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M.M. Meyyappa Chettiar Vs. Jayanthi Films (Madurai) Pvt. Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberPetn. No. 73 of 1961 (Sub Court, Mayuram O.S. 49 of 1960) and Applns. Nos. 115 and 163 to 165 of 196
Judge
Reported inAIR1964Mad134
ActsContract Act, 1872 - Sections 139, 140 and 141; Companies Act, 1956 - Sections 125 and 134; Provincial insolvency Act, 1920 - Sections 49
AppellantM.M. Meyyappa Chettiar
RespondentJayanthi Films (Madurai) Pvt. Ltd. and anr.
Appellant AdvocateK. Rajah Aiyar and ;K. Gopalaswami, Advs. for ;K. Sarvabhauman, Adv.
Respondent AdvocateV. Thyagarajan, ;M.A. Rajagopalan, Advs. for ;V. Veeraraghavan, Adv. and ;Dy. Official Assignee
DispositionApplication dismissed
Cases ReferredBank of India Ltd. v. R. F. Cowasjee
Excerpt:
.....obtained decree - in case creditor agreed with surety that he would secure debt advanced by him by procuring charge and fails to do so and thereby impairs rights of surety to proceed against debtor on basis of promised charge - surety have cause of action under section 139 - guarantor who guaranteed obligation of producers cannot take advantage of his own wrong in not having registered charge and plead that he is discharged of all liability as guarantor - it cannot be said that remedy of guarantor in respect of charge created under financial agreement has not been impaired - application dismissed. - - but where there is no such contract, and he only has a right to perfect what he has in his hand, which he does not do, that does not release the surety unless he can show that he..........in the said suit as not having been realised from m. v. v. nath in respect of hindi dubbing rights agreement, rs. 35, 526: 58 np. due under the distribution agreements with jubilee films (pte) ltd. for (1) madurai, ramnad, tinnevelly and kanyakumari districts and (2) tanjore, lirucnirapauj and karaikkal districts and rs. 1000, reserved in the said suit c. s. no. 4 of 1951 as not having been realised from thiruthandavam and co. messrs. jayantni films (pte) ltd. based their claims mainly on the financial agreement dated 24-2-1960 under which the insolvent venkatesam pillai stood as guarantor for all the obligations and liability of jubilee films (pte) ltd. under the agreement.2. the learned advocate for the applicants relied on the following passage in the decision in in re van laun.....
Judgment:

Sadasivam, J.

1. Applications by the creditor M. M. Meyyappa Chettiar to set aside the orders of the second respondent Official Assignee admitting the claims of the first respondent Messrs. Jayanthi Films Madurai (Private) Ltd. Messrs. Jayanthi Films Madurai (Private) Ltd. made four claims before the Official Assignee for a total sum of Rs. 2,42,177.03 nP. made up of Rs. 1,71,150.45 nP. in respect of which the company has obtained a decree in C. S. No. 4 of 1961, on the file of this court against Messrs. Jubilee Films (Private) Ltd. and the son and widow of Venkatesam Pillai, the managing director of Messrs. Jubilee Films (Pte) Ltd., Rs. 34,500 reserved in the said suit as not having been realised from M. V. V. Nath in respect of Hindi Dubbing Rights agreement, Rs. 35, 526: 58 nP. due under the distribution agreements with Jubilee films (Pte) Ltd. for (1) Madurai, Ramnad, Tinnevelly and Kanyakumari districts and (2) Tanjore, lirucnirapauj and Karaikkal districts and Rs. 1000, reserved in the said suit C. S. No. 4 of 1951 as not having been realised from Thiruthandavam and Co. Messrs. Jayantni Films (Pte) Ltd. based their claims mainly on the financial agreement dated 24-2-1960 under which the insolvent Venkatesam Pillai stood as guarantor for all the obligations and liability of Jubilee Films (Pte) Ltd. under the agreement.

2. The learned advocate for the applicants relied on the following passage in the decision in In re Van Laun ex parte Chatterton, 1907 2 K. B. 23.

'The Trustee's right and duty when examining a proof for the purpose of admitting or rejecting it is to require some satisfactory evidence that the debt on which the proof is founded is a real cent. No judgment recovered against the bankrupt no covenant given by or amount stated with him, can deprive the trustee of this right'. and contended that in spite of the decree and judgment In C. S. No. 4 of 1961, on the file of this court, the Official Assignee is bound to independently consider the claims made against the estate of the insolvent. the learned advocate for Messrs. Jayantni Films (Pte) Ltd. did not dispute this proposition. In fact, the 'Official Assignee Sri P. Sivaramakrishmah, who is an experienced Officer, has considered the claims made against the estate of the insolvent Venkatesam Pillai and admitted the claims of Messrs. Jayanthi Films (Pte) Ltd. after considering the objections of the applicant as evident from the orders sought to be set aside.

