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Calcutta National Bank (In Liquidation) Vs. Abhoy Singh Sahela and anr. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 163 of 1955
Judge
Reported inAIR1959Cal464,63CWN467
ActsCompanies Act, 1913 - Sections 109A and 120(1) and 120(2); ;Companies (Amendment) Act, 1936; ;Companies Act, 1956 - Sections 125, 127 and 141; ;Code of Civil Procedure (CPC) , 1908 - Section 9
AppellantCalcutta National Bank (In Liquidation)
RespondentAbhoy Singh Sahela and anr.
Appellant AdvocateR. Chowdhury, ;Bonomali Das, Advs.
Respondent AdvocateSubimal Roy, ;Amiya K. Bose and ;Bholanath Sen, Advs.
DispositionAppeal allowed
Cases ReferredHriday Nath v. Ram Chandra
Excerpt:
- lahiri, j.1. three questions of some importance arise for consideration in this appeal and before i proceed to consider them on merits i must record my grateful appreciation of the ability with which learned counsel appearing on both sides have presented their respective cases before the court. the first question is whether an unsecured creditor of a limited company has any locus standi in a proceeding for extension of time for registration of a mortgage or charge under section 120 of the indian companies act, 1913 as amended by act xxii of 1936. the second question is whether the court is competent to extend the time under that section for registration of a mortgage or charge in a case which comes under section 109-a of the indian companies act of 1913, and if the answer to the second.....
Judgment:

Lahiri, J.

1. Three questions of some importance arise for consideration in this appeal and before I proceed to consider them on merits I must record my grateful appreciation of the ability with which learned Counsel appearing on both sides have presented their respective cases before the Court. The first question is whether an unsecured Creditor of a limited company has any locus standi in a proceeding for extension of time for registration of a mortgage or charge under Section 120 of the Indian Companies Act, 1913 as amended by Act XXII of 1936. The second question is whether the Court is competent to extend the time under that section for registration of a mortgage or charge in a case which comes under Section 109-A of the Indian Companies Act of 1913, and if the answer to the second question be in the negative, the third question is whether an order of extension actually made by the Court under Section 120 (as amended by Act XXII of 19S6) in a case which comes under Section 109-A, is a nullity or an illegal order made by irregular assumption of jurisdiction.

2. The facts upon which the above questions arise are as follows :

On 30-1-1944, one Ranjit Bose entered into an agreement with one Robert Stanley Treanor for the purchase of a tea estate named the Rangaroon Tea Estate belonging to the latter and in pursuance of the said agreement paid a sum of Rs. 20,001/- as earnest money on 1-2-1944 and was put into possession. Thereafter the said Ranjit Bose approached the Calcutta National Bank Ltd. (now in liquidation) which has been and will hereinafter be described as the Bank, for a loan of Rs. 2,75,000/-. The Bank agreed to lend the said amount provided the said Ranjit Bose agreed to repay the sum with interest at the rate of 6 per cent. per annum and further agreed to secure the repayment by creating a mortgage by deposit of title deeds relating to the Rangaroon Tea Estate. On 18-6-1944, the said Ranjit Bose promoted and registered a limited company named the Rangaroon Tea Estate Co. Ltd., which has been and will hereinafter be described as the company. On 3-8-1944, the Board of Directors of the company passed resolutions authorising Ranjit Bose, who was one of the directors of the company, to act as a trustee of the company in the matter 6f the purchase of the Rangaroon Tea Estate for the company and also in the matter of the mortgage of the said Tea Estate in favour of the Bank. On 30-8-1944, the Bank advanced a sum of Rs. 2,75,000/- to the said Ranjit Bose with a further arrangement to advance upto the limit of Rs. 20,000/- on cash credit account and to secure repayment with costs and interest. Ranjit Bose hypothecated in favour of the Bank by way of first charge the entire Tea Estate with all the tea crops and all the moveables belonging to the Rangaroon Tea Estate and deposited the title deeds of the said Tea Estate. By an indenture dated 30-12-1944, Ranjit Bose transferred to the company the tea estate subject to the mortgage and charge in favour of the Bank. The company did not file particulars of the charge with the Registrar of Joint Stock Companies within the period of twenty-one days allowed by law whereupon the Bank which was not a party to the indenture dated 30-12-1944, filed an application for extension of time on 2-4-1949. No notice of this application was served either upon the company or upon any of its creditors and upon this ex parte application S.B. Sinha, J., made the following order on 4-4-1949 : 'It is ordered that the time for registration and for filing of particulars of the charge created under the said memorandum of deposit of title deeds and the said deed of hypothecation dated 30-8-1944, subject to which the properties were acquired by the said company under the conveyance dated 30-12-1944, in the office of the Registrar of Joint Stock Companies West Bengal be and the same is hereby extended by a month from the date hereof.'

3. Pursuant to the aforesaid order the Bank duly filed particulars of the charge and of the deed of hypothecation with the Registrar of Joint Stock Companies on 27-4-1949. It is clear both from the order of S. B. Sinha, J. and from the application upon which that order was made that in that proceeding the Bank proceeded on the footing that the case was one which came under Section 109-A and not under Section 109 of the Indian Companies Act of 1913.

4. On 30-1-1950, the Bank instituted a suit in the Court of the Subordinate Judge, Darjeeling, for enforcement of its charge against the company for the recovery of a sum of Rs. 1,70,365/12. The Company entered appearance in the suit and filed a written statement on 28-4-1950. Sometime in 1951, the suit was transferred to this Court under Clause 13 of the Letters Patent and registered as Extraordinary Suit No. 2 of 1951.

