STATE BANK OF INDIA Vs. VISWANIRYAT

JUDGEMENT

(1.) The principal question for decision in this appeal concerns the interpretation of S.125 of the Companies Act, 1956. The appellant is the State Bank of India, Willingdon Island and the appeal is against the order of the court below rejecting the appellant's claim under O.21 R.58 CPC against the attachment of properties of the defendant before judgment. The suit is by an unsecured creditor of the defendant company for recovery of money due to the plaintiff. Pending the suit some of the items of immovable properties belonging to the defendant company were attached on 7-7-1982 under O.38 R.3 CPC. The appellant the State Bank of India filed a claim against the attachment contending that the properties attached are subject to an equitable mortgage in favour of the bank and no attachment can be effected ignoring the mortgage. The suit was decreed on 4-8-1984 and in EP 227/1984 the decree holder brought items 1 and 2 of the attachment schedule to sale. The execution court ordered sale subject to the rights of the claimant bank to be adjudicated in proceedings initiated under O.21 R.58 CPC. Items 1 and 2 were sold on 11-10-1985 and the decree holder himself purchased the same for Rs. 2,30,000/-. The claim was rejected by the impugned order of the court below dated 3-4-1986 and the claimant has come up in appeal.

(2.) The defendant company was allowed what is called an "Export Packing Credit Accommodation" by the claimant originally upto a limit of Rs. 50 lakhs, later increased to Rs. 100 lakhs. Ext. A4 dated 31-3-1977 is a certificate issued by the Registrar of Companies to show that a pledge for Rs. 50 lakhs is registered under S.125 to 130 of the Companies Act. Ext. A5 shows that the pledge was increased from Rs. 50 lakhs to Rs. 100 lakhs with effect from 27-6-1977. Ext. A1 series are the documents of title deposited by the defendant with the claimant bank as per Ext. A2 letter dated 14-6-1977. Ext. A2 reads:

(3.) The lower court has rejected the claim also on the ground that the charge, if any, in favour of the claimant bank is void against the plaintiff for want of registration under S.125 of the Companies Act. S.124 of the Act defines "charge'' to include also a mortgage and S.125(1) enacts that every charge created on or after the 1st day of April, 1914 by a company shall so far as any security on the company's property or undertaking is conferred thereby ''be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or a copy thereof verified in the prescribed manner, are filed with the Register for registration in the manner required by ibis Act within thirty days after the date of its creation". The proviso to sub-s. (1) authorises the Registrar to extend the time by seven days in the circumstances mentioned therein, Sub-s. (2) enacts that nothing in sub-s. (1) shall prejudice any contract or obligation for the repayment of the money secured by the charge. When a charge becomes void under S.125(1), the money secured thereby shall immediately become payable (vide sub-s. (3)). S.130 provides for registration of charges and S.132 empowers the Registrar to issue certificates of registration.