3. Sri K. Rajah Aiyar, appearing for the applicants, urged that the only point for consideration in these applications is the objection raised! by him that under the financial agreement dated 24-2-1960, on the basis of. which Jayanthi Films (Pte) Ltd. Had made the claims as a creditor to the estate of Venkatesam Pillai, a charge right is created within the meaning of Section 123 of the companies Act and the same is invalid for want of registration and hence the liability of Venkatesam Pillai as guarantor is discharged by virtue of Sections 139 and 141 of the Contract Act. He relied on the decision in Bank of India Ltd. v. R. F. Cowasjee, AIR 1955 Bom 419, in support of the above contention. It is clear from that case that it as a matter of fact and law there was an encumbrance, it should have been registered under the Companies Act and that Section 109, Companies Act of 1913 renders certain mortgages and charges on moveable property of a company void against the liquidator unless particulars relating to the same are filed with the Registrar of Companies as prescribed under the Act. It was observed in that case that if there was a charge created in favour of the bank, the subsequent conduct of the bank, would have discharged the surety. But this point was held to be not of much importance in that case as in fact no charge was created in that case at any time. Thus the observations made in the above decision are merely obiter. Section 139 of the Contract Act could be invoked by a surely only if he is able to show that the creditor has done any act which is inconsistent with his rights or omits to do any duty and thereby impairs his remedy against the principal debtor. If a charge requires registration and no valid charge has been created by reason of non-registration, it could not be said that there was a charge right which was originally available and which subsequently got impaired on account of any act of the creditor. It is true that if the creditor had agreed with the surety that he would secure the debt advanced by him by procuring a charge and falls to do so and thereby impairs the rights or the surety to proceed against the debtor on the basis of the promised charge, the surety would have a cause of action under Section 139 of the Contract Act. this is clear from the following passage from Chitty on contracts:

'If there is a contract, express or implied, that the creditor shall acquire or preserve any right against the debtor, and the creditor deprives himself of the right which he has stipulated to acquire, or does anything to release any right which he has, that discharges the surety; but where there is no such contract, and he only has a right to perfect what he has in his hand, which he does not do, that does not release the surety unless he can show that he has received some injury in consequence of the creditor's conduct'.

4. Under condition. 8 of the financial agreement dated 24-2-1960 the guarantor Venkatesam Pillai has undertaken joint and several liabilty for the payment of the entire amount due to the financiers and for the fulfilment of an the obligations of the producers under that agreement. Under the terms of the agreement the producers nave agreed to give security for the picture 'Parthipan Kanavu'. Even Under Section 134 of the Companies Act, it is the primary duty of the company to register the charge, It is true that if the company fails, to do: so, it is open to any person entitled to the charge, namely, a creditor, to have the charge registered and recover the amount of any fees from the company. Hence Venkatesam Pillai, who has guarantees the said obligation of the producers, cannot take advantage of his own wrong in not having registered the charge and plead that he is discharged of all the liability as guarantor

5. It could not be also said in. this case that any charge right created under the financial agreement dated 24-2-1960 was in any way impaired by reason of non-registration Under Section 125 of the Companies Act. It should be noted that the non-registration of the charge would render it void only as against the liquidate or the creditors The Jayanthi Films (Pte) Ltd. filed C. S. No. 4 of 1961 and got a decree. Messrs. Jubilee Films (Pte) Ltd. went Into liquidation and the Official liquidator held that the 'charge created by the Jubilee Films (Pte), Ltd. under the financial agreement was really in the nature of a pleage and not a charge which had to be registered Under Section 125 of the Companies Act and that it had been properly enforced. The Jayanthi Films (Pte.) Ltd., completely worked out their rights under the charge or pledge and the charge has become practically valueless according to them. In tact the Official Assignee has valued the same at Rs. 20,000 and deducted it from the claim of the Jayanthi Films (Pte) Ltd. Hence it could not be said that the remedy of Venkatesam Pillai, if any, in respect of the charge created under the financial agreement has been impaired. Thus, there is no scope for the applicants to claim any relief by virtue of Sections 139 and 141 of the Contract Act.

6-8. Sri K. Rajah Aiyar conceded that he has no case, if the rights created by Jubilee Films (pte) Ltd. In favour of Jayanthi Films (Pte) Ltd., is really a pledge end not a charge. (After discussing the evidence his lordship concluded).

9. For the foregoing reasons Applns. Nos. 115 and 163 to 165 of 1963 are liable to be dismissed and they are Hereby dismissed with costs. Having regard to the amounts Involved and the time taken I fix the advocate's fee at Rs. 250 (separate fee in each claim).


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