5. The respondent No. 1, Abhoy Singh Sahela instituted a suit on the Original Side of this Court (Suit No. 755 of 1949) for the recovery of the price of packing materials supplied by him to the Company together with commission and damages, claiming a total sum of Rs. 1,27,270/11/9. On 20-2-1951, there was a preliminary decree in the aforesaid suit directing a reference and on 6-12-1951, the reference was concluded and on 17-8-1953, a final decree was made in favour of Abhoy Singh Sahela for the entire amount claimed by him.

6. On 18-12-1951, the company was ordered to be wound up and on 2-12-1952, the Bank went into liquidation.

7. Then begins a chapter of events with which we are directly concerned. On 26-5-1954, Akhoy Singh Sahela hereinafter referred to as the respondent made an application for setting aside and/or revoking and/or recalling the order or Sinha, J. The said respondent in the application alleged that on 3-8-1944, the Directors of the Company passed a resolution authorising Ranjit Bose to act as trustee of the company in the matter of purchase of Rangaroon Tea Estate and that the said Bose was in fact not the purchaser of the Tea Estate and the transaction was in the name of Bose to circumvent the provisions of Defence of India Rules. On these allegations Sahela contended that the mortgage and hypothecation were void, illegal and not binding on the Company, It was also alleged that the mortgage and charge was not registered under Section 109 or 109-A of the Indian Companies Act. In paragraph 17 of the petition the respondent alleged as follows :

(a) That the Company did not acquire the Tea Estate subject to mortgage. The Company acquired the Tea Estate on 30-8-1944, in the benami name of Boss and created the mortgage on 30-8-1944. That in the account of the Company with the Bank as filed with the said suit it appears the loan was debited to the account of the Company.

(b) The mortgage was effected without the sanction of the Central Government as required by the Defence of India Rules and was therefore void and illegal.

(c) The true facts were suppressed from the Court.

(d) That no notice was served on the company of the said application.

(e) That no intimation was given to the creditors and the Company.

Lastly Abhoy Singh Sahela alleged that he came to know of the order of Sinha, J., dated 4-4-1949 after searches in the office of Registrar, Joint Stock Companies on 14-5-1954 after having been informed by the Liquidator of the Company that all the assets of the Company were mortgaged with the Calcutta National Bank and that the Bank had filed a mortgage suit.

8. In the affidavit in opposition the Bank stated that the Company acquired the Tea Estate subject to the mortgage in favour of the Bank and that the loan was given to Ranjit Bose The Bank further denied the allegations of suppression of facts and also denied the locus standi of Sahela to make the application. The Company in its affidavit in opposition stated that the defence in the mortgage suit is that the mortgage was not effected in compliance with the provisions of the Company's Articles and that the mortgage is void by reasons of provisions contained in Defence of India Rules. The Company further contended that the Court has no power to grant any relief for registration of charge required under Section 109-A and that the order of Sinha, J., is therefore void.

9. By an order dated 23-6-1955, G.K. Mitter J. has allowed the application filed by Sahela and has revoked the order made by S. B. Sinha J. on 4-4-1949 and against that order the Bank has brought this appeal.

10. The first and the most important point that has been argued in support of the appeal is that Sahela, being an unsecured creditor of the Bank has no locus standi to file an application for revoking an order made under Section 120 of the Indian Companies Act of 1913. Section 120 of the Act as amended by Act XXII of 1936 consists of two sub-sections. The first sub-section authorises the Court to extend the time for registration of a mortgage or charge required by Section 109 to be registered within twentyone days in any of the following classes of cases :

(a) the omission to register was accidental or due to inadvertence or to some other sufficient cause

(b) the omission to register is not of a nature to prejudice the position of creditors or shareholders of the company

(c) that on other grounds it is just and equitable, to grant relief.

11. The second sub-section which was inserted for the first time by the Amending Act of 1936 provides that an order of extension made under the first sub-section 'shall not prejudice any rights acquired in respect of the property concerned prior to the time when the mortgage or charge is actually registered.'

12. In the present case the application for extension of time was filed by the Bank on the ground that the omission on the part of the Rangaroon Tea Co. Ltd. to register the mortgage and charge with the Registrar of Joint Stock Companies was not of a nature to prejudice the position of creditors and shareholders of the company excepting the interests of the Bank and that it was just and equitable to extend the time for the registration of the said charges. As I have already said, this application was allowed by S.B. Sinha J. on 4-4-1949 without issuing any notice upon the company or upon any of the creditors including the respondent, Abhoy Singh Sahela.

13. The answer to the question whether an unsecured creditor of a Company has any locus stand in a proceeding under Section 120 of the Act of 1913 depends upon the true meaning of the word 'creditor' in Section 120 and 'any creditor' in Section 109. On behalf of the appellant it is contended that the word creditor in Sections 109 and 120 means only a secured creditor or a creditor who has acquired any right in respect of the property concerned within the meaning of the second sub-section of Section 120 whereas the learned counsel for the respondent contends that the word creditor means both secured and unsecured creditor; reliance is placed upon Section 229 which speaks of secured and unsecured creditors and Section 166 which speaks of 'contingent and prospective' creditor and it is contended that where the Act uses the word creditor in a general sense it includes both secured and unsecured creditors. Section 166 or Section 229 of the Act, however, cannot furnish any key to the interpretation of the word 'creditor' as used in Section 109 or 120 of the Act, for the simple reason that those two sections deal with altogether different subjects. Section 166 deals with persons who can file an application for the winding up of a company and Section 229 deals with rules to be applied in the winding up of an insolvent company and it is in the fitness of things that those sections should contain provisions dealing with all classes of creditors. The meaning of the word creditor as used in Sections 109 and 120 of the Act must be determined by reference to the provisions of those sections themselves.

