1956 - the company had granted the mortgage by the deposition of sale deed wherein there was revision in the earlier amount of loan - the earlier amount of loan was duly registered in terms of the provision - it was held that the resolution revising and increasing the amount did not require registration - it was further held that the mortgagor was a secured creditor and the charge against the company was not void - - even on the assumption that amendment by resolution of 15.4.1970: required registration under section 123 of the act, the appellant will not be in any better situation and the result will be the same......acknowledging the liability and requesting the bank to adjust the amount to the extent of rs. 30 lakhs secured dy hypothecation of raw materials and unfinished goods in the steel plant and a loan of rs. 301 lakhs secured by shares and title deec's mentioned in letter of 23.8.1969. in pursuance of this the bank passed a resolution dated 15.4.1970 that should the loan of rs. 30 lakhs remain outstanding the bank may proceed to realise securities covering the loans without any further reference to the company. (3) it appears that excise and taxation commissioner, jullundur attached the property at jullundur for realisation of alleged arrears of sales tax against the company. the bank moved the company judge for raising the attachment and for permission to sell the property at jullundur......
Judgment:

Rajindar Sachar, J.

(1) This is an appeal against the order of the learned single Judge by which he held that the respondent bank was entitled to precedence as a secured creditor and was entitled to draw the entire amount, of Rs. 6,75,000.00 being the sale proceeds of Jullundur property in partial discharge of the amounts due to the bank under the equitable mortgage.

(2) M/S. Globe Motors Ltd. created a mortgage by depositing of title deeds relating to two properties one at Jullundur and the other at Jhandewalan, New Delhi to the extent of Rs. 40,00,000 on 7.2.77. This charge was duly registered with the Registrar of Companies under Section 125 of the Companies Act. On 23.8.1969 the bank wrote to Mr. Mundra who had propounded a scheme informing him that in their books a sum of about Rs. 57 lakhs and over was due and suggesting that a board resolution would be required for the acknowledgement of the liabilities then due to the bank This was again followed by another letter of 14.4.1970 in which in continuation of the earlier letter the Managing Committee of the Company, M/s. Globe Motors was informed that an amount of over Rs. 61 lakhs was due and asking them to pass a resolution acknowledging the liability and requesting the bank to adjust the amount to the extent of Rs. 30 lakhs secured dy hypothecation of raw materials and unfinished goods in the steel plant and a loan of Rs. 301 lakhs secured by shares and title deec's mentioned in letter of 23.8.1969. In pursuance of this the Bank passed a resolution dated 15.4.1970 that should the loan of Rs. 30 lakhs remain outstanding the bank may proceed to realise securities covering the loans without any further reference to the company.

(3) It appears that Excise and Taxation Commissioner, Jullundur attached the property at Jullundur for realisation of alleged arrears of sales tax against the company. The bank moved the company Judge for raising the attachment and for permission to sell the property at Jullundur. During the proceedings the property was sold and sale proceeds kept in tact subject to the order of Court. The State of Punjab put in its claim for being treated as a preferential creditor on the ground that some arrears of Sales Tax were due to it. This was resisted by the bank who claimed a preferential right on the ground of being a secured creditor. The learned Judge has found in favor of the Bank. The State of Punjab has now come up in appeal.

(4) The only contention of the learned counsel for the appellant Mr. Anoop Singh is that the resolution A. W. 1/6 dated 15.4.1970 created an amendment of the original charge of 7.2.1967 by which there has been a modification of that charge and as admittedly there has been no registration of the resolution of 15.4.1970 which he calls a charge, under Section 125 of the Act in token of a modification of the original charge the whole amount is void against the liquidator and the creditor. This argument is raised because if accepted it will help the State because if charge is not registered then it will be void against the liquidator under Section 125 and will cease to be a secured creditor with the result for all amounts due to the bank it will have to stand in queue Along with the State of Punjab. The learned Judge has referred to the resolution and to the letters and in our view has correctly come to the conclusion that there was no novation and no amendment of the charge; and consequently no necessity for registration under Section 125 of the Act. Even on the assumption that amendment by Resolution of 15.4.1970: required registration under Section 123 of the Act, the appellant will not be in any better situation and the result will be the same. It is not disputed by Mr. Anoop Singh that the earlier charge of 17.2.1967 in the amount of Rs. 40 lakhs was duly registered under Section 125, of the Act. The property has been sold for Rs. 6,75,000.00 the sale proceeds of which have been directed to be paid to the bank. Though we have held that there was no novation, or amendment as to require the registration of the resolution of 15th April, 1970, under Section 125 of the Act, even if it was assumed that the charge should have been registered, all that would happen would be that because of the voidness of the resolution of 15.4.70 for not having been regis- tered the earlier charge of Rs. 40,00,000.00 which was undoubtedly registered will be revived since, if on account of the non-registration or other cause, the later charge is or becomes void the equitable doctrine of revival will apply so as to revive a earlier charge; vide (1966(2) Comn. L. J. 255) United Bank of India Ltd. v. K. C. Mullick & Sons Ltd. The result would be that there would be a valid existing charge of Rs. 40,00,003.00 duly registered in favor of the bank who would thus be considered a secured creditor certainly up to that amount. As in the present case the amount directed to be paid to Bank is Rs. 6,75,000.00 , in partial discharge of debt, and being very much less than the secured amount, no objection can be raised. The appellant has thus no valid grievance and the learned Judge has correctly come to his conclusion, with which we agree. We would thereforee, dismiss the appeal. As there is no appearance on behalf of the respondent there will be no order as to costs.


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