AKKIRATH MUNDANAT MANAKKAL THUPPAN NAMBUDIRI Vs. A P KUTTI SANKARA MENON OFFICIAL LIQUIDATOR OF THE MALAYALEE

JUDGEMENT

(1.) This is an appeal against the order of Krishna- swami Nayudu J. dismissing an application filed by the appellant under Section 120, Companies Act, in the following circumstances.

(2.) On 26-6-1950 the Malavalee Bank Ltd., exe-cuted and registered a deed of sub- mortgage of some of the securities held by the Bank in favour of the appellant to secure a sum of Rs. 10,000, advanced by the appellant to the Bank. The loan was repayable within six months. On 4-7-1950 the managing director of the Bank forwarded to the Registrar of Joint Stock Companies particulars of the mortgage as prescribed in a form provided for the purpose, but he did not send either the instrument of mortgage or a copy thereof verified in the prescribed manner. The Registrar acknowledged receipt of the parti- culars and called upon the managing director to file the instrument or a copy of the same. The Bank replied to the Registrar on 13-7-1950 that they had not received a copy of the mortgage deed and that as soon as it was received they would furnish the Registrar with it. It appears that a copy of the mortgage deed was obtained by the managing director on 24-7-1950, but the same was not filed with the Registrar. By an order of Court dated 10-10-1950, the Bank was directed to be wound up and the first respon- dent was appointed official liquidator. Soon after the expiry of six months, the time fixed for the repayment of the amount due under the sub-mortgage, the appellant wrote on 25-1-1951 to the Official liquidator to make arrangements to pay the amount due to him. The Official Liquidator replied that the deed of mortgage in favour of the appellant was void under Section 109, Companies Act, as against the official liquidator and the other creditors, as the requisite particulars of mortgage had not been filed with the Registrar of Joint Stock Companies in time. The appellant thereupon himself applied to the Registrar in the prescribed form on 29-2-1951 for registration. As the application was made beyond the 21 days provided for under Section 109 of the Act, the appellant filed the application under Section 120 of the Act, out of which this appeal arises.

(3.) The learned Judge held that the omission to file the particulars of the mortgage with the Registrar in time was due to inadvertence on the part of the managing director in not filing the copy of the mortgage deed, that the appellant was not responsible for his omission, and therefore there was sufficient cause for the applicant not applying in time. In spite of his conviction that the appellant's cause was just and that the omission was due to ignorance of the requirements of registration on the part of the appellant which he considered to be sufficient cause, the learned Judge held that he was helpless to pass an order in favour of the appellant, because in his opinion he should be further satisfied that the extension of time would not prejudice the position of creditors or share-holders of the company. As the liquidation had intervened in the meanwhile and the effect of extension of time would be to entitle the appellant to rank as a secured creditor in preference, to other unsecured creditors of the company, he held that it was a case where the Court was unable to extend the time under the provisions of Section 120 of the Act. He, therefore, dismissed the application. He, however, observed that he was leaving open the question whether the mortgage in favour of the appellant had become void under Section 109, Companies Act. The learned Judge was inclined to hold that since the requirements of Section 109 of the Act had been substantially complied with by the managing director, the mortgage in favour of the appellant had not become void. The appeal is against this order.