14. Turning now to the provisions of Section 120 it appears that the Indian Legislature thought fit to introduce the second sub-section by the amending Act of 1936. If this sub-section be an exhaustive codification of the effect of an order of extension made under the first sub-section there can be no doubt that the intention of the legislature was only to protect 'rights acquired in respect of the property concerned prior to the time when the mortgage or charge was actually registered'. In other words, in Order to enjoy the protection conferred by Sub-section (2) the creditor must have acquired some right in the property, that is must be a secured creditor. Mr. Roy appearing for the respondent contends that that Section 120(2) is not an exhaustive codification of the effect of an order under Section 120(1), because under Section 120(1) the Court, is empowered to extend the time for registration 'on such terms and conditions as seem to the Court just and convenient,' which clause according to Mr. Roy is wide enough to confer upon the Court the power to protect not only secured but also unsecured creditors.

15. In order to determine whether Sub-section (2) of Section 120 of the Act is an exhaustive codification of the effect of an order under Section 120(1) it is instructive to refer to the rights of unsecured creditors under the corresponding provisions of the English law on the subject. Sub-section (2) of Section 120 of the Indian Act has no counterpart in the English Companies Act and Sub-section (1) of 120 is exactly in the same language as the corresponding sections of the English Acts. The question whether the Court can impose a condition to protect the rights of unsecured creditors under the 'just and convenient' clause occurring in Section 120(1) of the Indian Act and the corresponding sections of the English Acts gave rise to a divergence of judicial opinion in England. The controversy was started in the year 1902 when Buckley J. held in the ease of Re Joplin Brewery Co. Ltd., (1902) 1 Ch. 79 that in every ease of extension of time, the following proviso should be, added to the order : 'But that this order be without prejudice to the rights of parties acquired prior to the time when the debentures shall be actually registered'. His Lordship was inclined to add the proviso in view of the fact that applications for extension of time are made without serving the creditors. In this case the company was a going concern and there was no question of liquidation. It was thought that the 'just and convenient' clause required the Court to protect the rights of secured as well as of unsecured creditors. The principle laid down by Buckley J. in Joplin Brewery's case 1902-1 Ch. 79 was followed by Swinfen Eady J. in the case of Re Spiral Globe Ltd. (1902) Ch. 396 and by Buckley J. himself in the cases of In Re; S. Abraham and Sons (1902) 1 Ch. 695 and Re Anglo-Oriental Carpet Manufacturing Co. (1903) 1 Ch. 914, although in the first two cases the application for extension was made, after the commencement of liquidation proceedings and in the third case an extraordinary resolution had been passed for the voluntary winding up of the company a few days before the charge was actually registered.

16. The question whether unsecured creditors are entitled to the benefit of the formula evolved by Buckley J. and whether they require protection under the 'just and convenient' clause came up for consideration by the Court of Appeal in the case of Re Ehrmann Brothers Ltd. (1906) 2 Ch. 697. There it was held that the words 'without prejudice to the rights acquired prior to the date of registration' meant without prejudice to the rights acquired in the property of the company by charge, execution or otherwise. Vaughan Williams L.J. pointed out 'According to my reading of the order the protection is given only to those who have acquired rights of property or rights against property, and this it seems to me, clearly does not include unsecured creditors who have no right against the property in question and no charge against it.' Romer L.J. was also of the same opinion and he held that 'An ordinary creditor would have no locus standi', but he pointed out that different considerations would apply if there was liquidation or a charge. Then his Lordship proceeds to observe as follows :

'In the absence of liquidation and in the absence of something in the nature of a charge acquired upon any security comprised in the debenture, a creditor cannot intervene as against any property of the company or as against the debenture holders in any way whatever. That being so, it appears to me, as I have said, that the only right protected is something which affects the property covered by the debentures'.

In view of this decision of the Court of Appeal Buckley J. in the same year held in the case of Re Cardiff Workmen's Cottage Co. Ltd. (1906) 2 Ch. 627 that in granting extension of time under Section 15. of the English Companies Act of 1900 (corresponding to Section 120(1) of the Indian Act) the Court will not necessarily impose any term for the protection of unsecured creditors but his Lordship added 'that when a case of sufficient magnitude arose it might be well to give notice to some of the unsecured creditors of substantial amount so as to give them anopportunity of being heard if they so desire uponthe question of what is just and expedient in theirinterest'. In Re Monolithic Building Co. (1915) 1Ch. 643 which was a case of competition between anunregistered and registered encumbrancer it washeld by the Court or Appeal that only an unregistered mortgage is void as against a subsequent registered encumbrancer even though the latter hadexpress notice of the prior mortgage at the timewhen he took his security. In this case Lord Cozens-Hardy held that the words 'any creditor'in Section 93 of the English Companies Act 1908(corresponding to Section 109 of the Indian Act)meant any creditor who had a registered charge onthe company's property. The question again cameup for consideration of the Court of appeal in thecase of In re M. I. G. Trust Ltd. (1933) 1 Ch-542where it was again held that in granting extensionof time for registration of a mortgage the court willnot insert any condition for the protection of unsecured creditors and that Section 85 of the EnglishAct was not intended to protect unsecured creditors. The reason that appealed to their Lordshipsfor coming to this conclusion was that unsecuredcreditors always ran the risk of a mortgage or acharge being created by the Company in respect!of its property while it was a going concern andconsequently unsecured creditors could not be saidto be prejudiced by any order of extension of time.Romer L.J. dissented from the observations madeby Buckley J. in the case of Re Cardiff Workmen'sCottage Co. Ltd. 1906-2 Ch. 627, to the effect thatin a case of sufficient magnitude it was desirableto give notice to unsecured creditors of substantialamounts. The decision of the Court of appeal inre M. I. G. Trust Ltd. 1933-1 Ch-542, was affirmedby 'the House of Lords in In re M. I. G. Trust Ltd.,(1934) A.C. 252. Finally in the case of Re KrisCruisers. (1949) Ch-138 Vaisey J. followed theprinciples laid down by the Court of Appeal in thecase of M.I.G. Trust Ltd., 1933-1 Ch. 542 though hisLordship pointed out the anomaly of not giving anyprotection to unsecured creditors who might havebeen induced to give credit to the companyunder the impression that the assets of the companywere not subject to any charge or mortgage. Inthis case Vaisey J. was considering an applicationfor extension of time under Section 101 of the EnglishCompanies Act of 1948, which corresponds to Section 120(1) of the Indian Act of 1913.

17. The aforesaid review of the English authorities establishes beyond doubt that under the English Companies Acts passed from time to time all of which contain provisions similar to those of Sub-section (1) of Section 120, of the Indian Act of 1913 the unsecured creditors of a company neither require any protection nor are they required to be served with any notice in a proceeding for extension of time for registration of a mortgage or charge. With regard to the decisions of the Court of Appeal in the qases of Ehramann Bros. (1906) 2 Ch. 697 and M. I. G. Trust Ltd. (1933) 1 Ch. 542 Mr. Roy appearing for the respondent sought to argue that in those cases the Court of appeal was merely concerned with the interpretation of the proviso evolved by Buckley J. in Joplin Brewery's case, (1902) 1 Ch. 79 and those decisions cannot be regarded as authorities defining the powers of the Court under Section 15 of the English Companies Act of 1900 or Section 93 of the English Act of 1908 or Section 85 of the English Act of 1929. I am, however, unable to accept this argument. The Buckley formula (as it has been characterised by Mr. Choudhury) was evolved out of the language of Section 15 of the English Companies Act of 1900 and the interpretation of that formula cannot be dissociated from the language of the section upon which it was based and in dealing with that formula the English Courts in all the subsequent cases were really dealing with the powers and duties of the Court in a proceeding for extension of time for registration of a mortgage or charge.

18. It follows therefore, that under the first sub-section of Section 120 the Court is neither required to protect nor serve any notice upon unsecured creditors, and consequently the second sub-section of Section 120 must be held to be an exhaustive codification of the legal effect o an order made under, the first sub-section. The holder of any right which falls outside the second sub-section has no locus standi in a proceeding under Section 120 of the Indian Act of 1913.

19. With regard to the second sub-section of Section 120 G.K. Mitter, J. has held that it is a legislative recognition of the Buckley formula and that its effect is to obviate the practice obtaining in England of adding a proviso to the order; but that in enacting the second sub-section the Indian legislature never intended that in granting extension of time the Court was not concerned to take into account the position of unsecured creditors. The second sub-section was introduced by Section 64(a) of the Amending Act XXII of 1936 which was passed by the two Houses of Legislature in October 1936. The Indian Companies Act is largely based on its English counterpart and the object of the Amending Act of 1936 was to bring the Indian Act into line with the changes introduced in the United Kingdom. It is therefore reasonable to infer that when the Indian Legislature introduced the second sub-section to Section 120 it adopted the view taken by the Court of Appeal in In re M.I.G. Trust Ltd. (1933) 1 Ch. 542 and affirmed by the House of Lords in (1934) AC 252. As I have already pointed out under the decision of the English Court of Appeal the unsecured creditors of a company required no protection and no notice in a proceeding for extension of time. This principle was recognised by the Indian Legislature in enacting Sub-section (2) of Section 120. If the second sub-section is a legislative recognition of the Buckley formula it is a recognition of that formula as interpreted by the Court of Appeal in the case of In re M.I.G. Trust Ltd. 1933-1 Ch. 542. To say that Sub-section (2) of Section 120 does not exclude unsecured creditors is to ignore the language of that sub-section which in express terms only protects 'rights, acquired in respect of the property concerned.' If the right is not a right in respect of the property (as is the right of an unsecured creditor) it is not protected. With great respect to the learned trial Judge I am unable to accept his conclusion that in enacting Sub-section (2) of Section 120 the legislature never intended to exclude the unsecured creditors.

20. The view I have taken as to the effect of the second subsection of Section 120 is supported by the decision of the Madras High Court in the case of Thuppan Nambudiri v. Sankara Menon (S) : AIR1955Mad35 where Rajamannar C.J. with the concurrence of Raja Gopala Aiyangar, J. held that Sub-section (2) of Section 120 excludes unsecured creditors. Their Lordships held further that it excludes unsecured creditors even when liquidation has intervened. The case before us however is stronger than Nambudiri's case (S) : AIR1955Mad35 , because in this case there was no winding up order of the company on 4-4-1949 when the order of exten-tion was made by S. B. Sinha J. This decision was sought to be distinguished by the learned counsel for the respondent on the ground that conceding that Section 120(2) protects only secured creditors, the unsecured creditors can be protected under the first sub-section. I have already held that this argument is unacceptable because in my opinion Sub-section (2) deals exhaustively with the effect of an order made under Section 120(1).

21. The next question that falls for determination is whether the Court is competent under Section 120 of the Act of 1913 to extend time in a case which falls under Section 109A. G.K. Mitter, J. has held that it is not, for the obvious reason that Section 120 makes no reference to Section 109A and authorises the Court to extend time in certain specified classes of cases only if the mortgage or charge was not registered 'within the time required by Section 109.' The time required by Section 109 is a period of 21 days from the dale of creation of the mortgage whereas the time required by Section 109A is a period of 21 days from the date on which the acquisition by the company was completed. G. K. Mitter, J. has pointed out that more often than not, the acquisition by the company will be completed long after the period of 21 days from the creation of the mortgage or charge. Since the starting point of the period of 21 days under Section 109 is different from that under Section 109A it is impossible to apply Section 120 to a case which comes under Section 109A. Mr. Chowdhury appearing for the appellant, however, contended that the omission to mention Section 109A in Section 120 was a case of casus omissus which can be supplied by the Court. The argument is that Section 109A was introduced into the Indian Companies Act by the Amending Act of 1936 and although that section requires the particulars of the mortgage or charge to be filed 'in manner required by this Act', the manner laid down by Sections 112 to 121 relates only to mortgages or charges contemplated by Section 109. It is accordingly argued that Section 109A becomes altogether unworkable unless the entire group of sections beginning with Section 112 and ending with Section 121 is read as incorporating Section 109A. To illustrate, it is contended that there is no mention of Section 109A in Section 112 which requires the Registrar to keep a register of mortgages and charges, or in Section 121 which requires the company to give intimation to the Registrar of the payment or satisfaction of any charge or mortgage, though under Section 122 every officer of the company is liable to a daily fine for making default in filing with the Registrar for registration the particulars of the payment or satisfaction of a debt in respect of which a mortgage or charge has been registered either under Section 109 or Section 109A. This argument may have some force with regard to Section 112 and Section 12], but in this case we are concerned only with Section 120, and in our opinion there is nothing to suggest that Sections 109A and 120 cannot stand independently of each other. The omission to register the mortgage or charge under Section 109 renders it void against the liquidator and any creditor of the company whereas the omission to register under Section 109A only makes the officers of the company liable to a fine. Since the consequence of non-compliance with Section 109A is less serious than the consequence of non-compliance with Section 109 it is quite likely that the legislature deliberately left out Section 109A from the scope of Section 120. There is still another reason why the omission to include Section 109A in Section 120 cannot be said to be accidental. Section 109A was introduced by the Amending Act of 1936 and by the same Act Section 120(1) was also amended in some respects and Section 120(2) was also introduced. In spite of the amendments made in Section 120 the legislature did not think fit to bring Section 109A within the scope of Section 120(1). Consequently it is impossible to hold that the omission to include Section 109A within Section 120(1) was due to accident or inadvertence on the part of the legislature. Copious references were made on both sides to various text books on the construction of statutes as to the power of the Court to supply omissions. Mr. Chowdhury relied upon Maxwell (10th Edition) --P. 250-251 and Alien on Law making--(6th Edition)--P. 481 to establish the proposition that in the case of remedial statutes the Court is competent to supply omissions and that 'an omission which the context shows with reasonable certainty to have been unintended may he supplied at least in enactments which are construed beneficially us distinguished from strictly' (See Maxwell--9th Ed. page 256). Mr. Roy on the other hand relied upon Craies on Statute Law (4th Ed.)--P. 71 and the various cases referred to therein to establish that a casus omissus cannot be created or supplied. There is hardly any conflict amongst the authorities on this point. In Crawford on Statutory Construction the position is thus summarised at page 269-270:

'If a particular case is omitted from the terms of a statute, even though such a case is within the obvious purpose of the statute and the omission appears to have been due to accident or inadvertence, the Court cannot include the omitted case by supplying the omission. As is obvious, to permit the Court to supply the omissions in statutes, would generally constitute an encroachment upon the field of the legislature ........... Some decisions allowwords omitted by oversight to be supplied, if the statute is otherwise meaningless, or if an amendment, without interpolation is ineffective'.

22. As I have attempted to show earlier, the omission in the present case is neither accidental, nor due to inadvertence nor is Section 109A on Section 120 without the interpolation meaningless or ineffective. If we add Section 109A in Section 120 it would be, to quote the words of Lord Denman C.J. in Green v. Wood, (1845) 115 ER 455 (458) 'So, violent a change that it would amount to framing a new section' and 'would constitute an encroachment upon the field of the legislature.'

23. Mr. Chowdhury also asked as to wad Section 109A into Section 120 (1) of the Act of 1913 from another point of view. He contended that Sections 109A to Section 121 of the Act of 1913 should be compared with the corresponding sections of the Indian Companies Act of 1956 to gather the legislative intent of the old Act in the light of the new Act. He pointed out that under Section 141 of the Act of 1956, corresponding to the old Section 120 the Court has been vested with power to extend the time for registration in respect of all charges and mortgages under the part which embraces Sections 125 and 127 of the 1956 Act, corresponding to Sections 109 and 109A of the old Act. Accordingly it was argued that the legislative intent of the old Act was also to empower the Court to extend the time for registration both in a case which came under Section 109 and a case which came under Section 109A. In support of the proposition that the Court has the power to supply omissions to give effect to the legislative intent Mr. Chowdhnry relied on Sutherland on Statutory Construction (3rd edition) Vol. 2 page 453-456, Odgers on Aids to Construction of Deeds and Statutes (3rd edition) page 252 and also on Attorney General v. Clarkson, (1900) 1 QB 156 at p. 164 and Cape Brandy Syndicate v. Inland Revenue Commissioners, (1921) 2 KB 403 (414). The principle laid down in the case of Attorney General v. Clarkson, (1900) 1 QB 156, was followed by Lord Sterndale in the case of Cape Brandy Syndicate, 1921-2 KB 403, in which Lord Sterndale said :

''A subsequent legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous .........If there be any ambiguity in the earlier legislation then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier'.

This principle was approved by the House of Lords in the case of Ormond Investment Co. v. Belts, 1928 AC 143 when Lord Atkinson said :

'where the interpretation of a statute is obscure or ambiguous or readily capable of more than one interpretation light may be thrown upon the true view to be taken of it by the aims and provisions of a subsequent statute'.

Lord Buckmaster quoted with approval the observations of Lord Sterndale which I have already read.

24. All the authorities are therefore unanimous that the subsequent legislation may be looked at to fix the meaning of the earlier only when the earlier legislation is ambiguous. In the case before us there was no ambiguity in Section 120 as it stood before the enactment of the 1956 Act. The language of Section 120 was neither obscure nor capable of more than one interpretation. It laid down in clear and unambiguous language that it would apply only to a case where the mortgage or charge was not registered 'with the time required by Section 109'. If it was the intention of the legislature to make the provisions of Section 120 applicable to a case falling under Section 109A as well it would have said 'within the time required by Section 109 or Section 109A.'

25. For the reasons given above I am unable to accept the appellant's argument that Section 120 of the Act of 1913 applies to a case falling under Section 109A of that Act.

26. As the second point has been decided against the appellant and as I have held the Court is not competent to grant extension of time for registration of a mortgage or charge under Section 120 of the Indian Companies Act in a case which falls under Section 109A, the third question that arises is whether the order made by S.B. Sinha J. on the 4th April, 1949 is a nullity which can be revoked even at the instance of a person who has no interest in the subject matter of the dispute. On behalf of the respondent Mr. Subimal Roy has contended that the Court has jurisdiction to revoke an invalid order suo motu. He has further contended that assuming that the respondent has no right to come in under the first subsection ,of Section 120 of the Indian Companies Act he is at least a person who is affected by the order passed by S.B. Sinha J. and as such he is entitled ex debito justitiae to have it set aside. In support of this proposition Mr. Roy has relied upon the decision of the Privy Council in the case of S.T. Hussein v. Rughoonath, 14 MIA 40 at pp. 47, 48. That was a case where an expectant claim under an inchoate award by arbitrators was sold in execution of a decree, and purchased by the appellant Tuffuzzool Hossain. On an application by the respondent the sale was set aside by the executing Court without issuing any notice to the appellant who was in ignorance of it and had no opportunity of opposing it. The appellant thereafter brought a suit to set aside the order annulling the said sale and to enforce his rights as an auction purchaser. The suit was decreed by the trial court but it was dismissed on appeal and against the decree of the appellate court the appellant took an appeal to the Privy Council. The Privy Council affirmed the decision of the appellate court on the view that the expectant claim under an inchoate award was not property within the meaning of Section 205 of the Code of Civil Procedure which was then in force namely Act VIII of 1859. With regard to the decree made by the trial court the Privy Council made the following observations at pp. 47 and 48 :

'Mr. Fraser appears to have supposed a Judge of that court unable to correct his own error in sending forth per-incuriam (through oversight) an invalid order which he would not have made if duly informed .... ..... .... ..... ..... To recall andcancel an invalid order is not simply permitted to but is the duty of a judge who should always be vigilent not to allow the act of the court itself to do wrong to the suitor.'

Those observations were followed by this court in various subsequent cases. It is to be noticed however that the ex parte order with regard to which the Privy Council made the aforesaid observations was in that case challenged by the auction purchaser who was the only person interested in challenging it. Mr. Roy also referred to the decision in the case of Craig v. Kansen, (1943) 1 KB 256 at p. 262 where Lord Greene M. R. made the following observations :

'A person who is affected by an order which can properly be described as a nullity is entitled ex debito justitiae to have it set aside. So far as procedure is concerned it seems to me that the court in its inherent jurisdiction can set aside its own order and that it is not necessary to appeal from it'.

This dictum of Lord Greene was followed by the Privy Council in an appeal from the West African Court of Appeal in the case of Kofi Forfie v. Seifah, 1958 AC 59 at p. 67. In the case of Craig v. Kansen. 1943-1 KB 256 the ex parte order was challenged by persons who were parties to the proceeding and in Kofi Forfie's case, 1958 AC 59, the persons who challenged the ex parte order derived their title from persons who were parties to the order. No case has been cited before us which lays down that an ex parte order can be challenged by a person who was not only not a party to the proceeding but also had no interest which required protection in the proceeding. The present case is one where the ex parte order made by S.B. Sinha J. has been challenged by respondent No. 1 Abhoy Sing Sahela who according to my decision on the first point could claim no interest in the subject matter of the proceeding. I am therefore unable to hold that the decisions relied upon by Mr. Subimal Roy have any application to the facts of the present case. The question however still remains whether the order made by S.B. Sinha J. is void and is a nullity which has no existence in the eye of law. If it is a nullity in the sense that it is legally non-existent no proceeding need be started to have it set aside as has been done in the present case. It can be simply ignored and can be collaterally challenged. The conduct of the first respondent, however, shows that he has not treated it as a nullity and has taken steps to avoid it. The learned trial judge has relied upon the decisions in the cases of Tulsiman v. Harihar, ILR 32 Cal 253 (FB), Sudevi Devi v. Sova Ram 10 Cal WN 306 and In the Goods of Akshoy K. Ghosh, AIR 1949 Cal 462 for the proposition that he had jurisdiction to set aside the order made on the 4th April 1949. Upon the view taken by the learned trial judge to the effect that unsecured creditors require protection in a proceeding under Section 120 of the Indian Companies Act of 1913 the decisions relied upon by him undoubtedly apply; but as I have held that unsecured creditors are not entitled to protection in a proceeding under Section 120 of the Indian Companies Act these decisions in my opinion have no application. On the question whether order dated the 4th April, 1949 is void or voidable the learned counsel for the appellant has contended and in my opinion rightly, that the order is one which was made upon irregular assumption of jurisdiction and is not an order which was made without jurisdiction. In support of this proposition reference may be made to the case, of Hriday Nath v. Ram Chandra, ILR 48 Cal 138 at p. 147: (AIR 1921 Cal 34 at p. 36) where a Full Bench of this court had to consider the question whether an order permitting a plaintiff to withdraw a suit with liberty to institute a fresh suit in a case which did not come under Order 23 Rule 1 Sub-rule 2 of the Civil Procedure Code was a nullity and held that it was an order which was made by irregular assumption of jurisdiction. In that case it was pointed out that the jurisdiction of a court depends upon three circumstances namely, pecuniary, territorial and jurisdiction over the subject matter and if these conditions are fulfilled the court can be said to have jurisdiction. In that case Mukherjee C. J. delivering the judgment of the Full Bench observed as follows :

'The classification into territorial jurisdiction, pecuniary jurisdiction and jurisdiction of the subject matter is obviously of a fundamental character. Given such jurisdiction we must be careful to distinguish exercise of jurisdiction from existence of jurisdiction.'

In the present case S.B. Sinha J. being the Company Judge had jurisdiction under Section 3 of the Indian Companies Act over the subject matter of the dispute and there is no dispute that he had territorial as well as pecuniary jurisdiction in respect of the subject matter of the dispute. Consequently the conclusion is irresistible that the decision which he actually gave is a decision given in irregular exercise of that jurisdiction. For the foregoing reasons I hold that the order made by S.B. Sinha J. on the 4th of April, 1949 is not a void but merely a voidable order and it can be revoked only at the instance of a litigant who has an interest in the subject matter of that proceeding,

27. The above conclusions dispose of the main points raised in the appeal before us but there are two other matters which were considered by the learned Trial Judge and which also require consideration. The first one is the delay on the part of the bank to file the application for extension of time under Section 120 of the Indian Companies Act and the omission to serve notice of the application upon the company. It has been pointed out that although the bank knew the correct address of the Company it had deliberately given a wrong address. It is true that though the mortgage and charge were created on the 30th of August, 1944 the bank filed the application for extension of time as late as the 2nd of April, 1949 but this delay is hardly of any consequence because throughout the entire period the company was a going concern and the company was directed to be wound up only on the 18th of December, 1951. Under Section 109A it was primarily the duty of the company to file particulars of the charge with the Registrar of Joint Stock Companies. There was no risk of the security of the bank being jeopardised so long as the financial condition of the company was good and no adverse inference can be drawn against the bank for its omission to file the application for extension of time on an earlier date. As regards the non-service of notice upon the company it is strange that the company has not come forward with an application for revoking the ex parte order of S.B. Sinha J. nor has the company impugned the validity of the mortgage on the ground of absence of registration in the mortgage suit which is now pending on the Original Side of this Court as Extraordinary Suit No. 2 of 1951.

28. The learned trial judge has also made some adverse comments as to the validity of the mortgage under Rule 94A of the Defence of India Rules which were in force at the time when the mortgage and charge were created. We are informed that the question of the validity of the mortgage under the Defence of India Rules is a specific issue in mortgage suit itself and in our opinion that question should be left open for decision in the suit because it is not germane to a proceeding under Section 120 of the Indian Companies Act.

29. At the close of the argument Mr. Basu appearing for the first respondent invited our attention to a decision of Panckridge J. in the case of Sathgram Coal Co. Ltd. in the matter of, 40 Cal WN 1171 where the learned Judge held that a charge which is not registered under Section 109 of the Indian Companies Act is void against all the creditors of the company irrespective of the date on which their debts accrued. It was further held that even if decrees had been obtained on such unregistered mortgages prior to the winding up application that fact did not take the case out of the operation of Section 109. In that case his Lordship was considering the rights of an unregistered secured creditor who had obtained a decree on the unregistered mortgage prior to the winding up order. After obtaining the decree the mortgagee decree-holder applied for leave to proceed with his application for execution against the mortgaged property. That application was opposed by the Official Liquidator representing the creditors on the ground that as the mortgage was not registered with the Registrar of Joint Stock Companies under Section 109 of the Indian Companies Act it was invalid and inoperative against the liquidator and creditors of the company. This contention of the Official Liquidator was upheld by the learned Judge who held that it was clear that 'an unregistered charge is void against all creditors irrespective of the date on which their debts accrued'. Although His Lordship expressed his conclusion in a somewhat wide language the question whether unsecured creditors were protected by Section 109 did not really arise for consideration in that case. What His Lordship really intended to lay down was that the unregistered mortgage was void against the Official Liquidator and that conclusion would have been quite enough for the disposal of that case. Upon the facts of that case no exception can be taken to the decision but if it is used as an authority for the proposition that Section 120 and Section 109 of the Indian Companies Act protect unsecured as well as secured creditors it comes into conflict with the decisions of the Courts of Appeal in England in the cases of Re Ehrmann Bros. Ltd., 1906-2 Ch 697, and In re M. I. G. Trust Ltd., 1933-1 Ch 542, which were not cited before His Lordship. In my opinion the decision of Panckridge J., must be construed as meaning that an unregistered mortgage is void against the liquidator even though the mortgagee may have obtained a decree upon the unregistered mortgage prior to the winding up order,

30. Mr. Bhola Sen appearing for the company which is the second respondent in this case raised a contention to the effect that the appeal is not competent because the order of G.K. Mitter J., is not a judgment within the meaning of Clause 15 of the Letters Patent. The order against which this appeal has been filed, as drawn up, runs as follows:

'It is ordered that the order made in Matter No. 107 of 1949 and dated 4-4-1949 be and the same is hereby set aside and revoked ............'

Mr. Bhola Sen contends that the effect of revocation of the order dated 4-4-1949 is to restore the application filed by the bank on 2-4-1949 for extension of time under Section 120 of the Indian Companies Act and accordingly he contends that the decision of G.K. Mitter J., does not affect the merits of the Question between the parties by determining any right or liability and therefore is not a judgment within the meaning of Clause 15 of the Letters Patent. This argument in my opinion is without substance. It is true that G.K. Mitter J., has not expressly stated that the bank's application for extension of time stands dismissed but the effect of the order is to dismiss that application. The decisions on all the questions which have been decided by G.K. Mitter J., will operate as res judicata between the appellant and respondents and those questions will not be and cannot be re-opened or reagitated. I have therefore no doubt that G.K. Mitter J., has finally decided the questions involved in this appeal and his order is therefore a judgment within the meaning of Clause 15 of the Letters Patent. Before concluding my observations with regard to the submissions made on behalf of the company which is the second respondents in this appeal I cannot help remarking that I am not at all satisfied with the conduct of the company. Although the company was vitally interested in challenging the order made by S.B. Sinha J., on 4-4-1949, it took no steps in that behalf and on the contrary its Directors, for reasons best known to themselves, remain content, with supplying information to the first respondent Abhoy Singh Sahela as stated in the affidavit of Abhoy Singh Sahela himself.

31. G.K. Mitter J., has also pointed out that the form used by the bank for filing the particulars of the mortgage and charge with the Registrar of Joint Stock Companies is not appropriate to a proceeding under Section 109A of the Indian Companies Act. The form used is form No. XVIII which is the form appropriate only to a proceeding under Section 109. The form apposite to a proceeding under Section 109A is form No. XX. The form No. XVIII in which the bank filed the particulars 'of the mortgage as printed at p. 84 of the Paper Book bears the heading 'see Sections 109A and 277D'. This is evidently a wrong description of form No. XVIII. The correct heading of form No. XVIII is 'see Sections 109 and 277D'. The correct heading of form No. XX is 'see Sections 109A and 277D'. The criticism of G.K. Mitter J., with regard to the user of the form by the bank is undoubtedly correct. The forms are prescribed by Rule 11 of the Indian Companies Rules framed by the Central Government under Section 151 of the Indian Companies Act. Rule 11 is in the following terms:

'The forms set forth in the schedule hereunto annexed or forms as near thereto as circumstances admit shall be used in all matters to which these forms relate.'

The question whether the user of a wrong form for filing the particulars of a mortgage or charge with the Registrar of Joint Stock Company invalidates the registration is not relevant in a proceeding under Section 120 of the Indian Companies Act and may if necessary be decided in the mortgage suit itself if the parties raise any issue on that point.

32. For the reasons given above with great respect to G.K. Mitter J., I cannot agree with the order passed by him. I hold that the first respondent Abhoy Singh Sahela had no locus standi to fife the application for revocation of the order made by S.B. Sinha J., on 4-4-1949. I further hold that the order passed by S.B. Sinha J., is not a void order but is merely a voidable order which could be revoked or recalled at the instance of a person who had acquired rights in respect of the property which form the subject-matter of the mortgage or charge and as the first respondent is not such a party the order passed by S.B. Sinha J., could not be revoked or recalled at his instance. I would accordingly allow this appeal and set aside the order passed by G.K. Mitter J., and direct that the application filed by the first respondent Abhoy Singh Sahela be dismissed with costs in this Court as well as in the trial court. The liquidator of the appellant bank will be entitled to retain his own costs in the first instance out of the assets of the bank in his hands. The liquidator of the second respondent will also be entitled to retain his costs as between attorney and client out of the assets of the company in his hands but as between party and party both the respondents will be jointly and severally liable for costs of the appellant in this court as well as in the trial court. Certified for two Counsel.

Ray, J.

33. I agree.


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